Johannesburg – Eskom will be financially better off selling electricity to ferrochrome smelters at a discounted rate of 62 cents per kilowatt-hour (c/kWh) than losing that demand through further mine and smelter closures, the power utility has said.
Eskom board member Clive Le Roux said the deal makes commercial sense because lower electricity demand pushes down the marginal cost of generating power, allowing the utility to offer the reduced tariff without burdening other customers.
“As the marginal price came down, that got us into a position where we could actually afford to support that price,” Le Roux explained during a winter outlook briefing. “We are better off as Eskom financially with this deal than we were before. There is no pass-through or recourse to other customers required.”
The comments come as Eskom enjoys a surplus of generation capacity following a dramatic improvement in supply after years of severe load shedding. The utility is now actively seeking new markets for its excess power.
CEO Dan Marokane revealed that major ferrochrome producers Glencore Merafe Chrome Venture and Samancor Chrome together represent between 12 and 14 terawatt-hours (TWh) of annual electricity demand at full production capacity. More than 60% of their operations were placed in care and maintenance last year amid high electricity prices and weak global demand, contributing to a noticeable drop in Eskom’s sales.
Marokane said the discounted tariff deal will help revive this strategic industry, which is critical for South Africa’s economy and export earnings.
“We are looking at how to respond to that… and after due consideration, we will be able to make some announcements in this area,” he added.
Eskom is also developing a broader framework to offer discounted electricity to energy-intensive users during periods of surplus supply. This framework, which still requires regulatory approval, could include existing manufacturers and even Bitcoin miners, according to Acting Group Executive for Distribution Agnes Mlambo.
The power utility currently has surplus capacity that is being curtailed and is looking to convert that into revenue by attracting new demand that can be flexibly scaled up and down.