Eskom group chief executive André de Ruyter has admitted that the state-run power utility was ‘not where we want to be in terms of performance’ and that power supply shortfalls can be expected for another five years. Translation: Buy candles and kiss meaningful economic growth for the next few years goodbye.

De Ruyter made the remarks during a virtual briefing on Monday delivered by himself and other top Eskom brass. As the briefing took place, load shedding was taking place in the area around Megawatt Park.

“While there is an improvement on some aspects of the generation plant due to concerted efforts by Eskom employees, we are not where we want to be in terms of performance. The ultimate aim is to improve performance to reduce the risk of load shedding. The enormity of this task cannot be overstated,” De Ruyter said.

“Eskom has to reiterate, there will be a shortfall in supply of electricity of approximately 4,000 megawatts over the next five years as announced by President Cyril Ramaphosa,” De Ruyter said.

That is half a decade that South Africa simply cannot afford, if meaningful economic growth and development are to be achieved. It’s certainly no way to sell your economy as an investment destination.

Eskom finds itself caught in many binds. The utility has to take generation units offline for maintenance, which combined with unforeseen outages often triggers the need for load shedding. But if maintenance is not done – and done properly – things will get worse down the road. The company also has to continually beg its customers not to use too much power, in effect telling them not to buy too much of its product. That is clearly a bad business model.

“Maintenance in itself will not be the panacea to solve load shedding. What we need is additional generation capacity,” De Ruyter said.

That makes sense and it is not in Eskom’s hands – the government needs to lead that charge. There has been a lot of talk on that front from the Department of Mineral Resources and Energy, but little new generating capacity has been plugged in, to date. If bottlenecks can be reduced, the mining sector alone says it can bring two gigawatts in new renewable energy projects online. There is also a stated push announced in 2020 by the government to procure two gigawatts of additional emergency power, but with so many regulations and strings attached, one is left with the impression that there is no sense of urgency.

So for now, while it may not be a panacea, maintenance is the best option South Africa has to keep the lights on.

“The unreliability of the ageing fleet, with an uncertainty of about 6,000 megawatts of capacity at any given time, will remain until the reliability maintenance programme is able to address the historical maintenance backlog. The power system remains vulnerable and volatile with the risk of load shedding significantly reduced after the completion of the reliability maintenance by September 2021,” Eskom chief operating officer Jan Oberholzer said.

It was also revealing to note that the presentation showed that since 1 April 2020 – the start of the financial year – load shedding has been triggered on at least 43 days compared with 46 days for the financial year which ended on 31 March 2020. This is in part because of the surge in maintenance, but the backdrop was also a 51% decline in gross domestic product (GDP) in the second quarter of 2020. Things would have been worse without the effective collapse of the economy. To return to no load shedding soon would require another economic meltdown.

Then there is the small question of the climate crisis and Eskom’s contribution to it via its dependence on coal. Eskom cannot afford the mitigation measures needed to reduce the carbon footprint of its ageing fleet.

“We think there is a confluence of opportunities here for South Africa to accelerate the decarbonisation of its generation fleet by accessing green financing… as part of a just energy transition,” De Ruyter said. “Our average cost to mitigate one ton of carbon is $7. In Europe, that cost is in excess of $400. So it pays the Europeans, because carbon knows no borders, to rather approach a country like South Africa and assist us to decarbonise our economy.”

For the moment, Eskom needs coal and there is enough of that at least.

“Coal stock levels continue to improve, with average coal stock at 52 days by the end of February, excluding Medupi and Kusile. There is no power station below the Grid Code minimum requirement of 20 days,” Eskom said. BM

South Africans can expect to be hit hard by load-shedding before the end of June 2020, according to energy expert Ted Blom.

Blom told MyBroadband that as demand increases due to heavy industry, such as mining and smelting coming back online, Eskom could face problems from as soon as next week.

By the end of June, increased demand due to the winter season paired with a lack of new maintenance and problems associated with reactivating disabled power units will result in heavy load-shedding, Blom said.

“The moment that the full demand comes onto the system, you will see fireworks second to none,” Blom said. “I’m expecting transformers to blow up and boilers to malfunction.”

“I would not be surprised if we see the worst load-shedding we have ever seen by the end of June.”

Backup power UPS Solar power battery backup

Surge in demand due to mining and smelting

The national COVID-19 alert level has been reduced to level 4, which means that industries such as mining and smelting are beginning to come back online.

Blom said that as restrictions are relaxed and demand increases, Eskom will need to reactivate generation units which it has turned off due to the significant drop in electricity demand caused by the national lockdown.

“In the meantime, Eskom has not conducted extensive maintenance on its infrastructure,” he said, adding that some of the equipment, such as the large boilers in Eskom’s power stations, can take days to return to operation after a cold start.

He estimated that the national demand has fallen to around 10-12GW, primarily due to the lockdown requiring heavy industry to shut down temporarily.

Mining and smelting account for an additional 10GW of demand, and with these industries coming back online and more people returning to work across the country, he said Eskom will be hard-pressed to meet demand.

“Currently, Eskom is in the worst shape in its history,” he said.

Blom added that he expects Eskom to seek another government bailout later this year to fund its much-needed overhaul.

We are conducting maintenance – Eskom

When asked about the power utility’s ability to meet the electricity demand of the country during COVID-19 alert level 4, Eskom said it was too early to note an increase in demand.

“Businesses have only resumed operations yesterday, and many of them will be ramping up to full capacity during the course of the week,” Eskom said.

“It is too early, therefore, to say how the demand has changed, based only on yesterday.”

The power utility added that it has continued to conduct maintenance since the lockdown was first implemented, preparing for the increased demand after the lockdown is lifted.

“What needs to be stated clearly is that Eskom is able to meet demand, and as we have been communicating since the lockdown was implemented, we have ramped up maintenance in order to better meet demand post the lockdown,” Eskom said.

Blom disputed that Eskom would be able to supply enough power to meet electricity demand after the lockdown, however, stating that the maintenance conducted on the power utility’s infrastructure did not approach the amount required to significantly improve its generation capacity.

“They have just continued with normal maintenance,” he said. “They have not started on the ‘new philosophy’ maintenance.”

This “philosophy maintenance” model was announced by Eskom CEO Andre De Ruyter at the beginning of 2020 and refers to a plan to improve the long-term performance of the company’s power fleet at the expense of a higher risk of load-shedding in the near-term.

De Ruyter stated this process should take around 18 months, but Blom argued that the Eskom executive has drastically misconstrued the scope of the problem – and that it would take longer than five years to resolve Eskom’s reliability issues.