Peak Performer

Forget chatlines, music videos or Google mapping: in South Africa, the most-downloaded app delivers alerts, schedules and forecasts for power outages and rolling blackouts.

It’s the download that never sleeps. In February 4,000 megawatts of power - enough to power three million households - was cut from the national grid to prevent it from collapsing.

Load shedding has been part of South African life since 2014, when it became clear that Eskom - state monopoly supplier since 1923 - was facing various challenges in meeting the national demand for power.

Struggling to generate enough electricity to meet demand, Eskom has recently re-introduced a system of rotating outages called loadshedding; hitting small businesses and public services, investor confidence, and the public at large.

Amid this stygian gloom, to which South Africans respond mostly with stoical resignation, projects brought on stream via the Department of Energy’s independent power producer (IPP) have helped to somewhat ease the situation.

Notable among them are the 1,005-megawatt Avon and Dedisa peaking power plants, which commenced operation in 2015 and designed to help balance the grid’s fluctuating power needs by supplying Eskom at peak demand.

PRIVATELY-OWNED FIRST

The 670MW Avon facility at Shakaskraal, 65 km north of Durban, together with its Dedisa 335MW facility sister power plant in Port Elizabeth, are the first large privatelyowned power generating plants initiated by the Department of Energy.

Awarded in 2006 in anticipation of the 2008 black outs, the Avon and Dedisa scheme went into a protracted stall, before construction finally started, a seamless operation, on budget and on time.

“We are positioned and ready to provide supplementary power as and when needed, assisting Eskom with its generating challenges, and expecting an above-normal busy winter,” says CEO Tebogo More.

“We can go from zero to full load in less than half an hour and perform a fast-start from zero to 100% in 20 minutes.”

As-and-when extends beyond peak-time responses to emergency back-ups, a dual capability much tested last year.

“With a higher number of emergencies than anticipated last year, we ran more as an emergency power facility, so that has certainly been a challenge in terms of various logistics.”

Working with dispatachable generators – on/off, demandresponsive and dispatched at the request of power grid operators – is a highly testing operation.

“You never know when we will be dispatched, yet we have to be ready at all times. Having to navigate around that has been both interesting and challenging.”

A highly experienced energy and finance professional, involved for ten years in the infrastructure sector value chain from financing to construction and operations, Tebogo More arrived as CEO 18 months ago, on appointment from Avon and Dedisa’s leading shareholder, the French multinational utility company, Engie.

“Previously, I was a senior developer looking at projects within southern Africa from the renewable perspective and across different technologies, including looking at Greenfield opportunities, typically through a tender process initiated by government.” Before joining Engie in 2015 she was with the Aveng LTD Group, developing energy projects focussed largely on growth strategy, mergers and acquisitions.

“My background in power and gas has always been renewable energy, so this is the first time I have been involved with a dispatchable project.”

With a 38% shareholding, Engie is partnered by the Blackowned company Legend Power Solutions - 27%, Japanese-based Mitsui and Co - 25% - and the Peaker

Trust, representing broad based shareholding from KwaZulu-Natal and the Eastern Cape the two local, with 10%.

The power generated by these two open cycle gas turbine power plants are sold to Eskom under a Power Purchase Agreement over a 15-year term.

ON TO NATURAL GAS?

Both plants are prepared for a possible future conversion to combined cycle and to natural gas, as part of the government’s planned introduction of natural gas to South Africa.

Natural gas is one of the cleanest, safest, and most convenient forms of energy, and recent on- and off-shore discoveries of significant quantities in Southern Africa - including a “significant” gas discovery off South Africa’s southern coastline by oil giant Total - represent a new dawn for the region’s energy landscape.

“This could well be a gamechanger for our country and will have significant consequences for our country’s energy security and the development of this industry,” President Ramaphosa told Parliament in the televised speech.

Could Avon and Dedisa be part of this game changer? “The plant design has always included the long-term view to convert to natural gas, but from a project and financing perspective, there’s always been the need to ensure we do specifically and exactly what we are meant to be - which is a peaking plant.

“However, there is the opportunity to convert to gas as soon as there is a gas solution in the country with a steady and reliable availability of natural gas fuel. The capability is definitely there.

“It’s an issue on which we have been approached by a number of people, and from a shareholder and board perspective, one that we are looking at closely.”

However, for environmental groups such as Greenpeace, the Total exploration 175 km off South Africa’s coastline is “reckless,” warning of disturbances to marine life and averse global change impact.

ENVIRONMENTALLY AWARE

As gas-fired power station operators, Avon and Dedisa are aware of the environmental and cost issues.

“South Africa is as concerned as the rest of the world, and gas is an issue that has been seriously investigated.

“The environmental awareness is there, and if you look at some of our shareholders you will see that Engie in particular, has embarked on a zero carbon transition and has halved its CO2 emissions between 2012 and 2018. “De-carbonation is one of Avon and Dedisa’s main strategies, and each one of our shareholders is looking seriously into the ability to convert.” Open cycle gas turbines use almost any hydrocarbon fuel from high-octane gasoline to heavy diesel oils. And while higher operating cost is sometimes a criticism, Tebogo More says this is not an issue here.

“Peaking plants are not meant to be run for a long period. You are looking at about two hours a day depending on the peak times.

“So, in the grander scheme of things the numbers tally up. They only become expensive if they are then used as a base load - and we will definitely not get to that.”

Within a wide ownership structure, the role of the Peaker Trust, with its 10% share, has a special significance.

Established to promote and advance Broad-Based Black Enterprises, Peaker Trust dividends will go towards impacting individuals, including people with disabilities, establishing co-operatives, providing infrastructure to less fortunate areas, and contributing to local socioeconomic development initiatives.

The private-enterprise structure of Avon and Dedisa touches on another area of South African life – the issue of public confidence and trust.

A FUTURE FOR STATE/PRIVATE PARTNERSHIPS?

With many Government-run businesses increasingly attacked for inefficiency and even corruption, could this privatestate partnership offer an example of sound working relationship?

“I think absolutely it does. For any country to thrive you have to have a very good balance, and a very good and transparent working relationship between government and the private sector.”

If South Africa is to sort out the energy crisis, says More, it is imperative the state and private sector work hand-in-hand.

“I don’t think the answer lies with either, but in a transparent partnership, with a combination of the skills and doing what we each do best. “The private sector has a lot to offer in that it is not encumbered

by the reputational damage, from which, let’s say, the public sector has basically suffered.

“At the same time, at the government level there is a much broader view of national needs.

“And of course, within the state sector you have pockets of excellence - and we certainly experience it with the teams we work with particularly from an Eskom perspective

“Our relationship with Eskom is nothing short of completely professional and very knowledgeable. We work very very well with them and have that essential transparency and open communication. So there’s definitely a role to play from both sides.

“We want to be a value-added partner to the South African Government. And we can continue to do this by providing reliable power as and when we are called upon - whether as a peaking operation or in sudden emergencies.”

Tebogo More - Avon & Dedisa CEO