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

Overview of Multi-Year Price Determination
2013/14–2017/18 (MYPD 3)
Table 10: Components of Generation primary energy cost (R million)
Coal and coal handling
Page 55 of 144
2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 MYPD 3
Coal 35 376 37 010 41 966 47 282 52 351 57 703 236 312
Water 1 532 2 082 2 414 2 615 2 750 2 955 12 816
Start-up gas & oil 1 442 1 511 1 636 1 721 1 813 2 018 8 699
Coal handling 1 041 1 087 1 163 1 246 1 356 1 510 6 362
Water treatment 301 327 370 396 428 477 1 998
Nuclear 368 471 471 678 767 856 3 242
Open cycle gas turbines (OCGT) 2 642 3 592 3 258 1 788 1 898 2 056 12 592
Fuel procurement 457 435 435 443 452 485 2 250
Sorbent 10 56 139 251 456
Road maintenance 321 53 53
External electricity purchases 22 23 24 26 27 27 128
Enviromental levy 8 105 8 842 9 037 9 324 9 490 9 746 46 439
Displacement savings - 405 - 710 - 959 - 1 061 - 3 135
Generation primary energy (Rm) 51 606 55 433 60 380 64 865 70 512 77 022 328 212
The rand per ton cost of coal, excluding transport, which accounts for most of Eskom‟s
primary energy costs, grows by a compound average of 10% over the MYPD 3 period. Coal
costs vary depending on the contract type.
Table 11: Cost of coal purchases
2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 MYPD 3
TOTAL (Mt) 128 131 133 136 141 141 682
Delivered (R/ton) 271 299 334 355 397 438 366
Total Cost (Rm) 34 805 39 197 44 331 48 270 56 003 61 760 249 561
The amount of coal Eskom needs, which determines the overall cost of coal, is affected by
the burn rate (the volume of coal required to produce a unit of electricity). Eskom‟s overall
burn rate has increased from 0.55 tons per MWh in MYPD 2 to 0.57 tons per MWh for
MYPD 3. The burn rate is affected by power-station efficiency and coal quality.
In addition, coal volume projections take into account the projected power from IPPs over
the period and thus the reduced requirement for coal. Eskom has included all three rounds
of the renewable energy IPP bid programme on the basis that it is pursuant to a
determination made by the Minister of Energy. Should the programme not be implemented
as planned, there may be a shortfall in capacity which will need to be made up with
additional generation. In such event additional costs will be required for coal purchasers and
will need to be addressed appropriately to mitigate this risk.