ESKOM – Crisis And Opportunity

Amidst Covid-19, an oil price war and financial market chaos, the CSIR (Council for Scientific and Industrial Research) has updated its data on load shedding. By Friday 13 March 2020, South Africa had already experienced 88% of the load shedding that it endured in the whole of 2019. I will write it again: 11 weeks into 2020, South Africa has experienced 88% of all the load shedding it endured in the 52 weeks of 2019.


AN ANIMAL CALLED EAF (ENERGY AVAILABILITY FACTOR)


The reason for Eskom’s insufficient supply is the poor performance of its plant as measured by EAF – a measurement of how efficient Eskom’s power stations are. This has declined from over 88% in 2000 to 67% in 2019. The CSIR expects it to decline further to 64%. (There was a brief period in January when it was sitting at 61%.)


The IRP (Integrated Resource Plan), which is the Holy Grail of energy planning, assumes an EAF of 75%. Eskom’s own forward planning assumes an EAF of more than 70%. It is certain that none of these 70%+ figures will be reached, primarily for two reasons.


Firstly, more than 50% of the power stations are now 37 years old and have been poorly maintained. Old equipment poorly maintained cannot deliver high EAFs.


Secondly, there are serious design faults with both Medupi and Kusile, preventing these two plants from operating at capacity. Eskom CEO Andre De Ruyter has revealed that boilers at both Medupi and Kusile must be modified by adding 12,5 metres to their height to reduce exhaust steam temperatures. The boilers are currently 130 metres tall and the temperature of the exhaust steam is 128°C, which is too hot and damages the equipment. The units can therefore not be run at full capacity. Each of the 12 generating units at Medupi and Kusile will have to be switched off for 75 days to add the 12,5 metres – that is 900 days of being switched off!


Poor quality coal also affects the EAF.


MAINTENANCE MANTRA


To improve its EAF, Eskom has adopted a ‘philosophy maintenance’ policy. The programme involves regular maintenance and refurbishment of equipment as prescribed by the original equipment manufacturers.


Ironically, more maintenance means more load shedding. Plants must be switched off to be maintained. De Ruyter therefore warned that load shedding will be with us for at least 18 months. He also warned that the maintenance programme must be supported (ie load shedding endured) or the country can expect regular load shedding of 8 000 MW (stage 8) by mid-2021 due to a further declining EAF.


Some electricity commentators are more sceptical than De Ruyter and allege that load shedding will ‘carry on for five years’. The CSIR says it can take two to three years to end load shedding, depending on what decisions are taken (my emphasis). Those decisions relate to investment and the way the country organises its electricity industry.


NEW CAPACITY AND A NEW WAY OF DOING THINGS


The only permanent answer to load shedding is new investment in new capacity. That, in turn, requires a wholesale re-organisation of the electricity industry in South Africa.


In what is probably its most important political decision to date, the Ramaphosa government (in power for 25 months this past weekend) has chosen exactly those options − new investment and reorganisation. The relevant policies were published in October 2019 already and reiterated by the President in December – regrettably most people missed it.


The government’s energy plan, the IRP, envisages that 30 000 MW of new capacity will be procured by 2030, and 11 000 MW of old Eskom capacity will be closed. Nearly half of the new capacity (48%) will come from wind, 20% from solar, 10% from gas, and the balance from hydro, storage and coal. After December’s stage 6 load shedding it was decided that a further 2 000 MW of emergency power will be procured, pushing the total to 32 000 MW.

 

Also published in October was the Eskom roadmap, which confirmed the break-up of Eskom into three entities:generation, transmission and distribution. In February, Minister of Mineral Resources and Energy Gwede Mantashe,who is significantly also ANC chairman and an ex-unionist, declared, ‘There is no fight over that now, we all agree that there will be generation, transmission and distribution, each with its own board...’. The deadline for establishing the boards is 31 March.

 

The consequences of these policy changes are huge.

 

Firstly, it means more investment. To date, 6 000 MW has been procured from independent power producers. That brought investment of R220 billion (42% of which came from foreigners). If 6 000 MW brough