Do You Have The Energy For Harvest 2008?
29 January 2008 by Kim Maxwell
With power cuts from national electricity firm Eskom a reality, Kim Maxwell considers the financial implications of an energy-strapped harvest period.
Henk Bruwer, chairman of Wine Cellars South Africa (WCSA), told South Africa's energy suppliers that wine cellars use more energy within a 24 hour cycle to reverse the effects of power load-shedding during hot midday temperatures, than if power had not been switched off. Representing 52 cellars that collectively produce 80 percent of South Africa's wine volumes, WCSA's technical committee met with Eskom and the local minister of agriculture late last week to make suggestions.
Their calculations showed that cooling harvested grapes for processing after hot load-shedding periods used more power ultimately than if load-shedding schedules weren't implemented at all. As the agricultural sector's biggest income earner, the wine industry has asked Eskom to pay serious attention. Their suggestion is for early morning or evening load-shedding to be implemented instead of midday power cuts.
Finding solutions for harvest 2008 is crucial as the wine industry represents South Africa's biggest agricultural earner, contributing R3.5m in terms of exports in 2007. "We can't estimate losses to the industry during harvest 2008, as we don't know the load-shedding frequency. Some cellars have load-shedding twice a day and others twice a week. It also depends on how many cellars have generators," said Bruwer. He added that power interruptions also have knock-on effects, affecting things such as the efficiency of refrigerated harbour warehouse facilities containing wines for export, for instance.
WCSA committee member and Robertson Winery MD and cellarmaster Bowen Botha, estimated that wineries buying generators have to shell out approximately R3m - 50% on the capital outlay and the balance spent on generator installation. Bruwer said generator costs vary according to power usage within each cellar: "Do you want to run the whole cellar A-Z on a generator, or only the essential cooling systems and administrative areas? To run the whole cellar, the cost implications are that every kilowat you buy is around R1,000. If you're buying energy for a 12,000 ton cellar, you would need about 500 kilowats to maintain the cooling system alone," he said of the cost implications.
"The capital cost of buying a generator in 2008 is about R1,000 for 1 kilowat of energy. An average 12,000 ton cellar spends 500 to 1500 kilowats as a capital cost on a generator," explained Bruwer. "But the running cost of a generator increases per unit, irrespective of whether you're renting or buying. So the bigger the generator and more kilowats required, the more it costs per kilowatt for energy. With 100 kilowats, it costs around R1,000 per hour. For every 200 kilowats, it costs around R3,000 per hour. That's also affected by how a generator is utilized in the cellar."
Bowen suggested to Eskom that they consider buying additional generators and installing them at wineries, to reduce electricity usage and wineries' costs. Bigger cellars' electricity bills are calculated on their peak usage requirements through the year, highest during the two-month harvest period. If Eskom installed generators, it would reduce wineries' electricity bills and save power annually as Eskom could switch from electricity to generators at will, and wineries wouldn't be locked into paying high electricity fees for energy they haven't used while they are reliant on generator power.
"If we run a generator with fuel, our normal cost of electricity will double. As a cellar, we pay on a maximum demand system, so whether we use it or not, my bill will be calculated on the forecast of what we would use for peak demand period during the two months of harvest. So if I only need 1,000kva, they can do an installation of a 2,000kva generator in my system and switch me off whenever they like to save power. And their generator will kick in," Bowen explained of his proposal. "Robertson Winery has a few generators, but not enough to give me full capacity. I need 2,500kva to run my business - we're producing 32,000 tons. We run a bottling operation as well."
Graham Beck's one generator at their Robertson cellar is focused on the grape-receiving area and bottling hall. "The generator has run since 16 January when we started harvesting in Robertson," reported cellarmaster Pieter Ferreira in late January. "Thanks to load-shedding, we've run generators for 18 hours within a week - using 77 litres of diesel per hour (R7.57 per litre). Our second Robertson cellar is standing still because we don't have the generator capacity to run it as well."
Production manager Louis Jordaan said they are about to install another generator in their Franschhoek white wine cellar. "We've got the load-shedding schedule and it's scary. It's going to affect Franschhoek in the morning and afternoon for over two hours a time," he said. "From a technical point, we've been harvesting ten days, and we've only measured the diesel costs. Generator running costs also include servicing and maintenance out in the field. These are specialised machines," he said. "Working on our 2006 generator purchase, it costs around R1,000 for every kVA of energy required - based more or less on the price we paid. That cost is excluding the connection and installation fee, and daily running costs. With the scarcity of generators available in 2008, that price has probably gone up to R1,500 per kVA."
Harvest 2008 is 10 to 14 days later than harvest 2007. Bonita Malherbe of Robertson Wine Valley said that with power cuts occurring practically every second day, most wineries in the area have considered renting or purchasing generators.
Alex Dale of The Winery of Good Hope believes wine producers who say they can't afford generators are kidding themselves as quality impairment of spoilage issues will push their costs higher. "Just as none of us has spare money to throw at generators, none of us can afford not to," he said. "We're crushing over 500 tons on site this year, which is relatively small (around 40,000 nine-litre cases). For the second vintage out of three, we've had to rent a generator. Our experience in 2006 showed potentially catastrophic outcomes, had we not had the generator on various occasions. We cannot afford to risk not being in control of ferment temperatures, pressing cycles or bottlings etc, each time the power is cut."
Dale estimates the cost at approximately R30,000 per month for generator rental, excluding diesel, if only supplying power generation to the winery and barrel cellar. "Given that we'll keep the generator for at least three months, we're looking at about R150,000 all inclusive (delivery, fuel and rental combined). That's a huge cash outlay, and the last thing we need to be diluting our resources with."
Cloof in Darling has also hired a generator at R15,000 per month. "Compared with the cost of lost production, it's a worthwhile expense. But nevertheless grudgingly done," said spokesperson Oscar Foulkes.
In the Hermanus area, Gordon Johnson of Newton-Johnson Wines confirmed that they were using a generator purchased in 2006. "I heard an amusing news brief on SAFM the other day: 'ESKOM cannot supply any information on load shedding schedules as they are currently without power.' I looked to see if it was April 1st," he chuckled. The winery's generator costs about R175/hour in fuel to run. "It's pricy but a lifesaver. We are able to run the cooling plants for both our tanks and grape refrigeration room, run the press, crush, pump and make espressos, all at the same time."
"At the moment we are dealing with 2-hour power cuts daily, so I shudder to think what one would do without a gennie. Bouchard Finlayson also bought one in 2006, Hamilton Russell is installing one this season, and I've had calls from Beaumont and Creation Wines about our suppliers. So I think it's a 'must get' for everyone in the area in 2008," he said.
If you have energy issues or solutions to share during harvest 2008, then email Kim at kimmax@worldonline.co.za.