Eskom: Stuck in a spiral of crises

The country’s creaking power stations need repairs, but Eskom has no excess capacity to shut down for maintenance. But if they are not maintained, the stations will degrade even further

Eskom-bashing will escalate next year after the state-owned power utility this week made a point of denying that there is a “crisis” – and simultaneously warning that last week’s extreme levels of load shedding are likely to take place throughout February and March.

According to Eskom CEO Tshediso Matona, a real crisis would be the uncontrolled blackouts that would follow if there wasn’t planned load shedding.

Semantics aside, the underlying crisis of undermaintenance and overuse of the country’s old and increasingly ramshackle power stations is finally coming to the fore in a dramatic way.

Unplanned outages are escalating sharply, reflecting the vicious cycle Eskom has landed in: it can’t do proper repairs because there isn’t enough power to allow it to shut down plants. Because it isn’t doing proper repairs, the plants degenerate, leaving even less room for maintenance.

This week, Matona called it the “compounding negative effect”.

The severity of the situation is now surpassing the levels of the 1970s and 1980s, when Eskom was also constantly under fire for sudden massive price increases and poor service.

The current level of energy availability from Eskom plants has fallen to less than 75% – the same level as before the improvements in the 1990s, which went hand in hand with massive reductions in the cost of electricity in South Africa.

Eskom’s debt to equity ratio, a measure of its debt burden, is steadily rising back towards the high point of 2.9 in 1986, when the company was busy with its previous infrastructure drive.

In its annual and half-yearly reports, the company gives an average “unplanned capacity loss factor” – the percentage of generating capacity that is down on average over the period – excluding the stations that are down for planned repairs.

In 2007, the unplanned capacity loss factor was 4.6%. In the six months to the end of September this year, it was 13.3%. This just about equals the shoddy plant performance in the late 1980s, which led to the record unplanned capacity loss factor of 14% in 1989.

The difference between then and now is that back then, Eskom had just about completed a massive investment in new power stations that had pushed power tariffs sky high since the mid-1970s and created a huge reserve margin.

Eskom has published the daily figure for unplanned outages every Monday and Thursday since the beginning of 2012.

These figures show the degeneration in plant availability in the past few months (see graph), taking more than 8?000?megawatts out of a system that can nominally generate more than 40?000MW.

While the switch-on of successive units at the Medupi and Kusile power stations between the end of 2015 and 2019 are the light at the end of the tunnel, that light will be dim at first.

The unplanned outages in the system are now routinely taking out capacity equal to an entire Medupi plant (4?800MW), never mind the single 800MW unit due by July next year.

This week, Matona tried to reassure us that Eskom will be eliminating this gaping hole in the power system within a week, but the problem with unplanned outages is that they are unplanned and unpredictable.

The coal silo collapse at the Majuba power station in November has significantly aggravated the dilemma. At the moment, the station is managing about 1?800MW of generation – half its capacity – according to Eskom.

It is using trucks and manual loaders to feed the station – an incredibly risky stopgap. If the loaders fail, there is no Plan C, says Eskom.

If the usual heavy December rains on the highveld seriously degrade exposed coal, the system can also become unworkable.

Background

History

Eskom’s power generation peaked in July 2007 when it produced 20?800 gigawatt-hours, according to Stats SA’s figures for electricity sales.

Since then, the amount of power delivered by Eskom has declined slowly but surely with the winter peak in July this year falling back below the 20?000GWh level – the lowest level since 2005.

The Stats SA figures go all the way back to 1985 and show how dramatically the long-term trend of expanding power production came to an end seven years ago, the year construction on Medupi started.

Between 1985 and 2001, a total of 18?441MW of new capacity was commissioned – the result of a massive expansion drive starting in the mid-1970s, during which most of the current coal-fired power stations were built.

Saviour?

Medupi

Cabinet approved the building of the Medupi power station in October 2004 after several years of government vacillation about proposals to split up Eskom and privatise parts of the country’s power industry.

Eskom’s board approved the investment late in 2005. In 2006, Cabinet approved Kusile as well.

Construction of Medupi began in 2007, and Eskom at that point optimistically predicted the first of its six units would be online “early in 2011”.

Since then, the switch-on date for both new coal stations and the Ingula Pumped Storage Scheme near Ladysmith have kept being pushed back.

The three projects have suffered every conceivable kind of delay – from the temporary retraction of funding for Kusile in 2009 and the discovery of geological complications at Ingula, to strikes and bungling by Medupi’s two main contractors.

The current target for synchronising the first of the six Medupi units to the national grid is the end of this year, which Eskom has already admitted will probably be pushed back. The first power from the plant is expected in July.

Ingula was originally meant to be up and running in 2012. At the moment, Eskom expects it to be running in the second half of 2015.

Kusile should have started delivering power in 2013. It is now certain it will only provide power in the second half of 2016.

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