What is the purpose and structure of the War Room?

July 29th, 2015, Published in Articles: Energize

 

Addressing the South African National Energy Association’s (SANEA’s) Johannesburg lecture on 28 July 2015, Rudi Dicks, the deputy director general in the Department of Performance Monitoring and Evaluation in the Presidency, said that the War Room, which is presided over by the country’s vice president, Cyril Ramaphosa, is based on a concept where a deliberate focus is placed on the problem at hand. In war-time this would be the defence of the nation, but at present it is the critical shortage of electricity generation in the country.

IMG_4898

Rudi Dicks

Dicks delivered his lecture in the Delville Wood room at the National Museum of Military History in Johannesburg, which he said, was highly appropriate given his topic.

Strengths and weaknesses

Dicks said that there are both strengths and weaknesses in the use of a government War Room to address the shortage of electricity in South Africa.

Strengths

The strengths come from the significant focus placed upon the problem, something he called a “deep dive into the challenges at Eskom”. This deep dive involves inviting experts from industry as well as from the power utility to address the committee and discuss various challenges and to offer realistic solutions.

Weaknesses

The weakness comes from the fact it takes time for the War Room participants to understand the various challenges and to evaluate the options which are presented. Each presentation raises differing views and these need to be discussed and understood before any firm decision can be reached. For example, it was proposed that the three big smelters should be closed because that would save the country thousands of MW at relatively little cost to the economy or jobs.

Structure

The War Room consists of an inter-ministerial committee which is divided into strategic and technical groups. Both groups are chaired by the relevant minister (the minister of public enterprises) and has members from public enterprises, energy, national treasury, Eskom, mineral resources, planning, monitoring and evaluation, cooperative governance and economic development. It meets each Friday morning and invites various stakeholders to make representation depending on the topic being discussed at that particular meeting. The War Room committee is chaired by Cyril Ramaphosa.

Findings and recommendations

Dicks said that the War Room has calculated that planned load shedding costs the country between R9 and R15/kWh, while unplanned load shedding can cost as much as R65/kWh depending on the industry involved. The actual cost of load shedding to the economy is believed to be in the region of R8 to R11-billion, which is significantly more than the foreign exchange the smelters bring in. These figures appear to support the concept of closing the smelters until it was suggested that the steady load the smelters place upon the grid actually helps keep the frequency under control.

Although the cost of electricity generated by running the open-cycle gas turbines (OCGTs) is almost eight times more than that generated by coal-fired power stations, it is still less than half the cost of planned load shedding to the economy. For this reason it makes sense to keep the OCGTs, which were designed as “peakers”, operating in base-load mode.

Dicks said that the repairs needed at the Majuba (collapsed silo) and at Duhva (damaged boiler) power stations will take years to complete and will be very costly. Engineers have applied interim interventions to improve the output of these two power stations in the short term.

The idea of recommissioning old power stations – such as Ingagane (which was decommissioned in 1994) and Vierfontein (which was decommissioned in 1990) – are being considered. Another complication in the matter is the lack of sufficient people with adequate skills. Eskom wants to import skilled artisans but is having difficulty with the country’s immigration laws.

One suggestion is to explore the use of liquid natural gas (LNG) or methane gas-fuelled fuel-cells to generate electricity. This will require support from gas suppliers as is available in certain parts of Johannesburg. Another suggestion is an increase in the use of renewable energy with battery back-up, which is said to be cheaper per kWh than load shedding.

The way forward

Dicks said that lessons learned from other state-owned entities, the Post Office and South African Airways, have highlighted the need for stricter corporate governance at Eskom to keep costs under control and improve the utility’s credit rating to encourage foreign investment in the entity. Load shedding will remain part of our lives for some time yet, he says, and has to be better managed. The War Room is therefore applying pressure on the larger municipalities to stick to their published load shedding schedules, and will continue to monitor the roll out of the government’s five-point plan:

  • The improvement of maintenance and operational practices at Eskom’s power stations
  • Extension of cogeneration contracts with existing short term IPPs
  • Gas for power generation
    • Import gas, or electricity generated from gas, from neighbouring countries
  • More IPPs
    • Peaker plants
    • Renewables
    • Coal
  • Demand-side management
    • Reduction of energy requirement through energy efficient initiatives

Key challenges

The War Room recognises that the country needs an updated Integrated Resource Plan, a new Independent Energy Plan, a revival of the Gas Utilisation Master Plan; a transparent tariff trajectory; cost effective additional generation capacity; and the curtailment and management of primary fuel costs for coal fired power stations.

Dicks says that the War Room, which is currently focused on the country’s electricity needs, is set to become an energy War Room with a wider focus into all aspects of energy sources in the near future.

 

 

 

Related Articles

  • South African Government COVID-19 Corona Virus Resource Portal
  • Ministerial determinations propose 13813 MW of new-build by IPPs, none by Eskom
  • Crunch time for South Africa’s national nuclear company, Necsa
  • Dealing with the elephant in the room that is Eskom…
  • Interview with Minerals & Energy Minister Gwede Mantashe