Is There Finally a Credible Plan to Fix Eskom?

We have all been waiting for Eskom to have a plan and now a solution might be here to aid the old and unreliable coal power stations.

Jan Oberholzer, Eskom chief operating officer said in an interview with Engineering News last week that before the end of the month, the board would be considering a new approach in how to maintain the fleet of coal power stations. 

The thinking is that Eskom would remove a number of units for service for an extended period of time, so that it has the space to do proper maintenance. Oberholzer went on to say that he thinks that Eskom needs to be bold and tell the public that they have 25 000MW 24/7, 365 days a year and to take whatever buffer there is to maintain the units. He also said that units that need any maintenance should be taken off so that they can be maintained properly.

Koeberg is maintained rigorously and Oberholzer said that the same respect needs to be given to the coal units. 

At the moment maintenance of the coal fleet is continuously being deferred which results in poor performance and reliability of the plant. Maintenance is already shifted out as the utility faces extremely high levels of plant breakdowns, which comes less than a month after we reached stage 6

The problems that are currently being faced by Eskom have been years in the making. The scenario of committing to a guaranteed 25 000MW of supply will give the board a sliding scale of options to deliberate and Eskom will have the room to do maintenance on around 18 000MW of plant. The bulk of the 13 000MW to 14 000MW of plant that is experiencing breakdowns will then effectively shift into a planned maintenance mode. The backlog on maintenance is so large that this strategy would need to be followed for about two years. 

So what are the possible scenarios?

Committing to a reduced level of supply will leave the country with two options. 

The first of these options is that we enter a state of almost permanent load shedding where the shortfall is made of power rationing with the level determined by how much power Eskom has committed to supply. 

The second option is to bring a new emergency supply on stream as quickly as possible. The Department of Mineral Resources and Energy has started a process to find a way to look at sorting the short term supply gap by focusing on demand side management and new generation capacity. The request for information on the process to gain between 2 000MW and 3 000MW has been published with a deadline of January 31st. Further rounds of renewable energy procurement have stalled. 

If the maintenance strategy is pursued, then there will most likely be a combination of these. However, Eskom is known for unreliability and it is difficult to see that will be able to constantly supply 25 000MW with plants undergoing long term maintenance that can’t be called upon to plug the supply gap. 

At the moment a process seems to be underway by the presidency to strengthen, replace and overhaul the Eskom board, which could mean that the maintenance strategy might not get discussed this month. 

Eskom is not able to commit to this strategy in isolation and it will require political will from the presidency, the minister accountable for Eskom and cabinet as well as the ruling party. It will also not be easy to sell this plan to South Africa, but the public is frustrated and accept that it’s not just working right now. 

The treasury will also have a say as they will need to sell the idea to the rating agencies and will probably have to provide further financial support to Eskom. Removing a substantial level of supply for a period for two years will have an impact on Eskom’s revenue and its income statement will weaken further. 

When it comes to Eskom there are no easy decisions, but the fact is, time is running out and something has to be done. 

Article Source: https://www.moneyweb.co.za/news/companies-and-deals/finally-a-credible-plan-to-fix-eskom/