New data released by the Council for Scientific and Industrial Research (CSIR) has indicated that South Africa suffered a 2019 loss of between R59bn and R118bn due to loadshedding.
According to the CSIR, the 530 hours of unplanned power cuts during the year occurred at a higher intensity than previous years, including an unprecedented move to Stage 6 loadshedding in December. More energy – approximately 1 352 Gigawatt hours (GWh) – was shed during 2019 than previous years.
The percentage of time that Eskom’s power plants were able to produce electricity was at just 67%.
“Historical fleet EAF decline seems irreversible,” stated the presentation’s authors.
Loadshedding is expected to continue for two to three years, depending on key decisions and actions by government.
The CSIR presentation set out various scenarios for South Africa to ensure the supply of power in the current decade. A key response to start to close the “energy supply gap” is to let businesses, private citizens, mins and farms produce their own electricity.
By Mia Lindeque for EWN
Several municipalities have not yet communicated their plan with Eskom should the power company implement stage eight load shedding.
Last month, the utility implemented stage 6 rolling blackouts, which caught residents, businesses and municipalities off guard.
The state-owned entity has since held meetings with municipalities to encourage them to update their emergency plans to make provision for even darker days.
Eskom’s Dikatso Mothae said while the risk of stage eight load shedding was low, municipalities must be prepared.
“In terms of planning purposes, we have to make sure that those schedules are available. We have engaged municipalities, asking that they do the same.”
Following the breakdown of some of its power generation units over the weekend, the electricity system will remain “severely constrained” until at least Thursday, Eskom said.
In an update after at midday on Tuesday, Eskom said that these unplanned breakdowns, along with planned maintenance, meant that more than 12 500MW in power generation was offline by Monday evening.
Anything above 9 500MW means that Eskom has to resort to emergency power generation: open cycle gas turbines and pumped storage hydro electrical plants. These are very expensive ways of generating power, particularly gas turbines as they require large quantities of diesel. They can only be used for short periods before diesel and water reserves run out.
By Tuesday morning, the situation had improved to 11 500MW of capacity being offline.
“With the expected return to service of several units today and tomorrow, and with current diesel reserves, the probability of load shedding remain low for the week, but the system remains constraint until at least Thursday,” Eskom said in a statement.
It said that any additional unplanned breakdowns, or shortage of diesel and pumped storage, could result in load shedding at short notice.
Last month, South Africans suffered five days of load shedding after outages at five units. Eskom also resorted to emergency power generation, but then its diesel stocks started running low, which forced it to shed power.
Eskom yesterday released a press release stating that it “would like to inform South Africans and all its customers that the electricity system has been severely constrained this week. As a result of the loss of additional generation, delays in the return to service of units that are on planned maintenance and limited diesel supply, it has become necessary to implement stage 2 rotational loadshedding from 09:00 until 23:00 in order to protect the power system from a total collapse.”
In the System Status Briefing of 4 September 2019 Eskom warned that in order to avoid loadshedding, unplanned breakdowns needed to be contained at below 9 500MW. In the event generator breakdowns are experienced beyond 10 500MW there will be high usage of emergency resources (diesel and pumped storage generators), which may lead to loadshedding if the supply constraints is sustained for a long duration.
The severe supply constraint being experienced has come about due to high levels of unplanned breakdowns that have exceeded the 10 500MW limit. The supply constraint is caused by, among others, five generating units that are unavailable due to boiler tube leaks. In addition, a conveyor belt supplying Medupi Power Station with coal failed on Saturday 12 October resulting in low volumes of coal being supplied to the power station thus limiting the generating capability to approximately half the station output.
Due to the shortage of generating capacity from coal fired generation, the pumped storage and OCGT generators have been used extensively since Saturday, 12 October which has led to a decline in the dam levels and diesel tank levels.
“We unreservedly apologise to South Africans for the negative impact this may have on them and want to assure the nation that we continue to work tirelessly to ensure security of energy supply.”
Eskom has appealled to customers to continue to use electricity sparingly throughout the day:
• Set air-conditioners’ average temperature at 23ºC
• Switch off geysers over peak periods
• Use the cold water tap rather than using the geyser every time
• Set swimming pool pump cycles to run twice a day, three hours at a time for optimal energy use
• At the end of the day, turn off computers, copiers, printers and fax machines at the switch. Avoid stand-by or sleep mode
By Charlotte Mathews for MiningMx
The under-performance of Eskom’s fleet of coal-fired power stations is currently being concealed by falling demand. Even a 0.1% uptick in GDP growth would result in a resumption of load-shedding, Nelisiwe Magubane, chairperson of Matleng Energy Solutions and a member of the Eskom board, said on Wednesday.
Nelisiwe said Eskom was reviewing its system availability. The previous energy availability factor report of a few months ago predicted 75-80%. At this point availability was 69-70%.
