Electricity now a global challenge

Electricity now a global challenge
2008/04/18

Global demand for electricity is increasing rapidly on the back of ongoing economic development and security requirements, according to various sources. What is being done about it?
Two years ago, before rolling black-outs became a dreaded feature of life in South Africa, energy expert Professor Anton Eberhard warned that the efficacy of electricity supply planning and investments needed to be improved.
Writing in the UCT News (30 May 2006), Professor Eberhard, who leads the Management Programme in Infrastructure Reform and Regulation at the UCT Graduate School of Business, also emphasized the importance of developing sustainable demand-side management programmes.
"And," he adds, "as a contributor to the Energy Policy White Paper published by the government in 1998, I also warned that generation capacity would run out in 2007 and that the next investment decision was needed by the end of 1999 at the latest!"
Fast forward to 2008 …
Today, the country is in the throes of an electricity supply crisis that, while difficult to measure accurately, has had a detrimental effect on business confidence, says Richard Downing, an economist at SAACI (the South African Chamber of Commerce and Industry - formerly SACOB).
(At this point, it is interesting to note that Nicola Brooks of Moneyweb interviewed Ian Mckechnie, president of the South African Institute of Electrical Engineers on 17 January 2008. He told her that Eskom and government have known since 1990 that South Africa would run out of generating capacity by 2007.)
Commenting on SAACI's Business Confidence Index (BCI) for January 2008, Downing says business confidence has declined to its lowest level since October 2003. "The electricity shortages are of such a severe, sensitive and strategic nature that the magnitude in terms of real physical economic performance and capacity constraints has not yet fully entered the information base that shapes the business opinion and mindset," he says ominously.
He adds: "It is apparent that the shortage of electricity poses a severe threat to the production capacity for goods and services, since critical production time is lost due to electricity power shortages during working hours. Even if the loss in output could be limited to between 5% and 10% of GDP, it will be difficult to attain any growth in the economy in 2008. The severity of the electricity crisis has shifted all the attention towards keeping the economy functioning 'normally' on the supply side. The weaker rand against important trade and investment-related currencies bears testimony to a troubled business mood…."
Global electricity challenge
Global demand for electricity is increasing rapidly on the back of ongoing economic development and security requirements, according to various sources.
Among those countries treating the world-wide energy challenge as a priority is the USA. An example of its commitment to energy conservation is in President Bush's December 2007 signing into law of the Energy Independence and Security Act (H.R.6). According to Bill Williams, IEEE-USA's legislative representative for technology policy activities, the Act directs the Department of Energy to adopt a new national technical standard for interconnecting distributed energy sources to the electric power grid.
The Act also contains measures that will see the phasing out of inefficient incandescent light bulbs, the improvement of appliance efficiency standards and the implementation of other conservation measures, he adds.
In Australia, the New South Wales Government is spending an extra $85 million upgrading the central coast's electricity network, according to ABC News ("Health concerns over NSW electricity upgrade", 1 March 2008).
Other countries
Perhaps of little comfort to South Africans right now (particularly when they're caught up in their thousands in traffic snarls caused by power outages which render traffic lights useless) is that other countries are also experiencing power problems.
These include China, which according to Jody Clark in MoneyWeek (19 April 2007), is experiencing rising demand for electricity to the tune of 13% a year. He says that China's power plants – 78% of which are run on coal – are working overtime as a result. "And when you factor in that coal production in the People's Republic is not increasing significantly, it's no surprise that China has just become a net importer of coal after years as an exporter."
Switzerland is also troubled. According to swissinfo.ch, as the number of Christmas lights increases every festive season, fears are mounting that the country could face a shortage of electricity by 2020. ("Christmas lights spark electricity concerns" - 20 December 2007.)
Solutions
So what's South Africa doing to resolve the problem?
According to Luyanda Makapela in BuaNews (6 February 2008), the government launched South Africa's National Energy Efficiency Campaign in February and is working on energy-savvy proposals to include in the Electricity Regulation Act. Makapela says these proposals include increased use of solar power lighting and heating, replacing incandescent lights with energy-efficient bulbs, and promoting the use of creative systems lighting (CSL).
