Strategies to revive DSM mine pumping projects under the new ESCo model

Abstract

South Africa has a highly energy intensive economy dependent on a generation fleet of mostly ageing coal-fired power stations struggling to keep up with demand. The mining industry, and specifically mine pumping systems, is one of the major contributors to this energy intensive economy. The mining industry was responsible for approximately 14.3% of Eskom's total electricity sales for the 2015/16 financial year. Pumping systems, meanwhile, are responsible for nearly 14% of the total electricity consumed on a mine. In an effort to alter the consumer demand profile, Eskom introduced the Demand Side Management (DSM) programme in 2004. One of the initiatives forthcoming from the DSM programme is the energy service company (ESCo) model. The ESCo model entails Eskom contracting ESCos to implement DSM projects with the aim of reducing the electricity consumption or electricity cost of client systems. One such system commonly targeted for DSM projects under the ESCo model is mine pumping systems. Unfortunately, DSM mine pumping projects tended to deteriorate as a result of inadequate maintenance. A contributing factor was that the initial ESCo model only obligated ESCos to sustain projects for three months. Mine personnel were not equipped to sustain the projects thereafter; resultantly, the performance of a large number of the projects deteriorated. There is therefore an opportunity to revive these projects to achieve electricity cost savings. In 2015, Eskom introduced fundamental changes to the ESCo model. This included a mandatory three-year sustainability period for all DSM projects that ESCos now have to complete. The funding available to ESCos has also been reduced. The focus of this study was thus to develop a sustainable project strategy to assist ESCos in reviving DSM mine pumping projects under the new ESCo model. This study was verified and validated by implementing the sustainable project strategy on two case studies within the same mining company. The implementation of the sustainable project strategy proved to deliver positive results over a three-month period. Case Study A achieved a R785 000 electricity cost saving, and Case Study B achieved a R2.53-million electricity cost saving during this three-month period. If the performance of these two cases studies are extrapolated to a year, this would result in an electricity cost saving of R9.9-million for the mine.