Part 1 Revenue Application: Multi-Year Price Determination ... - Eskom

Overview of Multi-Year Price Determination
2013/14–2017/18 (MYPD 3)
Figure 11: Thirty-year horizon of Eskom’s existing generation capacity (GW)
Page 108 of 144
According to IRP 2010, South Africa needs to build about 45,000MW of extra generating
capacity by 2030 in order to meet the country‟s needs. This will cost about R1,8 trillion for
new generating capacity, R1,3 trillion to expand and maintain the network capacity and a
further R500 billion to cater for maintaining the existing power station fleet. Together, this will
require a combined capital cost of R3.5 trillion in total between 2013 to 2030. The pricing
implications of building this extra capacity needs to be considered and a decision made as to
how this issue should be addressed at this stage. If it is not addressed now, Eskom may
have to apply for a reopener of the MYPD 3 decision once the policy decisions have been
made.
Given that expansion projects can take decades to plan, finance and execute, Eskom should
start planning towards, and sourcing funding for, IRP 2010 capacity expansion during the
MYPD 3 period. There has been engagement regarding the DoE‟s policy requirements and
government is in the process of providing clarity in this regard. However, the government still
needs to undertake feasibility studies regarding its projected generation requirement and
how it should be allocated, so the allocation decision has not yet been made.
It would be irresponsible of Eskom not to reflect the implications of the additional capacity
requirements on the price path. Therefore, for illustrative purposes, Eskom has provided the
implications of two scenarios that assumes that it will ultimately be responsible for 65%
(scenario one) or 100% (scenario two) of the capacity requirements projected in IRP 2010.