Candlelight Christmas – Eskom warns of load shedding risk

Despite the heat in many parts of South Africa on Sunday, the implementation by Eskom of stage 1 load shedding between 12h15 and 22h00 brought a chill down many a spine.

This came just days after news broke that Eskom had shut down 11 power station units because of hefty maintenance costs.

On Friday at a state-of-the-system briefing, Eskom warned that load shedding cannot be ruled out this December, thanks to dwindling coal stockpiles.

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

“It is crucial that I inform you that load shedding cannot be ruled out for the remaining part of the year and we request South Africans to use electricity sparsely especially during the peak times,” said Eskom CEO Phakamani Hadebe.

The utility will implement 59 planned outages between September 2018 and December 2019 “to address partial load losses and maintain critical plant systems”, according to Hadebe.

While its Distribution and Transmission divisions are operating efficiently, as is its Koeberg Nuclear Power Station, the rest of its Generation arm is facing operational challenges. This is due to the deterioration of its coal-fired power stations and the fact that 10 of these have less than the 20 days’ coal stock required by the grid code.

As a result, the energy availability factor (EAF) for the 2019 financial year – at 74.2% – is “currently inadequate”.

Hadebe says the utility’s funding plan includes R11.5 billion in capital expenditure over the next 12 months and about R8.2 billion over the following 12 to 24 months. “If done well, we will reduce a lot of unplanned maintenance we are facing.”

Planned maintenance to increase

Despite making structural changes to address the current challenges, Eskom’s maintenance costs pose severe operational risk, with planned maintenance costs registering at 8.82% of capex while unplanned maintenance exceeds the threshold at 15.69%. “I would like to highlight that planned maintenance will increase further – probably by the end of the year it will be more than 9%, but that is deliberate as we are going to spend more time on maintenance,” said Hadebe.

Eskom has justified the deployment of diesel generators as a load shedding remedy, noting that the cost of load shedding is more dire to the economy. This year alone, Eskom has spent R200 million on diesel generators as 10 of its 15 coal-fired power stations experienced coal supply shortages.

Confronted with strikes, overruns and financial and capacity constraints, Eskom is poised to execute a nine-point recovery plan to address operational challenges. The plan is set to address partial load losses and minimise the risk of load shedding, and will see expenditure of between R750 million and R1 billion by the end of March next year.

Despite the hefty price tag, this budget will not cover the open cycle gas turbine bill, which essentially mitigates the risk of rain. As of Q1 2018, reports showed that Eskom’s diesel budget for the open cycle gas turbines was up from R4.6 million in January and R43.6 million in February to a staggering R140.6 million in March.

Coal contracts

A key pillar of Eskom’s recovery plan hinges on hastening the procurement process to keep coal plants stocked. “Twenty-seven new coal contracts have been concluded between January 2018 and October 2018 for [the] supply of 15.8 megatons (Mt) in the current financial year,” said Hadebe. Despite the optimism, the figure still way off the mark as the total contracted volume thus far is 73 Mt, which dims in comparison with the 116 Mt-per-annum target.

The nine-point system recovery plan aims to get the energy availability factor up to 75% by November 2019. The synchronisation of Units 3 and 2 of the new Medupi Power Station with the national grid earlier this year (on April 8 and October 7 respectively) will add an additional 1 500 MW.

Eskom has ‘simulated’ the inclusion of an additional 4 Mt of potential emergency coal stock, which would increase the total stock days across its fleet to 36.3 by March 31, 2019. At present 1.1 Mt of this is ‘firm’. The balance of 2.9 Mt is yet to be contracted through the urgent procurement process.

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