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IT LOOKS as if South Africans have rallied around Eskom's call for more efficient use of electricity after 2008's rolling blackouts alerted them to supply constraints.

But the reasons for lower power consumption are more complex than this.

Latest Stats SA figures show that in September this year electricity available for distribution was a seasonally adjusted 19546 gigawatt hours (GWh), which compares with 19897GWh in September 2008.

According to a recent Eskom presentation, it sold 216561GWh of power in the year to March 2013 compared with 224785GWh in 2012, a decline of 3,7%, which was more than budgeted for.

Yet cumulative GDP growth from 2008 to 2012 was around 11%, which means SA has actually economised on its electricity consumption by more than the 10% that was called for at the time of the rolling blackouts.

A big contribution to lower demand has been weak industrial growth and steeply rising tariffs.

Mike Rossouw, chairman of the Energy Intensive User Group, which represents SA's biggest users, says electricity consumption by mining and industry is more than 10% below its 2007/2008 level. This is, first, because the world is still recovering from economic downturn in key economies like the US, China and Europe and second, because industry has put numerous energy-saving measures in place. For example, companies are using machinery more efficiently, implementing new technologies, or generating power from waste gases.

Last week ArcelorMittal SA hosted media at its Saldanha Steel mill to show what it has done to cut down on its energy usage. This will both reduce its energy cost and help mitigate the effects of carbon tax, when it is introduced. About 44% of Saldanha's costs, excluding depreciation, are for energy, mainly coal and electricity but also coke and liquid petroleum gas.

In 2012 Saldanha saved 10,6MW on average of electricity. Energy consumption has fallen from 25,1 gigajoules/tonne of steel produced to 23,7GJ/t. The value of energy saved in 2012 was R127m, which cost R21m over two years in capital projects.

ArcelorMittal SA at Saldanha, together with Toyota, Saint-Gobain, Gelvenor Textiles and PPC De Hoek, are taking part in the industrial energy efficiency improvement project, an international initiative to share knowledge. The IDC also has a green energy efficiency fund that promotes projects in the industrial sector, and there are various other schemes.

According to figures supplied by Eskom's senior GM for integrated demand management, Andrew Etzinger, between the 2008/2009 and 2012/2003 financial years a cumulative 2564MW was saved through thousands of projects at customer premises for which Eskom paid incentives. The total cost of this was R6,98bn.

This compares with about R100bn it is costing to build Kusile and Medupi power stations to generate about 4800MW. It means that through cheaper demand management, Eskom has saved about R50bn capital it would otherwise have to spend.

Etzinger says demand management is a very efficient mechanism. For Eskom it is a risk-free investment that creates more capacity without building big new power stations. It also provides flexibility.

Eskom's demand management projects range from, for example, assisting mines to install more energy-efficient pumping and refrigeration units to having businesses switch to more energy-efficient lighting. The power-saving measurements are carefully audited, and the entity's consumption is measured before the project begins and after it is completed.

Yet though demand management has proven itself, Eskom announced in mid-November it was suspending its standard offer and standard product incentive schemes. Etzinger emphasises that these programmes have not been terminated. A wide-ranging review, covering various market segments, is being undertaken in response to the utility's financial constraints.

"We are reviewing them to make sure we are spending our remaining funds on the best possible programmes," he says. "We have approached government for additional funding for these programmes."

The priorities will be projects that save electricity at peak time and those providing opportunities for local content. Eskom's objective is to stimulate local companies and black empowerment enterprises, for example lighting, fans and motor businesses.

Reduced demand makes it difficult to believe warnings that SA will face another power crunch in the near future. By the year to end-March 2019 Eskom expects to have added 11126MW of installed capacity to what it had in 2012/2013.

Rossouw says when Kusile and Medupi units start to come on line from 2015, there will be a surplus of electricity until around 2025. For SA's demand to exceed it would require very rapid economic growth of 6%/year or more.

Etzinger says Eskom has worked with the Energy Intensive User Group in making its forecasts. "The important issues are, first, that we need to take a long-term view, as it takes so much time to build a new power station. Second, we don't know what will happen in 10-15 years and we need to plan for a range of eventualities. Third, and this is critical, it's better to build too much capacity than too little," he says.

Charlotte Mathews

mathewsc@fm.co.za

ArcelorMittal SA paid for the writer's visit to Saldanha.