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Co-generation Opportunities in South AfricaPublished by: Frost & Sullivan Published: Dec. 6, 2007 - 64 Pages Table of Contents
Abstract Research Overview
Market Sectors
The following technologies are covered in this research:
Surging Demand for Power Underlines Appeal of Co-Generation The South African co-generation market is currently in its early development phase. However, it is projected to experience significant growth - approximately 30 to 50 per cent per annum - over the next five to ten years. This expansion will be propelled by rising coal prices and by the fact that current energy demand is close to exceeding supply, creating a pressing need for additional sources of power generation. At the same time, end-user industries such as sugar, mining, chemical, and pulp and paper industries are looking for more efficient ways of converting their waste products into energy and providing biomass fuels for electricity producers. For instance, Tongaat Hullet, a leader in the sugar industry, is exploring a possible expansion into the biomass fuel industry. This trend is set to boost the prospects of the South African co-generation market since co-generation has the ability to use biomass fuels. The energy industry in South Africa is changing drastically; rolling black outs have forced the monopoly leader - electricity public utility, Eskom - to seek help. Eskom is committed to establish 900 MW of generation capacity by 2012. It is also anticipated to spend $22 billion on generation projects between 2007 and 2012, with $29 billion approved already. Even as Eskom has placed an ‘expressions of interest’ in co-generation projects, the national energy regulator of South Africa (NERSA) is working closely with Eskom and other stakeholders to establish a regulatory framework to develop the co-generation industry in the country. Promise of Higher Efficiency Bestows Advantage Even as Sizeable Start-up Costs Pose Barrier to Investments The growing prominence of less expensive, more efficient technologies paralleled by the rising price of fossil fuels will help create a highly lucrative market for co-generation in South Africa. "Co-generation has the ability to achieve up to 90 per cent efficiency, whereas current generation in South Africa has less than 40 per cent efficiency. With higher efficiencies, co-generation plants will be able to attain higher profit margins than regular sources of generation," notes the analyst of this research. "This could offset start-up as well as maintenance costs in the long-run." In addition to offering higher efficiencies, co-generation offers environmental benefits; it reduces the use of fossil fuels as well as conserves resources, resulting in fewer greenhouse gas emissions. Sizeable start-up costs are acting as a major restraint, hindering companies from establishing co-generation plants. Despite the offer of financial assistance from Eskom and the government, market participants are adopting a cautious approach. Joint ventures in the private sector could help minimise start-up costs. Furthermore, purchasing equipment in the grey market could, in some cases, alleviate start up costs by up to 30 per cent. Get Full Details About This Report >> |
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