Regulations will be supported by electricity rationing, continues Makapela, who wrote in BuaNews a week later (11 March 2008) that three electricity experts from France had arrived in South Africa "to help Eskom define the country's most pressing needs in terms of power generation, capacity and maintenance."
Alterative power
Wind-generated power, believed by Wikipedia to have been used for grinding grain in Persia since 200 B.C, is the world's fastest growing new source of electricity, according to America.gov (www.america.gov). "Turning sunlight into energy has been a dream of inventors at least since 1861, when the first sun-powered motor was patented in France. Today, innovation, investment and technology advances have produced solar technologies that generate power and reduce stress on a critical electricity infrastructure."
In his article "Global Wind Power Capacity Reaches 100,000 Megawatts" for the Earth Policy Institute (EPI - www.earth-policy.org – 4 March 2008), Jonathan G. Dorn says that global wind power capacity increased by a record-breaking 20 000 megawatts last year. This has brought the world total to 94,100 megawatts: "enough to satisfy the residential electricity needs of 150 million people".
In Europe, he notes that 2007 was the first year ever in which wind power additions exceeded the additions of any other power source, including natural gas. "Europe's installed capacity currently totals 57,100 megawatts, and its new installations in 2007 accounted for 43 percent of total global installations. Wind-generated electricity now meets nearly 4 percent of Europe's electricity demand, enough to supply electricity to 90 million residents."
Germany, the world's frontrunner in total installed wind power capacity, generates more than 7 percent of its electricity from the wind, says Dorn. Spain ranks third in total installed wind capacity, with wind energy supplying 10 percent of its electricity, second only to Denmark in terms of percentage of electricity generated this way.
"France also demonstrated impressive gains in 2007, increasing its total installed wind capacity by 57 percent to 2,450 megawatts," he says, adding that the French government's goal is to increase installed wind capacity to 25,000 megawatts by 2020.
According to Dorn, the USA is the world leader in new installations and has been for the last three years. On track to overtake Germany as the leader in installed wind power by the end of 2009, the USA boasts wind farms in 34 states, the electrical output from which equal to that "from 16 coal-fired power plants and enough to power 4.5 million U.S. homes".
SA and the generator generation
Here in South Africa, going to bed earlier at the suggestion of Minerals and Energy Minister Buyelwa Sonjica, is one way of cutting back on electricity usage.
This sage advice seems to have had little impact on South Africans, however, judging by unflagging demand for generators. Whether it's because South Africans as a nation don't like going to bed early, prefer hot coffee to iced tea or have an aversion to the food in their freezers defrosting and thereby making them vulnerable to food poisoning, they've become the generator generation.
Carpe diem, though: leading generator producer and supplier Jetman warns that these Eskom-panaceas can be lethal in the hands of novice users and get-rich-quick installers whose commitment to quality and expertise is negligible.
"There are several considerations to keep in mind when choosing which set to buy, and where and how to install it," says Jetman founder and CEO Wayne Soekoe. "The recent power failures have resulted in many businesses and home owners rushing out to buy generators. Remember, however, that a generator set ("genset") is in itself a supply authority, which makes the dangers and risk of electrocution exactly the same as Eskom or municipal supplies. The change-over requirements between the two power sources are crucial to the safety of the installation – incorrect connections are potentially fatal."
He continues: "There are many different generators on the market so get a qualified electrician to advise you on the best one for your needs. Heating appliances such as stoves, heaters, dishwashers, geysers, kettles, tumble dryers, toasters and hairdryers draw a lot of power while PCs and electronic equipment don't use much power but are voltage-sensitive. If the generator does not deliver a constant voltage and there are dips and spikes in the system, equipment is likely to suffer damage. It's therefore a good idea to initiate some internal load shedding when using a generator so switch off some lights when you want to boil the kettle."
"Single-phase generators work for most home-owners and motors of five horsepower or less. Industrial or commercial applications usually require three-phase power, which is also better for motor starting and running."
Finally, his advice for those faced with choosing gas or diesel-powered generators, is that diesel is the answer to longevity and lower operating costs. "Today's modern diesels are quiet and normally require much less maintenance than comparably-sized gas (natural gas or propane) generators," Soekoe explains, adding that fuel costs per kW produced with diesels are normally 30 to 50 percent less than gas units. – Ingrid Olivier
For more information contact SACCI at (011) 446 3829 or Wayne Soekoe of Jetman at (012) 252 0338, or send an email. Click here to visit the website.

