Embattled Eskom will in the near future approach the market for gas to run its diesel-gobbling open-cycle gas turbines (OCGTs).
This was announced on Wednesday at an emergency media briefing, shortly after the utility told the country that it will be subjected to Stage 4 load shedding until 05:00 on Friday (March 11). Thereafter Stage 2 will apply until 05:00 on Monday (March 14).
Eskom has been in a battle to keep the lights on since the start of the week due to “multiple generating unit failures over the past 24 hours”.
At first it anticipated that Stage 2 load shedding, which lowers demand by 2 000 megawatts (MW), would suffice to stabilise the power system if limited to the hours between 21:00 and 05:00 on Monday and Tuesday night.
The situation however deteriorated as more of its poorly maintained coal-fired units tripped.
According to Eskom head of generation Phillip Dukashe the availability of the coal-fired fleet dipped below 60% with more than 20 000 MW out of service.
Planned maintenance accounts for 5 505 MW of that and unplanned breakdowns for 15 439 MW.
On Wednesday morning Eskom chief operating officer Jan Oberholzer told journalists that Eskom is using its emergency reserves faster that it is able to replenish them.
“Stage 4 load shedding will therefore give us the space required to replenish the emergency reserves and continue to manage the system safely,” Eskom said in a statement.
The emergency reserves are pump-storage schemes and the OCGTs. Eskom utilised all 20 of its own OCGT units for an extended time on Monday and Tuesday, Oberholzer said.
Currently they consume a mind-boggling nine million litres of diesel per day, he said, adding that the shipping vessels used to import the diesel typically hold 30 million litres.
Impact of Russia’s invasion of Ukraine
Eskom expressed its concern over rising international diesel prices in the light of the war in the Ukraine.
The running cost of each OCGT unit has already increased by 40% to R700 000 per unit per hour, Oberholzer said.
Eskom chief financial officer Calib Cassim warned that should diesel prices continue to rise at the current rapid pace, there will come a point where the pressure on Eskom’s liquidity will simply not allow it to continue buying diesel to keep the lights on.
That may mean either increased load shedding, or government having to further assist Eskom with taxpayer money.
Although Eskom is entitled to recover the cost it incurs for supplying energy from consumers through tariffs, this is limited to prudently-incurred cost.
It may be allowed to recover amounts due to an unexpected increase in the diesel price that is outside its control after the end of the financial year by adding it onto tariffs retrospectively. Energy regulator Nersa has in the past been careful to exclude excessive spending on OCGT as a result of the poor performance of Eskom’s coal fleet.
In the current financial year Eskom has spent about R10 billion on diesel, including its own and privately-owned OCGTs.
This is far beyond the amount approved by Nersa.
Nersa has approved a 3% OCGT load factor for 2022/’23, which roughly translates to a budget of R3 billion, said Cassim.
In light of the rising international energy prices this could however increase drastically.
Cassim earlier said Eskom is considering hedging against price movement, but the timing is very bad.
Eskom has been talking about switching the OCGTs to run on gas for years, since it will be cheaper. The plant has been converted to dual feed, but that is where it stopped.
According to Oberholzer the utility now plans to ask the market for proposals for gas supply to its Gourikwa and Ankerlig OCGT plants, both in the Western Cape, as well as the repurpose of its old coal-fired Komati Power Station in Mpumalanga to run on gas.
He acknowledged that there is currently no infrastructure for gas utilisation and said the request for proposals will specify the gas required, gas volumes and quality to be delivered “at the gate” of the power stations.
Minerals and Energy Minister Gwede Mantashe recently stated that South Africa should increasingly look towards its own continent for its energy requirements. He specifically referred to oil discoveries in Namibia and pointed to the possibility of buying gas from the Gulf of Guinea and the whole West Coast region.