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There have, however, been notable improvements in the general performance of the
Eskom generation fleet in the recent past. The average Energy Availability Factor (EAF) has
increased from 70% to 81% (June 2016), and the implementation of planned maintenance
interventions required to ensure the continuous reliability of installed infrastructure has been
consistently improving. Figure 2 above shows this improvement, which has resulted in a 0.8%
year-on-year increase in electricity generation as at April 2016.

Although there is no apparent threat of imminent power outages, the short-term outlook
for security of supply remains uncertain; and at periods of peak demand, the recorded
reserve margins are still significantly below the desired international standard of 15% of
total demand.

Figure 3 below shows that there has been a decrease in total energy consumption in
recent months. According to StatsSA, electricity distribution decreased 1.4% year-on-
year in April 2016; and compared with the previous three months, seasonally adjusted
electricity distribution decreased by 0.9% in the three months ending April 2016.

Figure 3 Energy Distributed/Consumed in South Africa

Source: StatsSA PROVINCIAL OUTLOOK NATIONAL OUTLOOK GLOBAL OUTLOOK GAP HOUSING INVESTOR NARRATIVE SPOT THE OPPORTUNITY PORTFOLIO INSIGHTS KHULISA NEWSLETTER ELECTRIC VEHICLES ENERGY SECURITY LOOKING AT GDP

While this step change could partially be attributed to the success of energy efficiency
campaigns, increased prices and the subdued South African economy can also be
directly linked to the decrease in electricity demand.

Diversifying our Electricity System
Energy security not only relies on the reliability of installed generation, transmission and
distribution infrastructure, but increasingly also on the diversity of the energy mix of the
region. Currently South Africa relies heavily on coal as a primary source of energy, with
over 90% of the Eskom generation coming from coal-fired power plants.

Different studies have shown diversity of fuels and technologies to be fundamental to
a properly functioning and cost-effective electricity system, as it assists in balancing
the benefits, risks and costs associated with producing electricity. In South Africa, there
remains an urgent need to diversify energy sources, thereby incorporating cheaper,
sustainable and cleaner alternative technologies.

QUARTERLY ECONOMIC BULLETIN 2016 19