Eskom on the mend, but load shedding likely to continue until late 2021

Written by Ciaran Ryan. Posted in Journalism

CEO André de Ruyter says power supply should be stabilised by April next year, but load shedding remains a risk. From Moneyweb.

The utility is losing about R2.5bn a year to theft, illegal connections and meter tampering, and is taking steps to combat this. Image: Shutterstock
The utility is losing about R2.5bn a year to theft, illegal connections and meter tampering, and is taking steps to combat this. Image: Shutterstock

The good news is that Eskom is on the mend and plugging leaks across the organisation, such as the recovery of the R31.4 billion owed to it by municipalities and trimming staff by 2 000 to 44 000 – with a target to trim a further 6 000 by 2023.

Read: Eskom gets tough with errant municipalities, grabs cash and land

The bad news is that load shedding is here to stay a while longer, possibly until late 2021.

That was the message from Eskom CEO André de Ruyter, addressing the media on Thursday in a quarterly update on the state of the system.

“If Eskom fails, that poses a strategic risk to country. We’re doing a lot of work to recover stability of the generation system, and step up its reliability,” he said.

Latest round of load shedding

The load shedding experienced between July and August was the result of increased demand as government relaxed the lockdown, coupled with high levels of unplanned losses throughout the generation fleet. This forced it to rely on diesel-burning Open Cycle Gas Turbines, resulting in R800 million more being spent on fuel than planned.

The average age of its generation fleet is 39 years, with several units reaching end of designed lives. Failure to conduct the mid-life refurbishments required means Eskom is now having to play catch-up, which it is doing. Planned maintenance will impact about 12% or 6 000 megawatts (MW) going forward. This is necessary, said De Ruyter, to restore reliability to the grid.

Read: Eskom calls for battery-power storage

To address the medium-term shortfall, 11 800MW of additional capacity and 2 000MW of emergency power is being connected to the grid in the coming years. More than R100 billion will have to be invested in strengthening the transmission grid over the next decade.

A key area of focus is remedying the design defects in Medupi and Kusile power stations – the newest to be added to the fleet – to bring the units up to design output of about 800MW. Both power stations have a combined 12 units which, when brought up to design specifications, will alleviate the burden on the grid.

Work is also underway to extend the life of the Koeberg nuclear power plant for a further two decades.

Three of six new steam generators have been delivered to the site, and Unit 2 at Koeberg is now back on line after completing a maintenance programme.

Billions being lost to theft

The utility is losing about R2.5 billion a year to theft, illegal connections and meter tampering, and steps are being taken to combat this. There were 1 485 incidents of cable theft in the last year, costing roughly R50 million in asset losses.

The more important loss was the reduction in reliability of supply to customers, said De Ruyter.

“We are working with law enforcement, but we are asking South Africans to act as our eyes and ears [to report cable theft].”

Municipal debt still poses a major challenge, with R31.4 billion owed by municipalities as at the end of August. This forced Eskom to take assertive steps to arrest further accumulation of debt and recover exiting debt by obtaining court orders to attach bank accounts and seize assets. A recent verdict in the Johannesburg High Court validated Eskom’s debt recovery approach. The case was brought by Pioneer Foods to set aside Eskom’s decision to interrupt electricity supply to Walter Sisulu Municipality in the Eastern Cape.

The bulk of Eskom’s power is coal-fired, and coal stockpiles are currently around 58 days. Progress has been made in reducing emissions – from 0.48kg/MWh in the last two years to 0.35/kg/MWh this year. Overall emissions in previous years were aggravated by poor performance at the Kendal power station, which is in the process of acquiring new technology to address this.

Ciaran Ryan

The Writer's Room is a curated by Ciaran Ryan, who has written on South African affairs for Sunday Times, Mail & Guardian, Financial Mail, Finweek, Noseweek, The Daily Telegraph, Forbes, USA Today, Acts Online and Lewrockwell.com, among others. In between he manages a gold mining operation in Ghana, and previously worked in Congo. Most of his time is spent in the lovely city of Joburg.