While IT solutions and investments in new technologies could help Eskom cut costs and prevent further rate hikes, there would be no simple solutions for the troubled company.
Kieran McLoughlin, energy and utility manager at IBM Global Business Services, says many utilities globally are digitising processes and implementing automation, remote monitoring, control systems, communications and IT infrastructures. However, he adds, there are no straightforward solutions for the state-owned enterprise.
The National Energy Regulator of SA this week announced electricity tariffs would increase by 24.8% from April, and by another 25.1% next year, and by 25.9% the year after. The electricity power hikes are expected to affect every sector of the economy, and companies will again look to trim costs.
State-owned enterprise Eskom applied for the tariff increase to help foot a R385 billion bill to build new power plants as it battles electricity shortages due to a lack of investment in new capacity and an ageing fleet of power stations.
Eskom, which provides 95% of the country's power, has struggled with shortages since January 2008.
Diane Depuy, Maximo Utilities manager at IBM, says government's requirements need to be assessed. Solutions would have to provide what government requires from a transparency perspective to requirements on how the money should be spent and how the workforce is operating, says Depuy.
“When they look to decide if they're going to invest in new infrastructure, it's a strategy decision, which is going to have to happen on top of the solutions. There's not one answer,” says Depuy.
No simple solution
The regulator's hike adds another R85 billion to Eskom's revenue this year, R109 billion next year, and R141 billion the year after, as the parastatal seeks to build more power plants to prevent the lights from going out in SA.
However, notes McLoughlin, there isn't just one pattern to increase reliability, and funding would only really be effective with clear business strategies. He adds that, while intelligent grid or smart grid strategies are becoming increasingly popular, there are many different factors which need to be considered.
The intelligent utility network enables real-time operations, connectivity and the ability of companies to observe the electricity supply chain. This allows the utility to achieve increased reliability and efficiency from its assets and operations and improve service to its customers.
Substation blowouts and power outages, however, will continue to occur unless the utility gets its control strategy, and asset management, communication and connectivity strategies right, he says. The strategies would allow Eskom to optimise its investments and work from a common framework to ease management and control, he notes.
Systems, which would help manage assets and transportation, provide good connectivity and control strategies for control centres, along with modern distribution and management systems, are in place in many large utilities and could provide answers for Eskom, he comments.
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