Electricity now a global challenge

'House price recovery ahead'

 

The property market will remain tough for the next 18 months, but should pick up thereafter, predicts Andrew Golding.

'House price recovery ahead'

SA car trade 'hit by a tsunami'

 

"It was like being hit by a tsunami," is how Combined Motor Holdings CEO Jebb McIntosh describes what happened to the motor trade in mid-2007.

SA car trade 'hit by a tsunami'

Odds in favour of rate hike

Finance24
Wednesday, 16 April 2008 22:50:00

There is a 70% chance of another 50 basis points interest rate hike and an even chance of two additional hikes before year-end, says an economist.

Odds in favour of rate hike

Mbeki 'not man for Zim job'

 

The Zimbabwe Congress of Trade Unions says Thabo Mbeki is no longer a suitable person to mediate in the Zimbabwean crisis.

Mbeki 'not man for Zim job'

 

High-rise future for Muizenberg

High-rise future for Muizenberg
2008/04/17

A high-rise future envisaged in City of Cape Town documents for Muizenberg, on the False Bay coast, has caused consternation amongst residents, who fear it will destroy the coastal town's 'sense of place'.
The City of Cape Town's draft coastal development guidelines have been issued for public comment and are currently being discussed at sub-council meetings.
Intended to set a framework for coastal development along the 307 kilometres of coastline that fall under the city, the document notes considerable "inappropriate development" in recent years.
Population growth, city expansion, a development boom and strong national economic growth are identified as reasons for increased pressure on the coastline.
The coast is divided into different categories, including danger areas, new development areas, secondary and primary growth areas.
Muizenberg, along with Table View, Milnerton, the CBD, Sea Point, Camps Bay and Strand are classified as primary growth areas.
All of these areas are identified as appropriate for "significant growth and densification due to their very good access, high amenity value and current or future population concentration".
As such, envisaged development includes a mix of multi-storey flats, limited to 10 to 12 floors along the beachfront, but higher behind this row.
Muizenberg already has one high-rise apartment building in the Cinnabar Building, but many residents view it as an eye sore.
At a public participation meeting on the draft guidelines held at a Fish Hoek sub-council meeting last Friday (subs: 11/04/2008), Muizenberg resident John Cartwright said while "dreadful and feeble town planning" under apartheid had made densification essential, the historic and heritage value of Muizenberg was underestimated.
He said to encourage high buildings would cause "severe damage" to the heritage environment, referring to existing "horrors" such as the Cinnabar Building. Muizenberg was not as obviously special as nearby Kalk Bay, he said, but what there was should not be damaged further.
"It is actually a treasure and something that should be taken more seriously. The principle of densification is good but there should be sensitive ways of doing it."
Bowen Boshier, representing the Zandvlei Trust, an environmental organisation, said Muizenberg had a "tremendous sense of place". High rise buildings would remove mountain views, which would in turn negatively effect the sense of place.
"I hear repeatedly the word compromise, but developers do not compromise. They are compromising our life away and it is not necessary. I call on councillors to put a lot of thought into this," he said.
The document is likely to spark controversy in other areas. Melkbosstrand, Hout Bay, Kommetjie, Fish Hoek and Gordon's Bay are classified as secondary growth areas. This would see three-storey buildings on the beachfront, but higher buildings up to five storeys could be built behind this row. By Patrick Burnett

High-rise future for Muizenberg

 