Mike Rossouw, CEO of Independent Energy Thought Leader and a former chairman of the Energy Intensive Users Group, said if demand picked up, South Africa would experience loadshedding twice a day.
Magubane and Rossouw were speaking at the Afriforesight Future of Coals & Bulk Commodities Conference in Sandton.
Rossouw said the root of the problem facing Eskom was that its pricing policy was wrong. It was devised when Eskom was stable and smaller and not building new power stations. “Today it is the worst medicine for Eskom. The good news is that it can be changed overnight, without parliamentary processes, and things will start improving,” he said.
He said price and demand were inextricably linked. About 75% of Eskom’s income was derived from industry and mining, who were paying too much for power. A comparison of South Africa’s industrial and mining tariffs (rather than its average price) with the same sectors globally showed Eskom’s prices were far higher.
For some smelters, 60% of costs are electricity. At the moment 47 South African smelters were shut. Several South African mines were now smelting offshore because they could get better prices elsewhere.
As Eskom increased its tariff, demand for electricity was falling. As a result, Eskom did not have the revenue to pay for its current scale of operations, which were 500% bigger than they were in 2001 measured in number of plants, Rossouw said. The tariff allowed Eskom by the regulator should reward the utility for good behaviour and punish it for bad behaviour.
Rossouw said Eskom’s average price should not be more than 90c/kilowatt hour (kWh), and ideally it should be about 80c/kWh. Eskom has some power stations that can produce at 30-35c/kWh, but others were generating at a cost of 90c/kWh.
A price of 80c/kWh presupposed that Eskom could bring costs under control. “It makes no sense to raise prices because costs are not under control,” he said.
Rossouw said Eskom’s high costs resulted from three main factors. Firstly, it was paying excessive costs for coal as a result of too many small operators supplying bad coal intermittently and destroying road infrastructure at the same time. “(Former Eskom CEO Brian) Molefe’s ‘I don’t want the bakery I just want the bread mantra’ is nonsense,” Rossouw said, because coal and power stations were inextricable.
A second problem was that Eskom had too many assets. Breakdowns were now 20% of capacity from 3% in 2001 and fixing breakdowns required three times as many resources as planned work.
The third problem, Rossouw said, was staff and other costs. Eskom could address those costs, if it was allowed to do so. It should not be stopped from retrenching. “Every company in the world that is in trouble cuts back operations and staff,” he said.
South Africa could be heading for yet another dark period, with an Eskom strike drawing near, according to The South African.
Having just recently posted a record-breaking R20-billion loss in the last financial year, the struggle power utility is now facing labour disputes.
Between 180 and 200 senior managers are dragging the utility before the Commission for Conciliation, Mediation and Arbitration (CCMA) after not receiving salary increases and incentive bonus in the past year. The managers earn between R1.5 million and R3 million per annum.
Eskom recently granted middle managers a 4,7% increase, but they are dissatisfied and are looking for 7,5%.
Yet a recent report on eNCA states that 365 senior employees have had lifestyle audits conducted on them.
Eskom’s vast wage bill, its poor financial management and its uncontrollable debt mean that load-shedding is likely imminent. The utility is struggling to generate sufficient supply – something that will anger South Africans as rumours of a deal brokered with neighbouring Zimbabwe to supply 400MW of power per week.
This is a week that the beleaguered power utility would rather forget.
Yesterday the state-owned enterprise posted net losses after tax of R20.7-billion.
These losses were due to:
- Municipal debt rising to R20-billion
- NERSA only granting a 5.23% tariff increase
- Sales declining by 1.82%
- Wage settlements with unions that were above inflation
Soweto residents demand flat fee
The residents of Soweto, who combined owe Eskom more than R18-billion in unpaid fees, have demanded that prices for unlimited electricity be capped at R100 for each resident:
- Soweto residents demand that their debt be written off
- Of the estimated residents in Soweto, Eskom currently supplies 135 000 with legally connected power
- Only 12% (16 2200) of these customers pay for electricity
- Debt from the area has risen from R3.6 billion in 2014 to its current level of R18-billion
- Eskom is threatening to disconnect non-paying customers, remove illegal connections, and move more houses to prepaid electricity
- Soweto residents are fighting back, launching Operation Khanyisa which sees trained local members illegally reconnecting houses for no charge
Kusile in crisis
Construction on the coal-fire power station Kusile began 11 years ago, in 2008. However, not one unit is currently working:
- All six 800 MW generator units are offline
- Five years behind schedule, only Unit 1 at Kusile has been handed over for commercial service
- Units 2 and 3 are still undergoing testing and commissioning
- Major design, execution and operational problems are being experienced
Based on the factors mentioned above, a number of industry experts believe load-shedding will reappear towards the end of August:
- Major issues with Eskom’s new power plants haven’t been resolved
- Debt is mounting
- Generation remains a massive challenge for Eskom, and capacity is limited
- Operational issues have not been addressed
By Crecey Kuyedzwa for Fin24
Zimbabwe has started to institute planned rotational power cuts to reduce stress on its national grid, following low water levels at Kariba Dam, generation constraints at Hwange Power Station and limited imports from Eskom in South Africa and Mozambique.
