Founder: Turnaround Talk
With loadshedding being front and centre of everybody’s mind, the main question that the country is obsessed with is options to improve Eskom’s plat performance. This, in essence would lower the burden of loadshedding in the short term (where stages 2 and 3 would be more of a norm than stages 5 and 6) and eliminate the practice altogether over the long term.
While many options have been considered, none have been implemented. I recently read an article on News24 which points out that, again, there are concerns regarding a plan to improve Eskom’s performance, but private power producers may save the day.
Saying the right words
The article points out that speaking at a media briefing on Sunday, Eskom board chair, Mpho Makwana, said a plant performance recovery plan is in the final stages of being approved.
The plan aims to improve the Eskom coal fleet’s Energy Availability Factor (EAF) to a “desirable level” in two years. While the global norm is an EAF of 86%, Eskom plans to move from an EAF of 58% currently to 70% in two years. The EAF for the coal fleet is worse at 52%.
The EAF is the percentage of Eskom’s generation capacity that’s available – compared to its overall installed generation capacity.
The article adds that, during this time, Makwana warned the country might face permanent Stage 2 and 3 load shedding to provide some form of predictability to the public as well as headroom for Eskom to fix the plants.
“(The) execution of the recovery plan requires that power stations are given space and headroom to execute the recovery plan – this requires either adding additional capacity to create space to do proper maintenance without firefighting, or create some predictability by implementing a permanent Stage 2 or 3 for the next two years in order to give sufficient space for maintenance while giving the country a level of predictability or consistency to plan the livelihoods better,” Makwana said.
Eskom management however said higher or lower stages of power cuts could not be ruled out as the system remains unpredictable.
The article points out that the new plan includes addressing operational issues at particularly problematic plants, including Tutuka, Duvha, Majuba, Kusile, Matla and Kendal. The best-performing plants (including Medupi, Lethabo and Matimba) will be “safeguarded”. The plan also includes finding external specialised skills.
Eskom COO Jan Oberholzer said a large component of the plant recovery plan is exactly the same as a 2020 turnaround plan, although the utility would now hone in on critical areas for success.
But all the skills and money in the world won’t fix Eskom’s operational issues, he said. “If we do not have the opportunity to take the units offline and maintain them properly, we will continue to be where we are.”
The article points out that outgoing Eskom CEO André De Ruyter added that the upside opportunity for the EAF must be treated with caution and “a good dose of reality”.
The fleet is old and has not been well-maintained. “And as we conduct our reliability maintenance programme, and we open up the units, we often find that they are other problematic issues that we discover, or that when we return a unit that we have a failure on another component that was not in the scope for a particular outage,” he said.
“Regrettably, the performance of our units as they come back from these outages has not been as we would have liked or as we would have expected.”
Photo By: Eskom
The article points out that there are also diminishing returns – like with an old car, at a certain point in time, the car costs you so much to maintain that it’s cheaper to replace it with a newer model.
“I think the opportunity for us to effect a step change through maintenance alone in resolving the crisis is limited. And that is why we need additional capacity as well,” he said.
This is now coming, thanks to the private sector with some 9 200MW in independent power projects in the pipeline.
The article adds that, for years, Eskom’s executive team has argued that added generating capacity of between 4000MW and 6000MW is required to stave off load shedding and provide headroom for plant maintenance.
A new market platform for Eskom to buy private power could also help ease the dire supply crisis.
The so-called day-ahead market allows Eskom to buy electricity from private producers and companies with surplus power for the following day. Companies put in offers of available electricity on the marketplace, and Eskom can buy power at the best prices on offer for the next day.
De Ruyter said the marketplace has been tested and could be launched within the coming days.
“We think that this is indeed a very exciting development and a very promising development.”
Chris Yelland, an independent energy expert, agrees.
“This is a very exciting step. It’s the beginning of an electricity market,” said Yelland. “Ultimately, this thing has to develop into a national market, or what we call an energy exchange.”
The article points out that, Anton Eberhard, an energy expert from the University of Cape Town, says many countries have power exchanges where electricity is traded a day ahead, or even for the same day.
“Eskom has been experimenting with an internal pseudo power market and now the idea is to open the exchange to private electricity traders as well. But lots of work is still needed on market rules and oversight.”
Through this platform, Yelland said some 500MW in private power might become quickly available to Eskom – and a lot more over time.
Private power
The News24 article points out that the pipeline of over 9200MW in private projects, “is a very positive development, and it shows what can be done if regulatory barriers are removed”, De Ruyter said.
Last month, new legislation was gazetted to remove the 100MW licensing threshold for private projects. This means that solar and wind projects of any size can be built without a licence. Towards the end of 2021, government raised the threshold from 10MW to 100MW, which unleashed a wave of investment.
New legislation has also done away with a requirement for Eskom to be the sole buyer of electricity, allowing any buyer to enter into a contract with an electricity producer.
The article adds that, in such instances, Eskom will only be involved in terms of a “wheeling agreement” in order for private power to be transported across the utility’s networks.
“We have no exposure in terms of having to buy electrons at a certain price. Nor does National Treasury have to offer a guarantee to the investor in generation. So this relieves a significant financial burden on the state and enables willing buyers and willing sellers to engage with one another and agree on a price that is mutually satisfactory,” De Ruyter said.
Photo By: Government
Presidential tariff plea
The article points out that President Cyril Ramaphosa says he has asked Eskom not to implement the 18.65% tariff hike that is due to be enforced by April.
Ramaphosa was giving the closing remarks at the ANC’s Free State provincial conference in Bloemfontein.
Earlier on Sunday, Makwana says the tariff hike granted by energy regulator Nersa will go a long way to ease Eskom’s liquidity crisis.
The utility has a debt burden of around R400 billion, and has run out of money to buy diesel to power its open-cycle gas turbines, which reduces load shedding.
The article adds that Eskom said talks with National Treasury to find funds for diesel supplies were ongoing. Diesel supplies are expected to run out by the end of this month.
Infuriating
The article points out that the DA’s Kevin Mileham said the consideration of permanent Stage 2 or 3 load shedding for the next two years is the clearest admission yet by the ANC government and Eskom that they have failed to solve the electricity crisis.
“What is more infuriating is that the ANC government has, for the past week, been telling the country outright lies to the effect that load shedding will be a thing of the past,” he said. “First, it was [minerals and energy minister] Gwede Mantashe who said he could end load shedding in six to 12 months, and then [finance minister] Enoch Godongwana who claimed that power cuts will end in 12 to 18 months. Eskom has rubbished these claims and placed the country on permanent load shedding for two years with no guarantees after that.”
