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11 power station units out of action due to Eskom financial woes

Inadequate supply for eight of the next 12 weeks.

Eskom has shut down 11 power station units due for major maintenance because it lacks the funds to fix them up.

This comes as the embattled power utility struggles to find coal to feed its coal-fired power stations – the bulk of its fleet.

Moneyweb earlier reported that 11 of Eskom’s 15 coal-fired power stations have less than the required 20 days’ coal stock – and of those, five have less than 10 days’ stock.

The power stations that do have adequate supply are being run extremely hard, which could lead to further breakdowns and plunge the utility in a further downward spiral.

According to its latest published forecast covering the 14-week period from November 5 to February 10, Eskom is likely to have inadequate electricity to meet the country’s demand for most of that time.

Demand versus available generating capacity

Eskom’s three-month forecast of weekly demand versus available generating capacity. The coloured blocks indicate the absence or presence of a capacity constraint: green (adequate generation; no shortage), yellow (possibility of not being able to meet reserves), and orange (definitively too short to meet reserves and, possibly, demand). Note that OR refers to ‘operating reserve’ and UA to ‘unplanned outage assumption’. Source: Eskom Weekly System Status Report, Week 44, 2018

That means Eskom would be utilising expensive energy from the diesel-driven turbines owned by independent power producers, including the Avon and Dedisa peaking power facilities. When that is inadequate to plug the supply hole, South Africa will face load shedding.

The extensive use of diesel generators is set to increase Eskom’s financial headaches and give further momentum to the downward spiral.

Eskom is expected to provide South Africans with more information on this dire situation during a state-of-the-system briefing at its headquarters in Sandton on Friday.

It comes as national energy regulator Nersa awaits written submissions on an Eskom application for a 15% tariff increase on April 1 next year and another 15% for each of the two following years. The deadline for submissions is November 30.

If Nersa approves the full revenue amount Eskom applies for, the 15% increase will be on top of a 4.41% increase already approved for April 1 next year as part of a four-year recovery plan for amounts under-recovered in previous years.

April price increase

Eskom has submitted a further application to recover R21.6 billion to compensate it for under-recoveries in 2017/18. If approved, any part of this tabled for recovery in the next financial year will add to the percentage increase consumers face in April.

During a media workshop about its current tariff applications this week, Eskom Generation Group middle manager Brad Ross-Jones revealed that Eskom has closed 11 of the 25 generation units at three of its power stations – Grootvlei, Komati, and Hendrina. That’s almost half the generation capacity of these three.

The 11 units have been placed in reserve storage, which means they can be restored to working order within a year provided there is money to buy the spares and the spares are available. He confirmed that some of the spares could have long lead times between placing the order and taking delivery.

Ross-Jones explained that when units reach a stage where the operational cost is high and they need major capital interventions, Eskom places them in reserve storage since it does not have the money to do the required maintenance.

At the same time Eskom told journalists that it is not feasible to decommission (or ‘permanently dismantle’) power stations – a move suggested by many commentators when Eskom said it had excess generation capacity.

Eskom versus Nersa

Nersa seemed to share this view and based its tariff determination for the current year on its view that Eskom should decommission its Arnot and Hendrina coal-fired power stations.

Eskom is taking the Nersa decision on review in the High Court. No date has been set for the hearing yet.

Eskom told journalists that according to its operational analysis it cannot decommission any of its commercial units unless: it maintains an energy availability factor (EAF) of 78%; new build projects are completed within current deadlines; renewable energy projects up to bid round 4.5 of the Renewable Energy Independent Power Procurement Programme start delivering power commercially as planned; and assuming realistic demand growth and a 50-year life for coal stations.

So far this year the Eskom fleet’s EAF has been on average 72.99%. In the past weeks, it has deteriorated to well below 70%. (This would have been even worse if the units in reserve storage had been included in the calculation, but Eskom confirmed that they weren’t.)

In light of this and the possibility that other assumptions may play out differently, Eskom believes that Grootvlei, Komati, and Hendrina should be retained in reserve storage as “insurance”.

The question, however, remains whether such ‘insurance’ would pay off unless Eskom has the money to pay for spares and the capacity to plan ahead and order the necessary components in time.

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It seems inexplicable that Eskom ramp up their cost of electricity to all those who actually pay for their electricity, yet those who don’t pay or steal electricity sit back and enjoy having lights on. What is wrong with Eskom is a microcosm of what is wrong with government and both are intent in destroying the economy and quality of life – the philosophy seems to be create a nation of paupers

One of goals of leading freedom fighters was making the South looks like the rest of this continent. Halve way on the road, success, undeniable, visible everywhere. Go North have a new meaning. To Europe.

So Escom wants raise rates because they have/had an oversupply but now they want a raise in rates because they want to fix the units which is causing a shortage.This while they gave each employee a R10 000 after tax bonus this year apart from the wage increase. And they do not switch off to Soweto and nonpayers. And they gave an average bonus of R88 000 to employees last year. Looks like typical Africa policies.

What I like about the ANC is that everything is a new record.

Such a true statement – Everyday there is a new crisis! Never their fault!

The collectivist culture can only deal with the equal distribution of abundance. When they try to distribute scarce resources, they ensure that those products and services will become unavailable. The only factor that is successfully distributed by the ANC is stupidity and incompetence, there are an abundance of those.

All SOE’s and municipalities are stocked to the brim with stupidity and incompetence, and service delivery is in short supply. Something will have to give, and in similar situations across the world it is usually the purchasing power of the currency that becomes in short supply. An oversupply of stupidity and incompetence in government normally leads an oversupply and abundance of valueless currency.

Is this even the truth? Or are they just blackmailing us into higher tariffs?

It’s essentially The ANC that is “out of action”!!

Simple.

Was it not Pravin Gordhan who initially said they had no money for salary increases but then rolled over and agreed to an above inflation increase and a R10,000 bonus for every employee. One would think they would have enough savvy to keep money aside for basic maintenance before paying bonuses – or am I missing something here ? Heard on TV last night that some of the head honchos at Eskom have petro card accounts of R500,000 PER MONTH. How is this even possible ?

Did anyone look outside today during the hot weather? Did you see the awesome sunshine?
There is your answer but the arrogant fools in this country will tell you renewables cannot replace coal just yet. That is not the point: renewables can take the slack when needed which is NOW!

Stop being arrogant Sefricans and do your research and see how other countries are shredding coal plants! There is no future with this setup and the massive labour and transport costs.

It takes enormous talent and effort to fail when you are a monopoly. Guys really..

Those of us in business with would give our eye teeth to operate in a market selling a product everybody wants and to have no competition. How on earth can anyone get this so wrong.

If Eskom was as well run as the DCS catering contracts run by Bosasa, we would only be paying 75c/kWh. Adrian Basson never reported on under-performance by Bosasa so it is performing – @ R33.00 / day max for three square meals it beats all government run prisons by a considerable margin.

It seems as if government should be outsourcing all the SOE’s to make them effective.

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