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Eskom’s power problem could get a whole lot worse

The power utility will lose more than a quarter of its current generating capacity over the next decade.

An electricity-supply crisis is looming in South Africa that could make intermittent outages in the past few months seem trivial by comparison.

Eskom, which supplies almost all the nation’s power, will lose more than a quarter of its current generating capacity over the next decade as it shuts ageing coal-fired plants. Replacing that output and adding capacity needed to meet rising demand will take years and cost more than R1 trillion, according to government estimates. The problem is likely to worsen exponentially after 2030 as more plants reach retirement age.

While Eskom is building two new plants, Medupi and Kusile, they are running years behind schedule and billions of rand over budget, and won’t be enough to plug the supply gap. The utility has limited scope to invest in more projects because it isn’t making enough money to cover its operating costs and service its debt, which had ballooned to R419 billion at the end of its last financial year.

The government has said it will look to private investors to help fund new plants and step up purchases of renewable energy from independent producers, which have added 3 876 megawatts of capacity to the national grid since 2011. However, those plans are being implemented too slowly and on an insufficient scale, according to Jesse Burton, a researcher at the University of Cape Town’s Energy Research Centre.

“There’s this inaction by the state,” Burton said by phone. “We should be procuring immediately.”

President Cyril Ramaphosa in February announced plans to split Eskom into generation, transmission and distribution units — a move that should make it easier for private power producers to access the grid and sell their output. But powerful labor unions have vowed to prevent a break-up, fearing it will lead to job losses and privatisation. With elections due next month, the government has been loath to confront them head-on.

Read:

How Eskom plans to keep the lights on

Nero fiddles, while the prospect of load shedding continues …

Eskom has said its immediate focus will be to keep blackouts to a minimum by addressing maintenance backlogs, securing enough diesel to run turbines used at times of peak-power demand and fixing defects at its new units.

Beyond that, the nation’s energy blueprint, the Integrated Resource Plan, will spell out how future generation requirements will be met, according to Public Enterprises Minister Pravin Gordhan, who oversees Eskom. While the plan has been years in the making, it’s yet to be completed.

The document was significantly revised after the government determined that proposals favoured by former President Jacob Zuma to build nuclear plants weren’t affordable. The latest draft envisions the nation’s total installed power capacity rising about 60% to 78 344 megawatts by 2030, with the bulk of the new supply coming from gas, solar power and wind.

Engie SA, which operates the 100-megawatt Kathu concentrated solar power project 600 kilometres southwest of Pretoria and feeds into the grid, is among power companies that are awaiting the finalisation of the IRP and the issuing of new power supply tenders.

Read: Solar energy investors may pivot away from high-cost projects

“We were surprised that the program of development keeps delaying,” Paulo Almirante, the company’s chief operating officer, said in an interview at the plant. “Sometimes it’s a bit frustrating, the delays, but we are confident that after the elections this will be clarified and that the sector will continue to develop.”

© 2019 Bloomberg L.P

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Good morning, this article is very true but has no real point or solution. Eskom is in trouble and will get worse. We know that. As media please will you start posting articles on what individuals and business can do!
There have been the odd call for energy efficiency and demand side management, but not nearly enough. Please start writing articles on that and providing case studies. Energy efficiency with a reduction of 20-50% of electricity consumption in a household or business is imminently possible.
The above articles make us all feel hopeless. Yet everyone making some small changes will make a huge difference to long term security of supply, albeit while not helping Eskom to stabilise.

Well, my local mall just installed 300 solar panels on their roof. Should easily supply enough electricity to power the whole mall.

There are probably only 150 solar panels left by this morning, so maybe just power for half the mall, if they left the copper wiring intact!

I agree with you. Nobody seems to have an answer. The financial side should be relatively easy to sort out. Get rid of the 27,000 surplus employees. Once you have a viable business model it will not be difficult to find investors. In the past ESKOM bonds were the most sought after financial instruments.

@leonspies. On paper it sounds relatively easy to sort out. Getting rid of 27000 surplus employees sounds like a political and socio-economical nightmare to me! All in all, not so easy to sort out.

I only recently became aware (thanks to an EFF public outcry) that Eskom’s latest chairman appointed by the president (who calls for investment based on a drive to root out rampant corruption) apparently has an interest or shareholding in two companies that render maintenance services to Eskom. While Eskom’s newest CEO Hadebe is fully above board with an impeccable track record, the news about the chairman is most disheartening.

