This Sustainable Energy Briefing seeks to bring some degree of clarity to the confusing issue of Eskom costs and tariffs, and, in particular, tariffs to industrial users. What seems apparent from this analysis is that industrial users of electricity are paying below Eskom’s average cost of production and at rates inadequate to CAPEX requirements, the policy of cheap electricity to industrial is contributing to Eskom’s poor financial position, and some industrial users appear to be paying below the actual cost of production.
All of this has caused Eskom to cancel a raft of projects–including wind and solar projects–and concentrate on Medupi and Kusile. The irony is that the underlying cost drives (the costs of fossil fuels) are set to continue climbing, making Eskom power increasingly costly to generate.
A quick note on the data used in this analysis: The primary sources were Eskom’s Annual Report 2008 and official Department of Public Enterprises figures from 2008. These are the most reliable, up to date figures available. While tariff prices have risen (i.e. post-NERSA decision in 2009), data production has not caught up with this. Even though energy statistics are often confusing and delayed, nothing is lost by using official 2008 data. Eskom’s Annual Report for 2009 is used to confirm the 2008 data and analysis.
Download this SE Briefing (pdf, 944kb) at: sustainable-energy-briefing-18-final