Eskom’s big blunder – How poor decisions and corruption caused load-shedding

South Africa is in the midst of an electricity crisis, which is curiously the result of plans by Eskom to prevent this exact scenario from happening.

Energy analyst and EE Publishers MD Chris Yelland explained that Eskom was faced with two choices a few years ago:

  • Spend money on maintenance of old power plants to ensure they continue to function optimally.
  • Divert the maintenance funds to the Medupi and Kusile power plants to expedite bringing their 800MW units online.

Medupi and Kusile have six 800MW generation units each with more modern technology and higher efficiency than Eskom’s older power stations.

If all 12 of Medupi and Kusile’s generation units were functioning optimally, they would add 9,600MW of electricity to the grid.

This, in turn, would relieve pressure off Eskom and allow it to decommission old power stations which are expensive to run and maintain.

Eskom therefore decided to divert maintenance funds to finish construction at Medupi and Kusile.

Plan backfired spectacularly

Yelland explained that spending money which should have been used for maintenance on Medupi and Kusile has backfired spectacularly.

Instead of having two fully-functional and modern power stations adding 9,600MW to the grid, here is what actually happened:

  • Only 3 units at Medupi and 1 unit at Kusile are in commercial service. The other units are still under construction or going into commission.
  • Instead of producing 800MW each, these units can only generate 600MW each before problems arise.
  • The new generation units at Medupi and Kusile have serious problems, with an energy availability factor of around 50%. This should be between 85% and 90%.
  • The power generation units at Medupi and Kusile trip regularly and have worse reliability than Eskom’s older power stations.

Reasons for these problems are corruption and mismanagement at Eskom and its partners.

Widespread corruption and mismanagement have also seen the cost to build Medupi and Kusile increase by more than R300 billion, reaching R145 billion and R161.4 billion respectively.

Additionally, the Special Investigating Unit is currently looking into the theft of R170 billion from Eskom: R139 billion of which is related to 11 contractors who helped build the Medupi, Kusile, and Ingula power plants.

With Eskom’s Medupi, Kusile, and Ingula plants costing R334 billion to construct, the R139 billion stolen by contractors makes up a large chunk of the total price tag.

Yellend said Public Enterprises Minister Pravin Gordhan has even suggested that the strategy to divert maintenance money to Medupi and Kusile may have been because corruption is easier with capital projects.

Eskom left in a tough spot

With Medupi and Kusile not functioning as planned, Eskom is in a tough spot.

Medupi and Kusile are not adding nearly enough electricity to the grid to relieve pressure off Eskom and allow it to take older power stations offline.

The older plants now need to run optimally, but they have not been maintained properly for years because funds were blown on Medupi and Kusile.

Eskom does not have enough money to increase maintenance and finish Medupi and Kusile, and Yelland said Eskom now wants to backtrack on its previous strategy – planning instead to focus its finances on maintenance of older plants again.

To get the older plants to run optimally will not be easy, however, because of their deterioration in recent years.

Just like a car which is not serviced, these power stations are now seeing more unexpected breakdowns which are costly to repair.

Winter is coming

With an increase in unplanned outages and a much lower energy availability factor in 2019 than in previous years, Eskom will have to perform miracles to prevent load-shedding this winter.

Yelland said South Africa’s electricity demand is currently very close to the supply, which means any unexpected event can lead to load-shedding.

With electricity demand significantly increasing in winter months, Eskom will have to rapidly increase its power generation.

This will not be easy, and Energy expert Ted Blom recently told MyBroadband that load-shedding will “absolutely” return – it is only a matter of time before the power cuts are back.

Now read: Load-shedding is coming back – I guarantee it

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Eskom’s big blunder – How poor decisions and corruption caused load-shedding