[ad_1]
A bartender prepares drinks at a popular bar using candlelight as another rolling blackout affects much of the country’s largest city, Johannesburg, South Africa, December 8, 2014. EPA / KIM LUDBROOK
Cargo shedding is expected to continue for several years as Eskom grapples with aging infrastructure and a legacy of neglect and mismanagement. Private electricity generation will ease the pain.
Eskom’s unexpected load shedding escalation this week has confirmed that South Africa’s post-Covid-19 economic recovery will be strangled by energy constraints and that unless swift action is taken to support private electricity generation, overwhelming power outages will continue for years.
Meanwhile, a major shakeup is taking place at Eskom Generation, with the former CEO of the Eskom Generation Division displaced out of the way. Power plant managers at the Tutuka and Kendall power plants were also summarily fired yesterday pending disciplinary investigations, and further interventions are underway at the Kriel and Duvha power plants.
The lockdowns imposed in South Africa and elsewhere to slow the spread of Covid-19 led the national economy into its worst recession in nine decades, and businesses, industry and government have been quick to get back on track as ease restrictions.
But with the pickup in electricity demand, Eskom’s aging infrastructure was immediately affected and multiple breakdowns forced the company to resume load shedding in July to protect the national grid.
By the end of the month, the amount of energy reductions for the year had already exceeded the levels seen in 2019, which was the worst year on record.
Eskom insists its new intensified maintenance program, which aims to address decades of neglect and mismanagement, will end the load reduction in 18 months. But it is increasingly clear that this goal will not be met, given the scale of the problems at its underperforming coal-fired power plants.
The solution is for the government to take bold policy initiatives that enable all Eskom customers – industries, municipalities, businesses, farms, and households – to rapidly add new generation capacity with reliable, low-cost, and environmentally friendly solar and photovoltaic installations. environment, along with battery storage
Self-generation in the private sector has already begun, with an estimated installed capacity of 1.1 GW (1,100 MW), the equivalent of a full load shedding stage. But the paralysis of cumbersome and time-consuming policies and regulations continue to hamper a process that could address the widening gap between electricity supply and demand in just six to 18 months.
In the midst of the crisis South Africa now faces, the steps the government has taken to enable self-generation are too few and may be too late. By 2030, several of Eskom’s old coal plants must be decommissioned, taking roughly a quarter of their existing capacity out of service, and there is nothing in the pipeline to replace them.
“South Africa has reached a stage where the country simply does not have enough generation capacity that is reliable and that will allow the economy to not only recover from Covid-19, but make some kind of progress in the next 10 years.” Says Roger Baxter, executive director of the South African Minerals Council.
“As a country, we must understand that we have reached a point where the government has run out of options and that they have no choice but to incorporate the participation of the private sector. Without a reliable electricity grid, without a diversified supply, and without real competition on the generation side of the business, South Africa cannot grow its economy at all. It will be a stalemate. ”
South Africa’s economy grew at an average rate of 4.5% between 2001 and 2008, but in the last decade, growth averaged 1.5%, contracting to less than 1% in the last three years. Baxter says electricity limitations were a major factor and that the mining sector alone could generate 2.3 GW (2,300 MW) of its own power to help ease pressure on Eskom.
The Council for Scientific and Industrial Research (CSIR) predicted in August that load shedding would continue for two to three years in the absence of enabling regulations that allow and even incentivize “customer response at scale” with self-supply options to complement current network capacity.
“It is a fiery platform that we are on; we have to move faster, we have to do more,” said CSIR chief engineer Jarred Wright during a presentation of the investigation into the crisis. “An urgent response is needed both to ensure short-term fitness and to put South Africa on the path to long-term fitness.”
Expanding self-generation, which could be installed starting this year, would be the first step, he said.
The second was to complete the Emergency Power Acquisition Program to which the government committed in December 2019, seeking to add between 2,000 and 3,000 MW to the country’s electricity grid with the help of the private sector.
But progress has been slow, and the Department of Minerals and Energy only extended requests for project proposals in August, nine months later. The deadline for completion is mid-2022, but given the government’s slow and bureaucratic approach to acquisitions, it may take another year.
The third step identified by the CSIR is the implementation of the department’s latest Integrated Resource Plan (IRP), a long-term strategy for the country’s future energy mix that was published last October, eight years late.
The evidence that Eskom’s infrastructure cannot cope is the steady decline in its EAF (energy availability factor), which is the percentage of maximum power generation that a plant is capable of supplying to a power grid over a period of time. determined. It dropped from more than 90% two decades ago to about 67% in 2019, and has remained at an average of 66.1% percent so far this calendar year.
Eskom’s 2019 IRP and recovery plan are targeting a 78% EEP by the end of 2020, but this seems desperately unrealistic. Eskom’s maintenance push is vital to short-term supply stability, but the utility cannot resurrect its aging infrastructure, and the best that can be hoped for is the stabilization of the EAF at its current low levels.
Eskom recognizes that its outdated vertically integrated electricity supply model is at odds with the global shift towards unbundled grids, microgrids, distributed generation, smart grids and integrated generation in the private sector.
Last year, President Cyril Ramaphosa announced plans to separate the utility into generation, transmission and distribution units, but since then the company has indicated that it is difficult to make significant progress before its huge and ongoing load of power is restructured. R488 billion debt. Ironically, 22 years ago a similar plan was drawn up.
Eskom has to borrow to service its debt, and were it not for the latest government bailout of R49 billion, it would not have been able to meet its principal and interest repayments from the last financial year.
In a report presented to Parliament last week, Eskom said that as its debt had increased tenfold in the last decade, while tariffs had only increased fivefold, electricity prices were still too low and did not reflect prices. costs.
Baxter believes it is unfair for Eskom to insist that rates should reflect the cost of its borrowing because much of the debt comes from corruption and mismanagement, particularly in relation to the construction of Medupi and Kusile, two new power plants. who are now over six years old. delayed and five times more expensive than originally planned.
“Price is a big problem. Competitive pricing and price predictability are just as important as the availability of electricity, ”says Baxter. DM
Chris Yelland is the founder of EE Business Intelligence and Mariam Isa is a freelance financial journalist.
