Is Eskom turning the corner to better electricity supply?

Is Eskom turning the corner to better electricity supply? It certainly sounds like it is if you want to believe Minister of Electricity, Kgosientsho Ramokgopa, who recently said he is doing his job so well that his ministry will be redundant by the end of the year.

Most recently, Ramokgopa announced that due to the reinstatement of unit 3 of the Kusile coal-fired power plant, the country had begun to ‘turn the corner’ to reduce load shedding. Can South Africans and especially, commercial and industrial companies abandon their contingency plans to ensure security of supply?

The short answer is no, says Charl du Plessis, general manager at Energy Partners Power, as data on Eskom’s medium-term outlook suggests that it may not yet be time for South Africa’s commercial and industrial companies to have a sigh of relief.

The country’s economic losses have undoubtedly been exponential, with recent estimates by the Council for Scientific and Industrial Research that load shedding cost the South African economy R560 billion in 2022 alone. In the retail sector companies are reporting as much as R500 million diesel cost expenditure annually due to load shedding.

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Beware of good news at Eskom before the election

With the election coming up, everyone In the ruling party is trying to make South Africans believe that Eskom is recovering. Eskom has been reporting a consistent, year-on-year improvement in its Energy Availability Factor (EAF), with the latest increase from 27.4 GW EAP in May 2023 to 28.9 GW in October 2023.

However, Du Plessis says, while this provides much-needed relief from the growing intensity of rolling blackouts and will go a long way in curbing the escalation, the EAF remains very low, hovering above the 50% mark, which effectively means that half of Eskom’s generation fleet remains out of service.

“In addition, the relative gains towards improving EAF remain well below Eskom’s own target of above 60%. These top-level figures alone show that despite Eskom’s claims that the worst is indeed over, the numbers are simply not adding up.”

Du Plessis warns with 2024 being one of the most pivotal election years in South Africa’s democratic history, the chance of political ‘string-pulling’ to prop up the harsh realities of the situation cannot be ruled out.

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Companies must not rely on ide of energy-secure future

“Eskom’s Medium-Term System Adequacy Outlook (MTSAO) for 2024-2028 gives credence to the fact that, in terms of the state of the commercial and industrial sectors, due caution is warranted when it comes to relying on the idea of an energy-secure future over the next five years.”

The MTSAO stated that, according to its current modelling and projections: “In terms of unserved energy, no scenario achieves the system adequacy metric of 20 GWh in all years of the MTSAO period.”

Government’s Integrated Resource Plan (IRP) 2023 drew similar conclusions, envisioning an increase in new generation capacity of more than 29.3 GW, procured through various programmes and projects up to 2030.

However, Du Plessis points out, considering that Eskom has an installed generation capacity of about 49 191 MW, the current shortage is about 25 087 MW given the current energy availability factor of about 51% for the year to date.

“Turning the corner and ending load shedding within a few months through quick fixes as promised is therefore unrealistic. Instead, large new-build projects are required – and soon – to close this shortfall gap, yet these often take years to develop and construct.”

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Gas will not be the answer for more power

The IRP places a strong emphasis on gas-to-power capacity and currently South Africa imports the majority of its natural gas from Mozambique. However, due to several factors relating to infrastructural limitations, political tensions and environmental pressures, gas imports from Mozambique are expected to decline, he says.

Eskom also plans to operate some of its coal power stations, which have been earmarked for decommissioning beyond their intended service lives but given the current unreliability and increased risk of breakdowns with end-of-life power stations, Du Plessis says this is also likely to fall short of expectations.

“The updated IRP also relies to a very large extent on embedded generation and distributed capacity (own generation, rooftop solar PV, energy efficiency) which is expected to increase by 900 MW per year. If anything, this projection provides firm proof that government will not be able to solve the energy in its own capacity, despite its lofty promises.”

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There is no quick fix for Eskom

Du Plessis emphasises that there is simply no quick fix. “The private sector is contributing significantly to potential new utility-scale generation through independent power producers (IPPs), who are entering into direct energy wheeling arrangements with companies across South Africa.

“Although wheeling will, in the long-term, add generation capacity, wheeling inherently does not address the need for security of supply for companies in South Africa.”

Now is the time for companies to develop highly effective contingency plans that outline procedures and protocols for managing operations during loadshedding events, he says.

“Companies should identify critical functions, prioritise equipment and resources and establish communication channels to ensure seamless coordination and response during disruptions.”

Du Plessis says with the election date looming, the energy crisis its set to take centre stage as one of the country’s most pressing challenges and a serious threat to sustainable economic development.