Actually there a two problems that need sorting out and these problems are not intractable by any means. The first problem is that Eskom is a wealth destroying organisation. When your electricity sales are less than your costs you have a big problem. For the last few decades Eskom has been packing in the cadres, making losses and the taxpayer picks up the tab. Eskom buys energy from ISPs and sells it at a loss. The taxpayer picks up the tab either by government subsidy or ridiculous above inflation price increases. The only way out of this mess is to bite the bullet and break up Eskom exactly as I and the ANC have proposed. The next step is to sell (privatise) the entities and let the market sort out the mess. The proceeds of the sales are used to retire debt. The ANC will have to get some fortitude to do this. Once faced with cold winds of market forces the entities will suddenly become wealth generating and sustainable. Do not write off old coal fired power stations. In Australia the Vales Point power station was sold for a song and is now pumping incredible cheap electricity into the grid. There is no reason some of the SA oldies cannot have a new lease on life with the right market conditions. In fact, this is the only way over the ‘hump’. The alternative is rocketing electricity prices, ongoing blackouts and industrial collapse. This is not a tenable option.

To digress for a minute. Do not be fooled by something like the 100MW CSP Kathu plant. People see 100MW and compare this with 3600MW Duvha. We would need 36 of these to replace Duvha? Wrong! this is nameplate capacity. In reality these CSP plants have a capacity factor of about 20%. Thus we would need about 180 Kathus to replace one Duvha. The price per kwH of these CSP plants is a secret but I would say about R2.50. In other words for Eskom to remain in the black it would have to sell this electricity to municipalities for more, which would then mark it up even more. Maybe R5 per kWh? Get the picture? Renewables are sooo cheap. Now add the cost of the backup.

The second problem is getting over the hump. Expensive electricity is unfortunately part of the solution. The next step will result in market driven massive solar panel rollouts with grind active inverters where you can sell your surplus electricity back to the grid company. They would buy it for 80c from you when they could sell it for a whole lot more! High prices invite competition like bees to the honeypot. More suppliers will jump on the bandwagon as long as there is a buck to be made in a free market. The latter is very important that there must be no market distortions. These suppliers will then force energy prices down. They may fund their production via geothermal, wind, solar, nuclear, coal, oil,wave, gas or cow flatus. However they choose. Encourage competition as long as it is within the law.

Along the way South Africa will have to dispense of the militant unionism in the way of privatisation and the culture of theft being ‘okay’. This will be the regimes true leadership test.

Gina. Emigrate. Period – or prepare to be eating dog food when you are 75 and the Rand is worth less than the Zim dollar. You think it wont happen? That’s not a chance I”m willing to take with my family. Get out now

Even if someone had the perfect plan to give to Cyril Ramaphosa and Pravin Gordhan it would not even be the first step of a 100 step plan to solve the power issues, not to mention sorting out the country’s economy.

The problem doesn’t so much lie in finding a solution, I’m sure there are numerous options that can be brought to the table to consider that could work in conjunction with each other.

The vast number of problems lie in the governance of the country and SOE’s.
A solution could be to remove the surplus workforce, but that’s only easy on paper. To implement it, is another story, with the laws, unions and political narrative (especially just before the election) and lack of understanding of basic economics, I would venture to say, a mission impossible, and not in the sense of the movie, where Tom Cruise manages to pull it off, it truly is impossible.

That’s without making mention of the corruption within government and the SOE’s.

I always refer to Newton’s law:

Law I: Every body persists in its state of being at rest or of moving uniformly straight forward, except insofar as it is compelled to change its state by force impressed.

another version…

In an inertial frame of reference, an object either remains at rest or continues to move at a constant velocity, unless acted upon by a force.

If I look at South Africa and its people as a source of energy (or force) moving in a direction, which over the last number of years has been moving downhill, I don’t see the trajectory changing without a major force to change that trajectory as the downward momentum is gaining more speed, just like a ball rolling down a hill, the longer and further it rolls.
So without a huge, and I mean huge, change in direction with a massive shift in governance, politics and accountability I can only draw as a logical conclusion that we’re heading downhill fast, unless massive changes come about, until then, we’ll keep rolling downhill.