How fractions work in USA

How fractions work in USA
Property 24 2008/04/17

Only one South African delegate attended the recent World Fractional Ownership Conference held in San Francisco, USA, and came back with info on how they do things there.
Thys Geyser, Chairman of the South African Association of Fractional Intermediaries (SAAFI) and Director of Pam Golding Fractional, was the only South African delegate to attend the recent World Fractional Ownership Conference held in San Francisco, USA, hosted by the world's guru of fractional ownership concept Richard Regatz. Says Geyser: "This conference is committed purely to fractional ownership, and was attended by 750 delegates with 70 speakers over the 4 days, representing the intellectual property of the world on fractional ownership."
Before attending, Geyser had assumed that South Africa lagged the US market by 3-4 years – given the fact that they have had fractional ownership for 12 years and South Africa only for around 4. "I found this not to be the case. In terms of the evolution of the industry in South Africa, we have caught up with the US in a big way and are almost on a par with them already, and are very close to the cutting edge."
It was also found that in terms of legislation and industry regulation in the USA and South Africa, we currently have similar issues. "In the US they define the market by equity-based products (fractional ownership, private residence clubs, etc.) – and non-equity or time-based products (timeshare, destination clubs). The general public get confused about the two, but there is a very clear line between them - you are either buying equity, or you are buying use (time). The fundamental underlying issue of fractional is that it is equity-driven. The biggest difference here is that the US has perfected their legislation and the industry is tightly governed, whereas in South Africa the legislation still lags this growing industry.
"The timeshare people in the US suggested that the fractional ownership folk affiliate with them. However, the fractional delegates chose not to do so, although they do subscribe to the timeshare legislation. They feel that they do not sell time, they sell ownership, and they want their own body and specifically don't want the close association. The situation is exactly the same in South Africa, and this issue is currently on the table.
"In South Africa there is TISA (the Time Share Institute), a self-regulating body representing timeshare and applying timeshare legislation, who say they are already regulating with proper legislation for timeshare, and have suggested that fractional ownership members join with them. The fractional market, currently without dedicated or specific fractional legislation, but represented by SAAFI, want to be compliant - but we don't necessarily want to be part of the timeshare fold. We wish to seek our own avenue, and hence have engaged with the Department of Trade and Industry. By choice and association, we would rather have our own association for joint ownership of property – whatever that property may be."
Geyser has brought back to South Africa pointers that he is now implementing among the SAAFI membership. "In terms of legalities – in the US, at the inception of a fractional ownership offering, they spend an enormous amount of time making sure that every product is registered with the regulator and that all related aspects are examined.
"In the past in South Africa, members could affiliate with SAAFI, becoming an accredited SAAFI member, and we then expected them to comply with our regulations. We have changed this, with immediate effect since our recent SAAFI Executive Board meeting. There will now be three different categories of membership – developer; broker/sales company; or management company. For every specific project undertaken, the member must submit legal documents with a list of compliance criteria, and demonstrate that everything is compliant at the outset, from their legal documents to their marketing promises. If they comply, SAAFI will approve the project, after which members can take it to the consumer."
All existing members of SAAFI will have to reapply, and new members will have to ensure that they comply with all requirements both as a company and ongoing on a project by project basis, which is the way it works in the USA. Adds Geyser: "We are a self-regulating industry, and this will further strengthen our endeavours to protect the consumer."
For more information contact Thys Geyser of SAAFI on 083 452 4774 or 021 912 1541 or email thys.geyser@pamgolding.co.za.
SAAFI have business to business seminars for anyone entering the fractional ownership industry to discuss the role of SAAFI and what we can for them – go to www.saafi.co.za or email info@saafi.co.za.

How fractions work in USA

Huge potential in African property

Huge potential in African property
Property 24 2008/04/17

In terms of property, Africa is the last true emerging market, outperforming the Pacific rim countries – but there are challenges.
According to Ian Fife, property editor of Financial Mail, Africa is the last true emerging market. "Asia is a technically emerging market but with property returns that are not worth writing home about. The same as Russia really. The one market that hasn't been covered is Africa. None of the major institutional investors are focused on Africa. That has to spell opportunity," he says. "Real estate opportunities are huge in Africa but they come with obstacles like a lack of infrastructure which is needed before investment can take place, but well worth the effort."
Mike Flax, founder and CEO of Spearhead concurs that, "There are a lot of opportunities in Africa but it is hamstrung because of land title issues and corruption etc. Therefore it is difficult to become a real player in Africa."
According to property economist Francois Viruly, Africa is the dark continent.
"In Africa, with the number of people and growth in population, the lights need to go on. Then the property market will get the infrastructure it needs," says Viruly. "Instead of one man one vote, economic development must get us to one man one volt.

