Demand Side Management Strategy by ESKOM
Policy measure

According to UN CSD (2005), Eskom has been implementing its demand side management strategy (DSM) in South Africa through its collaboration with the Department of Minerals (DME) and the National Electricity Regulator (NER).


Eskom’s DSM strategy aims to influence the electricity usage patterns of electricity consumers. It comprises a dual approach: to help reduce demand for electricity at peak times by shifting load to off-peak periods without affecting business or reducing production levels, and to reduce overall electricity consumption reduction by installing energy-efficient equipment and optimizing industrial processes (UN CSD, 2005). 

Implementation

Eskom has adopted an ESCO methodology as the key delivery mechanism to implement the DSM process. Energy efficiency and load management projects are implemented via a third party (ESCO) and savings resulting from the intervention are shared between the host side, Eskom and ESCO in approximately equal proportions. Capital funds are collected through supply tariffs and administered by Eskom. (Department of Minerals and Energy, 2005)  

Challenges

“Although the ESCO industry is not new as a Demand Side Management approach, it is not fully developed in South Africa. Players do exist in the marketplace, but they are relatively few and many of them have limited experience. As a result a confidence gap exists in the market where customers are skeptical and reluctant to use this service delivery mode. This is exacerbated by an absence of a well-established performance standard and service provider certification and accreditation.” (Department of Minerals and Energy, 2005)

Outcomes

According to the Department of Minerals and Energy (2005), by 2004 there were 80 ESCOs registered and six projects had been implemented, together yielding a reduction in demand of around 1MW. Approximately 30 additional projects with a combined potential saving of some 140MW had been identified as well. In addition, approx. 300 MW worth of potential projects were in the investigation stage at the end of February 2004.


Since 1991 onwards, Eskom’s DSM programme “has grown into a concerted national electricity-saving effort officially initiated in the last quarter of 2002. In support of the government’s Black Economic Enterprises policy, a significant amount of R42.7 million was inverted in [ESCO’s] in 2004.” (National Business Initiative, 2006).


Moreover, it is acknowledged that the implementation of DSM not only fosters energy efficiency within a firm, but also creates jobs. A fact which is likely to have led to the birth or expansion of energy services companies in South Africa (Department of Minerals and Energy, 2005).

References

Department of Minerals and Energy (2005). Energy Efficiency Strategy of the Republic of South Africa. Available at: www.info.gov.za/view/DownloadFileAction?id=88503.


National Business Initiative (2006). Energy Efficiency Case Studies. Available at: www.nbi.org.za/Lists/Publications/Attachments/105/energy_efficiency_case_study.pdf.


UN CSD (United Nations Commission on Sustainable Development), 2005. South Africa Country Report. Fourteenth Session of the United Nations Commission on Sustainable Development.