Another component of change then enters the fray, time. Which begs the question, how long would even the most powerful winds of change, take to turn this momentum around?
Based on various observations, I would have to conclude that it is most likely going to take longer to get back to where we were than what it did to get where we are now. Thus if one looks 10 years ago, I can’t help but deduce it will take more than 10 years to get back to that same level. Thus if one wishes to go back 13, 19 or maybe even 25 years, in each instance I would have to assume it would take longer to get back there.

This then raises the question for me personally, do I have the time (or energy) to bring about a big enough change? And if so, do I personally feel it would be worth my time (and resources) to work tirelessly for 10 years to get the country back to where it was 10 years ago?

Since time is the arguably the most valuable asset (since nobody knows how much of it they have). Would it be wise to use so much of it, to just get back to a point where we as a country were so many years ago? I ask myself this question on a daily basis and every time I come to the conclusion, no, it’s not worth the investment to invest a minimum of 10 years, to get back to where we were back in 2009, in the year 2029.

Just like with global markets, I prefer to go with the momentum of the market, I don’t feel the need to swim against the stream in large bodies of water. If I want to do something different or go against the stream, I’ll do so in a small pool or tiny stream.

Thank you GinaSchroeder

We get fed non-stop doom and gloom news from all directions.

We have a lot of natural resources which most countries do not have.

It has been a mere 1 year since Mr. Zuma resigned.

Watch the economy sky rocket after the elections!

@TheSpeculator

“We get fed non-stop doom and gloom news from all directions.”

– The “doom and gloom news” that we are fed, is any of it based on facts or is it merely fiction? From what I’ve read it seems there are a lot of facts doing the rounds lately.

“We have a lot of natural resources which most countries do not have”
“Watch the economy sky rocket after the elections!”

– I will agree that we have a lot of natural resources, but I have to ask what we are doing with those, are we processing them and then exporting them, or just exporting the raw material?

– The gold price closed at $1,664.00 at the end of 2012 and we are currently sitting with a gold price of +-$1,300.00, so it seems it’s down more than 20% since then.

– The 2000s commodities boom was from 2000-2014, so I struggle to see how our natural resources are going to affect any growth in our current economy.

– I really do hope our economy would “sky rocket after the election”, but without evidence showing change in policy and governance I struggle to see this happening. There’s no evidence (from what I see) that an economic rocket is being built that is going to fly high into the sky, and possibly to Mars.

Thus I have to go with journalist and writer Christopher Hitchens on this one and say “what can be asserted without evidence can be dismissed without evidence”.

Please provide me with evidence so I can get off the “doom and gloom” train as it’s not a pleasant ride, but at the same time life is full of harsh realities.

Good luck Speculator. Think with your head and not you’re heart, that’s the only debate worth having (yes, we all love it here when its good) but the facts are VERY clear. SA is done

Well a great starting point I always say is a geyser represents around 30%-40% of household energy consumption, and it is by far the cheapest form of solar power to be had.

The problem at bottom will not change until people decide they want a new administration and vote the ANC out. The ANC is counting on being reinstated come May 8th, seeing as how they have a shiny new leader (who apparently was struck deaf, dumb and blind to ANC corruption from birth). They are of the belief that they can pretty much screw up this country up as much as they see fit and get away with it. Until they are punished for their misdoings at the polls we will NEVER see an improvement in this country.

Here is some information on solar systems to help you make the decision and specify the system you need.

https://tigersonagoldenleash.co.za/2019/04/01/to-solar-or-not-to-solar/

Got this far in the article:
“This storage system will set you back about R3 to R6/kWh”
R3-R6/kWh backup batteries? The writer left out a few zeroes.

He tried to work out the average cost per kWh of the battery over its lifetime.

a Pylon US3000 should look something like this:

It costs R20K and does 4500 with 80% DOD so it should give you 2.8kWh * 4500 cycles = 12 600 kWh, but its not really that much because the battery losses capacity every year so I would probably guess that you should get 8000 kWh out of a US3000 over its lifetime, so that would be R20 000/ 8000kWh = R2.5 per kWh of storage.

Lithium beats lead acid batteries by a country mile when you start calculating the cost per kWh over the lifetime of a battery.

