The need for more power and water means the South African government is beginning to look more favourably on new dam projects, as Neil Ford explains

IT is now almost a year since the South African government published its plans for the water sector for the next 20 years. Now that the water and power industries have had time to digest the details of the new National Water Resource Strategy (NWRS), it appears that the strategy could reignite interest in hydroelectric power schemes, as well as highlighting the need for increased water storage capacity. Although the 1998 National Water Act set out the government’s position in theory, it was only with the publication of the NWRS that its full intentions became clear. Both state owned and private sector investors should now have a much better idea of the main investment priorities over the new few years.

Although the NWRS has not settled the debate over public versus private sector management of the water sector, it does set out ‘the legally binding framework within which the water resources of South Africa will be managed in the future’. Of great interest to the power and water sectors is the strategy’s provision to set up new catchment management agencies (CMAs). The realignment of water authority boundaries had been anticipated since the political reorganisation of the country following the end of Apartheid. The new agencies will manage the use of water resources at the regional level.

The Ministry of Water Affairs and Forestry (MWAF) and the CMAs will offer 40 year licences to any individuals or organisations seeking to develop water sources in the country. Companies seeking to develop hydroelectric power plants or new bulk water reservoirs will be required to demonstrate that their projects will use water efficiently. Even organisations holding existing rights to water resources may be required to apply for licences.

The Department of Water Affairs deputy director general of policy and regulation, Barbara Schreiner, says: ‘We have the powers to call for compulsory regulation if we identify a particularly water stressed area or where major inequity issues need to be addressed. In this case we could ask for all water users in that area to apply for licences.’ Eye-in-the-sky satellite technology is being used to identify illegal or inefficient water use but this is mainly aimed at irrigation projects, rather than bulk water users.

The South African Minister of Water Affairs and Forestry, Ronnie Kasrils, who introduced the NWRS to the National Assembly, did pour some cold water on the suggestion that many new dams would be built. He argued that past investment had focused too heavily on developing new reservoirs at the expense of developing existing resources, and added that the government’s priority would be to re-allocate water ‘from low benefit uses to higher benefit uses over time’, in obvious reference to high agricultural consumption and the lack of water supply to certain areas in the country.

However, he has since put his weight behind the campaign for new dam creation and has attacked environmental groups which oppose the new Berg river dam, which is primarily designed to supply drinking water to Cape Town. He said: ‘As we face the challenges of climate change, I am struck by how poorly Africa is developed to cope with it. In the US, they store in dams and reservoirs 6150m3 of water for every American. In South Africa, we store only 746m3 per person; in the rest of Africa, it is only one tenth of that, 40m3 per person in Ethiopia and just 4m3 in Kenya. Yet our climate is more uncertain, arguably justifying more not less storage.’

The MWAF predicts that total existing water resources and those currently being developed should exceed total water demand until 2025, providing efficiency targets are met. However, the ministry predicts that 11 of the country’s water management areas will face shortages by that date. The NWRS proposes the construction of desalination plants to increase supply but although desalination production costs are falling, they are still substantially higher than those in traditional reservoir supply.

New hydroelectric schemes?

While the water sector and the NWRS are likely to provide some incentive for new dam construction, the growing power needs of South Africa as a whole and particularly the country’s industrial heartland around Gauteng province should provide just as great a boost. As Tables 1 and 2 demonstrate, relatively little new hydroelectric generating capacity has been brought on stream since 1990 and even those plants which do exist comprise only a small percentage of total generating capacity.

The biggest boost for the hydroelectric sector could come from South African state power company Eskom, which has traditionally focused its attention upon coal-fired power plants. Ehud Matya, the managing director of Eskom’s generating division, which is expected to be spun off from the parent company as a separate organisation over the next few years, announced last year that future new plant construction could be dominated by gas fired and hydroelectric plants. The South African government is committed to reducing the country’s reliance upon coal, and Eskom has agreed to abide by the government’s aim of reducing the proportion of electricity generated from coal from the current level of 88% to 70% by 2025.

Nevertheless, coal remains by far the cheapest option and Matya himself admits that electricity produced from gas will cost two to four times more than that produced using coal. In addition, tens of thousands of South Africans are employed in the country’s coal mines and so a political decision to reduce demand would not be popular, particularly as any substantial dash for gas would require importing gas, probably from neighbouring Namibia. On balance, it is unlikely that coal-fired plants will be closed but the government could still achieve its target by ensuring that a large proportion of the new generating capacity that is brought on stream over the next two decades is non-coal and a sizeable proportion of this is likely to be hydroelectric capacity.

Hydroelectricity is certainly more expensive than power produced by coal-fired plants but South Africa’s need to increase its water storage capacity for domestic, industrial and agricultural supply provides further economic and strategic incentive for new dam construction. Most potential reservoir sites in the country have already been developed but relatively few encompass hydroelectric schemes. However, the government has identified up to 8000 small hydro sites, all with projected capacity of under 100MW and mostly lying in KwaZulu-Natal and the Eastern Cape in the south of the country.

There is also some potential for more pumped storage power stations, as well as the existing 400MW Palmiet and 1000MW Drakensberg plants. They are useful in coping with the growing swings in demand which are resulting from South Africa’s electrification programme and the Drakensberg (pictured above, left) and Palmiet plants are also used to transfer water from one catchment area to another.

Cross-border power

Even if Eskom and the South African government decide to go down the path of increased hydroelectric power production, the growth in power trading on the continent of Africa as a whole could discourage new plant construction in South Africa itself. The Southern African Power Pool (SAPP) is already in place and improved stability in the Democratic Republic of Congo has raised hopes that the hydroelectric potential of the river Congo could finally be developed, largely for export to South Africa.

The creation of a unified African power pool has been placed at the heart of the New Partnership for Africa’s Development (Nepad) the much heralded economic development plan for the continent. According to Ben Munanga, Eskom Enterprises regional manager for Central and North Africa, a pan-African grid could be in place by 2010.

An increasing number of voices within the country are backing hydroelectric investment. Richard Worthington, the author of a recent University of Cape Town report on the country’s renewable energy policy, has appealed to the government to consider the environmental and financial advantages of hydroelectric energy.

He argues: ‘We don’t need to rely on the prospects of carbon financing to support a more responsible approach to energy development. Targets should not be based on what the advisers from the World Bank’s Prototype Carbon Fund assure our officials can be achieved through their projects, but rather on the public benefits that can be achieved through best practice and full cost accounting.’ Whether the government will follow his suggestion of introducing a pollution tax to narrow the cost gap between coal fired and hydroelectric production remains to be seen, but the vested interests of the coal industry at last seem to have a fight on their hands.
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