The truth behind Eskom’s crisis

As the power system teetered on the brink of collapse in January, Eskom chief executive Tshediso Matona stated the obvious: “We have arrived at a point that does not allow us to ignore the health of our plants”.

He told us how the utility would do more maintenance than ever before, with the not-so-thinly-veiled implication that previous chief executive Brian Dames and his executive team sat around playing solitaire and did the absolute bare minimum maintenance in the nearly four-year period Dames was in charge.

Said Matona: “If we did not decide to keep the lights on during the World Cup, South Africa would not have been where it is today.”

The problem, of course, is that the World Cup was a two-month period right at the start of Dames’s tenure. I don’t know Dames, nor have I spoken to him since the announcement of his resignation in December 2013, but those decisions to run the plants long and hard over 2010 would’ve been made before he arrived (and likely in the corridors of Cabinet or The Presidency or Luthuli House).

In fact, during the winters of 2012 and 2013, Eskom did planned maintenance right up to the coldest months (June/July). The severity of the decision to “keep the lights on” during 2010 was clear two years later (not now!). By then, Eskom was running its planned maintenance at 12% (around 5 000 MW, on average) – a level we simply hadn’t seen before. And it is unlikely to be seen this year.

Eskom maintenance

In 2013, Dames told us in his deadpan fashion that “winter will be different to previous winters as Eskom will have to perform long duration planned maintenance during the coldest months”.

At the time, he added that “Our power stations are ageing and are being run hard. Sustained high levels of planned maintenance are needed to ensure reliable performance.”

Dames is a convenient scapegoat, even though he wasn’t mentioned explicitly. So too, our President’s protestations that the current supply crisis is a result of apartheid/government being so successful at electrification/wet coal (pick one or more).

The interesting thing about Matona’s “colour” in January for the current state of Eskom’s generating fleet is that none of it was on any of the prepared slides. These were off-the-cuff (unchecked?) remarks.

At that briefing, the utility assured us that it would no longer defer or ignore maintenance. Mongezi Ntsokolo, Group Executive: Generation, put it plainly: “We are starting differently with maintenance as from today… We want to push as much maintenance before winter as possible, we have not decided exactly what we will do.”

So, a plan to do “as much as possible” without a plan. Sounds about right.

The truth is the long-term outage at Duvha (costing 600MW) and the impact of the “cracked” silo at Majuba (costing anywhere from 1 210MW-2 310MW) have severely impacted Eskom’s ability to do any maintenance at all, never mind the amount necessary.

Matona quantified the scale of the problem. The maintenance schedule… “is asking for 2 000MW of diesel capacity and an additional 3 000MW more capacity than we have”.

Put bluntly, Eskom needs to find 5 000MW of capacity just to do proper maintenance.

And it’s not going to be able to find it.

But we knew this already. It’s taken the media six weeks to start figuring out just how bad things are at Eskom, something I’d detailed on Moneyweb in early December. In theory, Eskom had a window over the holidays to do more maintenance than usual because of lower demand.

But, ironically, Eskom under Matona has done less planned maintenance over the peak December/January period than it did a year ago when Dames was still in charge, as data compiled by Moneyweb shows (on this chart, more is better).

Eskom planned maintenance – 2014 and 2015

The system was so tight over Christmas, that Eskom could barely manage 6 000MW of planned maintenance (versus 8 000MW at the exact same time a year ago). We don’t know the exact figures for the two dates as Eskom did not publish system status information on December 25 or January 1 (something it did do in 2013/2014), but its impossible for Eskom to have suddenly burst to more than the 5 500MW level simply because of the quantum of unplanned outages.

Most worryingly, it was able to run planned maintenance at between 6 000MW and 8 000MW in the second half of January last year, compared to under half of that this year.

The unplanned outages are at levels never ever seen before. Last Monday, a full quarter of Eskom’s generating capacity was offline because of unplanned reasons. And the trend is not good (on this chart, more is not better).

Eskom unplanned outages

Obviously, it is able to do maintenance in the unplanned outages, but it’s highly unlikely any of this is meaningful, given the urgent need to get the tripped/offline units back online as soon as possible.

Without this gap to do maintenance, there’s a decrease in performance, and – to quote Matona – the “increase in unplanned outages had a compounding negative effect on power system reliability”.

It’s a downward spiral with no end in sight.

Even if you take the ±2 000MW related to Duvha and Majuba out of the equation, the situation still looks worse than it did a year ago.

But Eskom can’t just magic away that 2 000MW headache it’s sitting with. That unit at Duvha will be offline for the next three to four years. The reconstruction of the silo at Majuba will also take at least three years.

That means the first unit at Medupi coming on stream is not the oasis in the desert it’s being made out to be. Those 800MW are not even enough to replace the shortfall from Majuba! And that’s presuming Eskom can get it producing anywhere near full capacity, which seems unlikely given the synchronisation “issues”. Best case: it’ll probably be enough to offset the 600MW shortfall from the exploded Duvha boiler.

So again, Eskom is adding capacity and not even able to stand still.

Little wonder Eskom senior management prays every day, if the City Press is to be believed (which it should be). Matona’s been AWOL for a large part of January… we’ve heard from Acting CEO Dan Marokane (whose day job is Group Executive: Group Capital) practically since that briefing. (That’s another story altogether.)

The simple truth is that another catastrophe like Duvha or Majuba will push us over the edge. I think nearly everyone at Eskom knows that.

How do we get out of this mess? Some thoughts, tomorrow…

*Hilton Tarrant works at immedia. This article was republished with permission from Moneyweb

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