@PJJ
Does this mean that for storage only one has to pay twice what Eskom is charging? Add to this the servicing and replacement cost of the solar panels and inverters. I bet they will not last the 30 years what the article implies. The price of lead acid batteries in my experience increased more than inflation instead of staying the same. 2.4kW inverter implies maximum 10 Amp current consumption which is ridiculously low. A large screen tv and a small aircon use more than that.According to the article they bought a gas stove and limit the aircon usage. What about the geyser? The article misses a major cost if you go over to gas stove, gas heaters and gas geyser, the cost of gas and the cost of conversion.

@The Hun
I never said it was cheap, I merely stated what the costs of battery storage was per kWh, I have crunched the numbers before and the break even cost for solar is around R3.3 per kWh, so if Eskom every charges more than that its cheaper to generate yourself.

Most people currently pay around R1.85 per kWh depending on tarrif and R300-R400 connection fee, if the current 13% trend continues Eskom will reach R3.3 per kWh in 4.8 years so yeah, lets be conservative in say in 7 years it will be cheaper to make your own power than buying Eskom.

Lithium batteries have dramatically declined in price over the past years, from well over R12K per kWh to the current R7.5K per kWh, and anyone that is serious about solar will buy LFP.

Also 2.4KW is plenty, you clearly don’t know how efficient appliances are nowadays. (A very sneaky throwing a big constant load like a air con in)

LED TV = 70-110W
With all the LED lights in my house on (Kitchen+living room+bedroom+ 1 bathroom) = 300W
Networking equipment (Routers+IP Cameras+Alarm system) = 80W
That gives you a grand total of lets round it up 500W… yes 500W
with 2A you can power all of the essentials.

But lets entertain the air con idea, we still have 1900W of headroom.
a generic Samsung 12 000BTU aircon draws 1.1KW

1.9KW-1.1KW = 700W still left…

Sorry for joining the discussion a bit late.

@PJJ
Thanks for clarifying the numbers, you are spot on. Using the air con at night is what makes our required system so expensive, since it requires about 4-6 kWh to make it through the night on sleep mode.

@The Hun
I based the numbers on my consumption, which I’ll admit is on the low side. My geyser is already solar, which helps a lot. The 2.4 kW installation should be sufficient for our usage. If I wanted to scale back even more, a gas oven will be the next step. Since the stove is already gas, the installation will not be that expensive. Granted, I’ve not included the gas costs, which is about R700 per year presently.

@Tigersonagoldenleash
Be careful with the gas oven. I grew up in Hungary and nearly everybody used gas for cooking, even now most people still use it because it is much cheaper per unit of energy than electricity and cities have piped gas everywhere. Gas ovens have always caused problems because controlling the temperature is far more difficult compared to electricity. People used bricks in the oven to act as “heat accumulators” to stabilise the temperature. Today most people rather go for a combined gas cooker and electric oven. My sister-in-law a few years ago changed to electric oven after 50 years of gas and could not praise it enough.

@The Hun
Thanks, will do. At this stage I’m just trying to get a grid-tied solar system approved in our estate.

The past weekend I performed an oil change & air filter service to my HONDA EU3000is (silent inverter) generator, as well as the in-laws’ Yamaha EF2000i genset.

What a historic proud moment it has been, as a private investor funding my own (micro) power plant! 😉

When your Eskom-friend abscond leaving me powerless, I can turn to my (other) lifelong friends and teammates, named Honda, Sasol & Castrol, and NGK.

Solutions to Eskom? A little too late. I accept this is the story “how the country got here” and how SA is transforming to an African nation closer to its roots. Once enough taxpayers have left (who pay for everything), there won’t be luxuries like Eskom, nor any large industries left (only small, retailers with PV-solar supply). Eskom would’ve left the building.

And National Health Insurance would then be with us, to further suck inefficiency out of this country (like any SOE did).

When one looks at the station ageing graph, it’s clear how we got into this horrific situation (power capacity and financially) Up until Kusile and Medupi the station roll-out was more or less evenly spread, going back 50 years or so. Then a gap of 20 years when someone went to sleep. Then bang, 2 large station projects that cost twice as much as budget and got behind their schedule. No wonder there is a now R300Bn hole in the loan books suddenly.Of course, not the only factor, collections is another issue, but this stands out clearly.

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