Eskom doesn’t have money to fix or kill run-down power plants

Eskom does not have enough money to repair or refurbish sixteen of its 99 coal generation units, City Press reported.

As a result, these generation units — with a combined generating capacity of 2,635 megawatts — are not used.

This is enough power to prevent two or three load shedding stages and is more than the 2,000MW South Africa aimed to procure with its emergency power tender — including the torpedoed Karpowership deal.

Eskom said that when its older power station units reach a point where large expenses are needed to service a turbine or generator, an evaluation is done to decide if funding for the repair is approved or whether the unit is put into reserve storage.

The utility said that fourteen generating units across its Hendrina, Grootvlei and Komati power stations are mothballed in this way.

One unit each at Duvha and Hendrina is offline due to breakdowns that Eskom has decided would be too expensive to repair.

The units are not permanently decommissioned, Eskom said. If circumstances change and it is decided to return them to service, these units could still operate within a relatively short lead-time.

According to the City Press, de-mothballing plants placed in reserve storage can happen within a year or so, though the cost of repairs and amount of time needed varies between units.

Chris Yelland
Chris Yelland, managing director of EE Business Intelligence

Chris Yelland, managing director of EE Business Intelligence, said it would be better for Eskom to bring these units out of storage than commit South Africa to emergency power purchase agreements at the relatively high cost of R1.50 per kilowatt-hour.

Eskom said that it does not have the money to refurbish or repair the sixteen units because the annual tariff increases approved by the National Energy Regulator of SA (Nersa) do not cover its costs.

Eskom implemented a Nersa-approved average tariff increase of 17.8% on electricity supplied to municipalities and a 15.06% increase to its direct customers from 1 July 2021.

Yelland said that he was unconvinced by this argument as Eskom uses expensive diesel in its emergency turbines to keep the lights on.

He said that Eskom may not be completely forthcoming about the condition of the units it has placed into reserve storage and that some of them may have been stripped for parts.

“But let’s take Eskom at its word. Let it show us that the units can be put back into operation soon,” the City Press quoted Yelland as saying.

Aerial view of Eskom’s Komati power station

Fully decommissioning a power plant — such as the Komati Power Station, which currently has eight of its nine units in reserve storage — is also costly.

Eskom estimated that the cost to decommission its coal-fired power stations and associated mines is over R26 billion.

Reuters reported this week Eskom is in talks with development finance institutions to raise R143 billion to shut most of its coal power plants by 2050.

The power plants may be re-purposed, and the sites used to produce power from renewable energy or natural gas.

Eskom is looking at converting Komati to a solar and battery storage site and could present the project at COP26 to show it is serious about reducing carbon emissions, Reuters reported.

South Africa is the world’s 12th biggest emitter of greenhouse gases, and Eskom accounts for two-fifths of its emissions.

According to statistics collected by Our World In Data, over 85% of South Africa’s electricity production still relies on coal.

Eskom’s plan to raise money to adapt or shutter its coal plants comes amid South Africa’s goal to reach net-zero emissions by 2050.

Part of South Africa’s plan to reach net-zero emissions is carbon taxation.

The first phase of South Africa’s carbon tax has a rate of R120 per ton of carbon dioxide equivalent emissions.

“This rate will increase annually by inflation plus 2 per cent until 2022, and annually by inflation thereafter,” the South African Revenue Service explains on its website.

The second phase of South Africa’s carbon tax will come into effect after the Climate Change Bill is passed in parliament and signed into law by the president.

Now read: Good news about Eskom’s debt

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Eskom doesn’t have money to fix or kill run-down power plants