Eskom, South Africa’s state-owned power utility, is at a turning point according to Group CEO André de Ruyter. Professor Anton Eberhard, director of the Power Futures Lab at the University of Cape Town’s Graduate School of Business posed some questions to the power utility’s CEO.

Anton Eberhard: The performance and availability of Eskom’s power stations have declined from above 90% in the early 2000s to an average of 64% in the 2021 financial year. Is this long-term, historical trend inevitable as Eskom’s kit ages? Obviously, Eskom should do all it can to improve operations, but what is a realistic expectation of future performance? Will we see energy availability factors above 75% again, or will average power plant availability now remain in the 60s%?

André de Ruyter: Eskom’s fleet of coal-fired power stations, excluding Medupi and Kusile, are on average 41 years old. These power stations have been run far harder than international norms, and have not been maintained as they should have been. In addition, the new generation plants, Medupi and Kusile, have design defects that will take time and money to address. We, therefore, have a generation system that is challenging to operate.

As one would therefore expect, the long term trend in energy availability factor has been downward. In January 2020, when I had just started, we took the decision to embark on a campaign to ramp up our maintenance in order to increase the energy availability factor. At the time, we made it clear that catching up on the maintenance backlog would mean an increased risk of load-shedding, as we took units down for outages typically lasting up to 100 days each. The energy availability factor, therefore, has been even more depressed than one would expect by extrapolating the long term trend, because planned maintenance is deducted from the energy availability factor.

We have recently seen some major units returning to service after long outages at Duvha and Tutuka, which have played a significant role in alleviating the pressure caused by the incidents at Medupi 4 and Kendal 1. In the medium term, we should therefore expect some recovery in the energy availability factor as our planned maintenance returns to a more typical level. We are working hard to get the energy availability factor above 70%, but given the age of the fleet, it would be unrealistic to expect a sustained performance above 75%. This is the reason why we have welcomed policy interventions to increase the available generation capacity for the country, as ultimately, we need more power to enable South Africa to grow.

Anton Eberhard: Declining power station performance is one reason for loadshedding and power cuts which South Africa experienced in 2007, 2008, 2014, 2015 and every year since 2018. But you have pointed out that South Africa is also short of power. These shortages will increase as old power stations reach their end of life. You said recently that 22GW will need to be decommissioned by 2035. The Integrated Resource Plan 2019 indicated around 33GW of new power generating capacity has to be added by 2030. That will require well over a trillion rand (over US$68 billion) in new investment. In a number of speeches you have made the point that because of Eskom’s high levels of debt, and a fiscally constrained state, most of this investment will need to come from the private sector. It’s unprecedented for an Eskom CEO to speak in this way, effectively encouraging private competition, but I guess you are alerting us to the urgency and the magnitude of the challenge if we are to keep the lights on. Can you elaborate on what needs to be done to restore electricity supply security?

André de Ruyter: Eskom has publicly stated that the country currently has a generation capacity deficit of 4,000MW. And that is at the current levels of economic activity and available generation capacity. This gap will obviously increase should economic activity rise without commensurate investments in generation capacity, which result in increased load-shedding. This need not be the case. South Africa should never have been forced to choose between protecting Eskom and having electricity.

We are pleased that today everyone acknowledges the solutions to South Africa’s electricity deficit cannot be left to Eskom and the government alone. It is as much in private capital’s interest to increase available generation capacity as it is in the government’s interests. While the state has a very limited ability to make any further significant investments, the private sector has indicated its willingness to invest in generation capacity to solve the single most important factor holding back the country. And that is electricity. In this context, we were very pleased with the lifting of the licensing requirement from 1MW to 100MW, as we believe that this step will enable substantial new capacity to be added in the short term.

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Source: EsiAfrica

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