Power utility Zimbabwe Electricity Transmission & Distribution Company on Sunday published load shedding schedules for the whole of the country.
“The power shortfall is being managed through load shedding in order to balance the power supply available and the demand,” it said in a weekend statement.
While Eskom in South Africa has eight stages of load shedding, Zimbabwe has announced only two stages for now.
The power supplier divided the country into seven regions, and then further into districts or suburbs. It has given each district or suburb a numerical code.
This code is then checked against a regional table which has two time periods: Morning peak – between 05:00 and 10:00, and evening peak, between 17:00 and 22:00.
When power is cut, suburbs that fall within the time period lose power.
The same suburbs or districts will not generally have power cuts over the same day’s morning and evening peaks. When load shedding moves to Stage 2 and “increases beyond the planned limit” power to additional suburbs will be cut. The power cuts will be in five or eight hour blocks in different areas of the region or district.
Zimbabwe has had to implement power cuts, in part, due to poor rainfall in 2018 and 2019 that led to reduced inflows into Kariba Dam. The dam’s hydroelectric power stations supply electricity to both Zimbabwe and Zambia
Over the years Zimbabwe has been topping up its power supply by importing an average 100MW of power from Eskom and Mozambique, but will be forced to look for more given the current crisis.
Power imports from South Africa’s Eskom also cannot be guaranteed, with the power utility facing a fair share of its own challenges.
Analysts say the impact of the power cuts will be significant to industry, which cannot easily turn to the use of generators amid limited availability of fuel.
By Tom Head for The South African
South Africa could be set for another round of drama from Eskom, as the ailing power utility has reportedly failed to receive R7 billion in loan payments initially set to come from the Chinese Development Bank (CDB).
That’s according to City Press, who have reported that the creditors do not trust their promises over proposed maintenance work. It would be the second time in just over two weeks that one of Eskom’s promised loans failed to materialise after the Brics New Development Bank also did not part with their billions.
Why haven’t Eskom received the loan?
On Easter Friday, Finance Minister Tito Mboweni was forced to grant the power giants an emergency bailout in order to meet salary demands and diesel costs. It’s reported that the CDB has taken note of their actions, and fear that this particular instalment of their cash will be used to plug holes, rather than go towards maintenance.
The loan in question will come to R33 billion in total, and it has been earmarked for the development of the Medupi and Kusile power plants. The new builds are yet to get up to full speed, and they’re struggling to produce the amount of electricity needed to keep South Africa illuminated as more “old units” come to the end of their lifespans.
Load shedding fears resurface
Eskom is very much living hand-to-mouth at the moment. In fact, some of their biggest critics believe this will be the last week where the lights stay on: Natasha Mazzone of the DA has accused the firm of diverting funds from long-term projects in order to keep voters happy before the general election this Wednesday.
Public Enterprises Minister Pravin Gordhan has also refused to rule out the return of load shedding this winter, despite unveiling plans to nip it in the bud at the beginning of April. We’ve already seen how one defaulted payment can spark a financial crisis, so a second one within two weeks is a terrible omen for the company… and its consumers.
By Rene Vollgraaff and Londell Phumi Ramalepe for Bloomberg/Fin24
South Africa’s power cuts could bring economic growth for the year close to zero if they continue at the same severity seen in March, the central bank said.
The wave of rolling blackouts that started in November and are among the worst the country has yet experienced could knock 1.1 percentage point off economic growth, the Reserve Bank said in its Monetary Policy Review released Wednesday in Pretoria, the capital.
Expansion of close to zero would be the worst outcome since 2009, when former President Jacob Zuma came to power.
The nation’s embattled power utility, Eskom, implemented so-called stage 4 load-shedding, which removed about 10% from the grid, last month as ageing plants were offline. The company is battling with high debt levels and declining revenue after years of financial mismanagement. It was at the center of alleged looting under the previous administration that’s referred to locally as state capture.
“It has become clearer, however, that the legacy of state capture of which load shedding is one symptom will constrain growth for a longer period,” the Reserve Bank said. “The damage done by state capture is worse than previously understood.”
The country’s economy went through a recession last year and hasn’t expanded at more than 2% annually since 2013. Growth will only pick up once domestic constraints are dealt with, Deputy Governor Kuben Naidoo said in a presentation after the release of the Monetary Policy Review. Gross domestic product increased 0.8% in 2018.
The central bank pointed out that its estimates, which also show 125 000 jobs could be lost, assume load shedding will persist at high levels throughout the year, and don’t incorporate longer-term costs such as forfeited investment.
“It’s unclear to what extent firms and household have now made their own plans to manage or avoid their reliance on Eskom, which could mitigate growth costs,” the Reserve Bank said.