"According to Gross Domestic Product, Holland looks very big while most of Africa disappears off the map.
"The moment that changes property opportunities start arising. Africa is not a continent where nothing is happening. There are a number of countries exploring it at the moment. It is a continent with commodities that China and India want. 20% of US oil comes from the African continent. That must offer opportunities."
Nick Tyrrell, head of Research and Strategy at JPMorgan's European Real Estate Group, says that from a European or US perspective there is a lot of opportunity for strong returns in African real estate. "But we also see risky, opaque and inaccessible markets with significant exchange rate risk that is near impossible to hedge and worry, maybe unfairly, about red tape, political risk, and corruption," he says.
"From my trip to Cape Town I learned that most of these things are not really true of South Africa. But South Africa on its own is just too small a market that is too far away from London or New York to be worth the cost of investing in by itself.
"I came away from Cape Town convinced that South African property specialists should be using their expertise not to take South African capital into Europe and the US, as seemed to be the theme of the recent IPD/SAPOA conference, but rather to attract European and US capital into Africa by exporting South African methods and know-how to the rest of the continent."
Hyprop Investments' CEO Pieter Prinsloo disagrees. "We need our methods and know-how locally – there's enough growth in South Africa to keep us occupied," he says. "In Africa there are constraints like a lack of infrastructure and a consumer base. Effectively one works from a low-income base."
Patrick Sumner, head of Property Equities at Henderson Global Investors, says his team is prepared to take on development market risk. "However, because the Real Estate Investment Trust (REIT) structure is not operational in South Africa and because local institutional funds are crowding out foreign investment, I don't feel there is currently opportunity in South Africa," he says. "On the positive side though there's information on South Africa's successes. IPD numbers need to be promulgated abroad and South Africa needs to continue to work hard on bringing REIT legislation in."
According to Colin Young, head of Institutional Asset Management at Old Mutual properties, "China is number one in attracting foreign investment, with Africa being fifth".
"Size does matter when it comes to attracting foreign capital," he says. "No one else is punting Africa or specifically South Africa - we need to do it!"
Lisa Forshey, a general manager of Absa Bank limited, concurs with Young that the focus has to be on size. "We have to focus on getting South Africa's stock level to a place where it can attract the money," she says.
The good news is that despite these constraints, Malcolm Frodsham, director of Research at IPD UK, says that property investors are searching for opportunities and that South Africa is well placed to be a growth hub. - By Kara Michaels

Huge potential in African property

WC restaurant sold to chain group

WC restaurant sold to chain group
2008/04/17

A restaurant in the centre of Stellenbosch was recently sold to a rapidly expanding franchise chain.
Tarragon Bistro in Stellenbosch was sold to the franchise chain Simply Asia, which in coming months is to launch a further five such outlets nationally. With 14 Simply Asia restaurants already successfully in operation, 11 are situated in the Western Cape.
"Being situated in historic Dorp Street in the heart of Stellenbosch, and with no other restaurants of this kind in the area, they are well-placed to cater for locals, including the numerous students in this university town, as well as tourists," says Joep Schoof, consultant for Pam Golding Commercial's (PGC) specialised Restaurant Division.
"Among other stock, we are currently marketing a variety of restaurants ranging in location from Camp's Bay to Muizenberg to Stellenbosch and the Winelands and other areas of the Western Cape. Buyers are wide-ranging, from locals to those in Gauteng and international investors, including those already established in the industry.
"While it's true that value for money is a key issue for restaurant, clientele, personal service and attention are other key ingredients. Successful restaurants are those where the clients feel at home - they receive excellent and personalised service - and yes the food must be good.
"In Cape Town, the successful restaurateurs are those who provide all the above and who cater primarily to please the local clientele - with the additional patronage of the tourism market an extra cherry on top. Tourism fluctuates, so if you don't hook in the locals during winter, for example, you will not fare well during a period when tourism wanes."
He says the fresh bakery/coffee shop concept where consumers can see the real product being produced, is increasingly popular. "They're looking for fresh produce and organic ingredients in a back to basics search for the best possible flavour."
From an investment perspective, Schoof says an efficient and successful operator can make back the original investment in two-and-a-half years.
"There are sound opportunities out there. However, the industry faces a new challenge in terms of the electricity shortages. New developments are providing for such contingencies in the planning stages and restaurateurs who do not make provision for energy supply need to plan forward," he adds.
For more information contact Joep Schoof on 084 415 1116 or send an email.

WC restaurant sold to chain group