Comments from FAPA on Eskom’s RCA applications · FERRO ALLOY PRODUCERS ASSOCIATION * * * * * * *...
Transcript of Comments from FAPA on Eskom’s RCA applications · FERRO ALLOY PRODUCERS ASSOCIATION * * * * * * *...
Comments from FAPA on Eskom’s RCA applications
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Presented by: Dr Jurg ZaaymanChairman: Ferro Alloy Producers’ Association
FAPAFERRO ALLOY PRODUCERS ASSOCIATION
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Eskom’s ZAR 66,7 Billion RCA applications
Nothing different from
Eskom’s application for a DEATH SENTENCE
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FAPAFERRO ALLOY PRODUCERS ASSOCIATION
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FAPA members cannot exist without Eskom
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Eskom cannot afford to loose more baseloadcustomers like FAPA members
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FAPA members are the Smelters of Chrome,
Manganese and Silicon Alloys
FAPAFERRO ALLOY PRODUCERS ASSOCIATION
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The whole SA Ferro Alloy
Industry faces extinction
because of too high electricity
prices
A number of smelters have
closed down resulting in a large
number of direct and indirect
Job Losses
More smelters will close down
if this RCA application is
approved
Currently we have Surplus Electricity supply (Excessively High Industrial Tariffs)
More than 80% of worlds’ reserves of Manganese and Chrome
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FAPAFERRO ALLOY PRODUCERS ASSOCIATION
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FAPA Strongly Opposed to this
Outrageous RCA application
•ZAR 66.7 Billion equals a once off 33% Tariff Increase(200TWh sales) - even if implemented over a few years it willcripple the economy
• It totally defeats the purpose of a Multi Year PriceDetermination
• If any of this RCA is allowed Eskom will not change –Eskom need to change if they want to survive in a rapidlychanging environment
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FAPA Strongly Opposed to this
Outrageous RCA application
•Eskom made a profit of ZAR1.6 Billion over the period
•Most of this application is based on sales that did notrealize – Eskom will suffer even more sales losses
•Eskom is loosing their most important customers first
•Large amounts of job losses has already occurred
•Eskom already entered into a utility death spiral
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Eskom price Increase 27.5% 31.3% 24.8% 25.8% 16.0% 8.0% 8.0% 12.7% 9.4% 2.2% 5.3%
SA Average CPI 10.0% 7.3% 4.1% 5.0% 5.8% 5.8% 6.1% 4.5% 6.6% 5.6% 5.8%
Eskom price c / kWh 26 33 44 53 61 65 70 78 85 87 91
Electricity price at CPI 26 28 29 30 32 34 36 37 40 42 44
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Price c / kWh
Electricity Prices and Percentage Increases
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FAPAFERRO ALLOY PRODUCERS ASSOCIATION
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Eskom Tariffs are too High
250% over 10 years
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Eskom Tariffs are too High
Smelters in Norway, Finland and France pay
30% less than SA smelters for electricity
Smelters in China pay 10% less for electricity
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Eskom has entered a
Utility Death Spiral
Source: Eskom
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Eskom has entered a
Utility Death Spiral
Eskom’s Growth Expectations / Targets not realistic
Solar and Wind Generation is already cheaper than Eskom’s
Lowest Day time Tariffs (Payback on PV > 10 MVA < 5years)
More and more people are going partially or totally off the grid
This trend will increase rapidly with the development of lower
cost storage solutions e.g. Batteries
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Lower sales 67% of RCA
170
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2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18
Actual vs Forecast Sales Volumes
Actual Standard Tariff Sales Volumes (TWH) Forecast Sales Volumes
Source: NERSA
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Lower sales 67% of RCA
Since 2011 actual annual sales were decreasing – why use the
forecast ?
Everybody were asked to reduce their electricity consumption
by 10%
Everybody were told to use less electricity and become more
energy efficient
Eskom could not reach the forecast – even if they wanted
because there were constant Load shedding and load
curtailment.
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A number of Smelters Closed Down Recently
Eskom are loosing their most ValuableCustomers the Baseload Consumers
TATA, ASA, IFM, Machadodorp and Hernic in BR
Various Mn Furnaces ~ more than 60% capacity not in use
~ 2 439 GWh/a
Only Smelters with access to low cost ore are surviving
Most Smelters will not survive if ore is used at Market prices
We are destroying value by smelting which encourages the
shut down of smelting capacity and increased export of
unbeneficiated ore
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Low cost to provide smelters with electricity
Eskom make their biggest profits with Smelters
Higher voltages, Less distribution and Maintenance
costs
24/7 consumers of electricity with the ability to shift load
to assist Eskom in managing peak consumption periods
Why are Smelters Important
to Eskom and the Economy ?
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20 000
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23:00 02:00 05:00 08:00 11:00 14:00 17:00 20:00 23:00 02:00
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Summer & Winter load profiles
Typical Winter Day Typical Summer Day
Source: Eskom
Because of smeltersclosing
Peak is getting steeper.
Difference between peak and offpeak is growing ~ 13 000 MW
Eskom face Extreme
Technical challenges
Smelters reduce load during
winter eveningpeak ~ 700 MW
Winter peak is a problem with more
units in cold reserve
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23:00 02:00 05:00 08:00 11:00 14:00 17:00 20:00 23:00 02:00
MW
Summer & Winter load profiles
Typical Winter Day Typical Summer Day
Source: Eskom
Smelters consume electricity 24/7
Eskom loose sales with
baseload reductions
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Conclusion
• Eskom tariffs are already too high and we will see
numerous job losses if the RCA’s are approved
• Eskom’s sales will decrease at a much faster rate
with higher tariffs
• Eskom should start with drastic cost savings to turn
themselves and the economy of the country around