Abstract
Over the last decade, South Africa has been experiencing an electricity supply crisis. This power crisis has been threatening the stability of the national power grid. The crisis was caused by insufficient generation capacity as well as an increased demand for electricity. In order to counteract this situation, the state owned electricity utility, Eskom decided to increase its power capacity by building new power plants, and implementing demand side management (DSM) initiatives to save energy. All of this came at a cost. Therefore, the present study was aimed at helping decision makers in the South African electricity sector to decide on the optimum funding allocation for the above projects. The research methodology adopted in this study was cost analysis. Three levels of cost comparison were developed in this study. These were based on power generating technologies (coal, gas, nuclear, wind, concentrated solar power, and solar photovoltaic), and on DSM programmes (residential mass rollouts, standard offer programme, standard product programme, performance contracting programme, and energy services companies model mass rollouts). The first level analysed the costs of building power plants as well as costs of producing electricity using different power generating technologies. The second level analysed the costs of implementing DSM programmes as well as costs of saving energy by implementing DSM programmes. Lastly, the third level analysed the costs of building power plants against the costs of implementing DSM programmes, as well as assessing the costs of producing electricity versus the costs of saving energy. The results for both power plants and DSM measures were tested through sensitivity analyses. At the first comparison, it was revealed that renewable energy technologies have the highest costs, higher than other generating technologies. At this level, a conclusion was drawn up in three parts noting that (1) although renewable technologies are expensive, they should be given more weight due to the fact that they are inexhaustible, (2) they guarantee safety to the environment, and (3) they do not emit greenhouse gases into the environment. At the second level of cost comparison, it was demonstrated that residential mass rollout (RMR) has the highest cost, higher than any other programme. At this level, it was concluded that due to the target market of RMR, which is residential sector, RMR should be given more weight, because more energy is wasted in this sector. It was further observed that residential consumers use a lot of electricity during peak period, and this increases during the winter season. The third level of cost comparison demonstrated that DSM measures were the resource alternative available at the lowest cost to the electricity utility. Hence, DSM initiatives could help to alleviate power outages issues and therefore, delay the need for building new power plants. Since DSM initiatives were found to be cheaper to run, their implementations meant that the utility would save billions of Rand by not using large amounts of water, coal, fuel, operating the plant at lower levels of intensify and doing less maintenance on the power plant.
M.Ing. (Engineering Management)