Loadshedding risk to lower after September 2021

While Eskom expects to have performed adequate reliability maintenance on its aged power plants to significantly improve reliability by September 2021, the risk of loadshedding will still not be eliminated going forward.

This frank admission was made by the power utility’s Chief Executive Officer (CEO) Andre De Ruyter during a virtual Quarterly State of the System media briefing on Thursday.

“We have stepped up our reliability maintenance programme to the point that we have some 14% of our units undergoing maintenance and that is a very high number, and it is reflective of the seriousness in which we are handling this,” he said.

However, he said the power utility can “only fix so much”, with several of its power stations having already reached their design lives of 39 years.

“These design lives are further compromised by the fact that we have not over the years done the mid-life refurbishments that were required. The system continues to be unreliable and unpredictable, he said.

In a presentation, Eskom chief operations officer Jan Oberholzer said the power system remained vulnerable and volatile, with the risk of loadshedding significantly reduced after the completion of the reliability maintenance by September 2021.

De Ruyter emphasised that the more capacity that the power utility can add to the grid in a short space of time, the lower the risk of loadshedding will be.

The power utility, he said, continues with its maintenance plan that is geared towards improving performance in sustainability which can guarantee a safe and secure supply of energy.

“In order to do this, a major component of our turnaround programme has been to focus on repairing some of the defects inherent in both Medupi and Kusile [power plants],” De Ruyter said, adding that this has seen the utility achieve successful and promising results.

“We believe we are getting our arms around these design defects and with these modifications we will be able to achieve design outputs. In the case of Medupi, 793 megawatts per unit, and 800MW for Kusile, we will then be able to reliably run these units at their design capacity. It will take time. We are going to be completed with the Medupi process by the end of the financial year.

All of this, he said, will contribute to a change in the reliability of the generation system by April next year, however, this is not yet enough to eliminate entirely the risk of loadshedding.

“There is also more work that needs to be done. By September this year, we would have performed adequate reliability maintenance and significantly reduce – but sadly not eliminate the risk of loadshedding going forward,” De Ruyter said.

Further work, he said, is underway to extend the life of the Koeberg Power Station – the only nuclear power station in Africa – for a further 20 years.

“The milestone achievement of the past months being the arrival of the first of six steamed generators,” he said.

Important for Eskom to become a viable power utility

De Ruyter said it was important that Eskom becomes a viable power utility.

“For that reason, there is a requirement for us to have cost reflective tariffs and that these put us in a position where we can recover our reasonably incurred costs so we don’t ask the public to subsidise Eskom’s deficiencies and our excess costs,” he said.

“We do this mindful of the strategic role that we play in the South African economy.”

If Eskom were to fail, he said, it is clear that Eskom would place very significant risk on South Africa itself.

Distribution and illegal connections

On distribution, De Ruyter said Eskom was concerned about the continued illegal connections that affect the grid.

“At present we are losing about R2.5 billion a year to electricity theft, illegal connections and meter tampering. This is not a loss that we can accommodate and we have therefore implemented load reduction during peak hour where illegal connection cause grids to be overloaded, creating a risk of fires and even explosions to our distribution transformers. In order to protect assets, this is a step we have had to take. It is regrettable,” he said.

Cable theft has since 2015 also become an “epidemic”, he said, with the power utility recording about 58 incidents per year. This equated to R50 million in losses.

“Added to that is a lack of reliability to the system and a disruption to customers. Clearly there is a need to combat this scourge,” the CEO said.

While Eskom continues to work with law enforcement agencies in this regard, De Ruyter urged the public to report related incidences.

Municipal debt

Municipal debt continues to prove an Achilles Heel for the utility, with De Ruyter revealing that South African councils owed the utility over R31.4 billion as of August.

“The amount is unsustainable and leaves us with no option but to take steps to arrest the further accumulation of additional debt to recover. It gives us no pleasure but we are left with no option but to accelerate the debt recovery process,” he said.

This includes the attachment of municipal bank accounts as well as the seizure of assets via court orders.

Operational sustainability

“We remain committed to ongoing engagement with government and other stakeholders to find a sustainable solution to the problem of municipal debt. In this instance, I have to thank the Deputy President for his leadership of the political task team which has been very strongly focused on addressing the issue of municipal debt.

“Our ultimate goal is to achieve operational sustainability and thereby reduce the risk of loadshedding. We believe that by discipline and a collaborative approach, relentless focus, I’m encouraged to make tough decisions that will aid Eskom to reliably provide electricity to power the growing economy.

“The legal separation of the transmission business, which will become a wholly owned subsidiary of Eskom, is a key milestone that is being worked towards.

“It will be a catalyst to unlocking additional private sector capacity. This is an important step because it allows us as the buyer to give private investors the confidence that there will be no leakage of sensitive commercial information,” he said.

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