Despite the nation’s mood being one of “misery”, as one Eskom executive termed it yesterday, the utility’s top management is confident that load shedding will be limited in the coming winter months.
This is mainly due to the fact that three large generators will return from maintenance outages between now and the end of next month.
Two units at Kusile Power Station (1 600MW) are expected back online in the “next few weeks” while Koeberg Unit 2 (920MW) is scheduled to return from its refuelling and maintenance outage by the end of June (although Eskom Group CEO André De Ruyter said “late June/early July” when referencing this in his opening remarks).
It also generally sees better performance from its coal fleet in winter months when temperatures are lower. This will help.
And because the demand profile looks quite different in winter with far steeper morning and evening peaks, when there is a generation shortfall, load shedding will likely only be required during those times (this is consistent with what we’ve seen this week, with load shedding implemented between 5pm and 10pm daily since Monday).
De Ruyter was defiant on Wednesday, saying “We should not accept load shedding as the new normal” and that he and his executives “are seized with the matter”.
Key to turning around the coal fleet is the 4 000MW to 6 000MW of new generation capacity that needs to be brought on stream “yesterday”.
COO Jan Oberholzer highlighted that this was his answer to President Cyril Rampahosa in their first meeting on December 11 2019.
Not a single megawatt has been added to the grid under Ramaphosa’s administration.
While there has been some movement, no new projects have reached financial close, and some never will (as the investment cases no longer make sense). This new capacity will give Eskom the headroom it needs to do proper maintenance on its ageing fleet. Until then, it can’t as it is forced to operate units that should not be running just to keep the lights on.
The outlook is not positive.
Base, mid and worst-case scenarios for winter
The winter base case scenario of the utility’s transmission unit (which is in its final stages of separation in the unbundling process) saw no load shedding with only R1 billion spent on diesel for the open cycle gas turbines (OCGTs) until August.
Segomoco Scheppers, Eskom’s managing director for Transmission, admitted yesterday afternoon that clearly this is no longer the case. Since April 1, the country has seen more than 10 days of load shedding.
This base scenario is predicated on up to 12 000MW of capacity being unavailable (due to outages). On Monday as it announced Stage 2 load shedding in the evening peak, Eskom said 15 943MW was unavailable due to breakdowns, on Tuesday this was 15 762MW, and on Wednesday it said this was 15 988MW.
While outages ought to improve in the coming months and planned maintenance is deliberately reduced to levels below 3 000MW, it is not likely that the base case is realistic for the whole of winter.
Scheppers said the transmission unit’s plan is “tight” and that there is inherent uncertainty.
He highlighted that it requires OCGT usage over weekdays and that the failure of Medupi 4 (which exploded last year) has increased the dependency on diesel generation to manage the power system.
In other words, the Medupi explosion = more diesel needed.
More likely as a ‘base’ scenario – certainly based on the last six weeks – is the operator’s second scenario which sees (on average) up to 13 500MW being offline due to breakdowns until the end of August. Here, load shedding up to Stage 2 will be implemented on 37 days. Diesel costs will be above R3 billion.
The current worst scenario as per the transmission unit’s plan is predicated on 15 000MW of generation being offline due to unplanned outages across winter. Here’s load shedding will be required on 104 days (the plan covers 153 days between April 1 and August 31) and the highest stage of load shedding will exceed Stage 3. Diesel costs will total more than R7 billion.
In the mid scenario diesel spend is between R500 million and R600 million a month, with load shedding on between six to nine days each month. In the worst case, this jumps to at least R1.2 billion a month (and as much as R1.8 billion) with load shedding on 19 to 22 days each month.
Brace yourself for a rough summer
Scheppers would not comment on the published outlook for summer saying that it would be revised based on the performance in winter. But the current base plan for summer (September 2022 to March 2023) sees 16 days of Stage 1 load shedding with total diesel spend of R5.2 billion. This is predicated on the level of unplanned outages being 13 000MW.
At 14 500MW of breakdowns, perhaps a more realistic number given performance in the recent past, the plan sees 132 days of load shedding (in a 212-day period). The highest stage will be higher than Stage 3 and diesel costs will total R16 billion.
But Eskom cannot physically take delivery of this much diesel to burn. It says it is not possible to use more than about R1.2 billion in diesel a month. With the recent spike in global prices, one may assume this figure is now R1.5 billion.
The problem is that the transmission unit’s plan in the mid scenario requires 23 days of Stage 2 load shedding in November at a cost of R2.5 billion and a further 15 in December (effectively every day until the country shuts down mid-month) at the same cost.
But this is not possible, which means an almost guaranteed diesel bill of R1.5 billion in each of those months and higher stages of load shedding (Stage 4, perhaps?).
In January, the plan requires R3 billion for diesel (twice as much as is physically possible) and the scenarios in both February and March are similar to November.
The worst-case scenario (modelled on unplanned outages being at the 16 000MW level) is, well, much worse. Here the numbers stop making sense from September. A total of 191 days of load shedding out of 212 with upwards of R4 billion required for diesel each month from November until March.
That is simply unworkable – even if Eskom had the budget to pay for as much diesel as it wanted (it doesn’t).
Unless its OCGT plants are switched to LNG this year still (which, in theory, means it can burn cheaper gas and more of it) or there is a miraculous turnaround in the performance of its coal fleet, we are all but guaranteed that load shedding will be a near-daily occurrence from November.
De Ruyter had to leave Wednesday’s state of the system briefing early due to an appointment with National Treasury and the Department of Public Enterprises. Those present at the virtual briefing were told any announcements from those engagements would be made when appropriate. Could there finally be some movement on the $8.5 billion in funding secured by the country at last year’s COP26 talks?
Still, those projects are going to take time … and September is around the corner.