“Dysfunctional and too complex” – New report details the biggest issues at Eskom coal stations

The National Treasury has released a report comprising independent assessments of operations at Eskom’s coal power stations – and it paints a dismal picture.

A VGBe-led consortium that also included Dornier, KWS, RWE, and Steag experts conducted an independent investigation and compiled the report.

It was based on Eskom’s operational situation from March to May 2023, and was first handed to the National Treasury and the Minister of Finance in September 2023, before being analysed by various Eskom and state stakeholders over the past few months before its release.

“Dysfunctional management processes”

According to the consortium, most of the issues relating to the low Energy Availablity Factor (EAF) of the coal fleet can be attributed to a single cause – “the management system with its governance, structure and processes is dysfunctional and too complex.”

The report highlightedthe following key reasons for this:

• Too many organisational layers and opaque decision-making processes generate a tremendous amount of red tape, with lengthy procedures and a lack of accountability. In many cases the decision-making is delegated to committees, of which there are too many at all levels of the hierarchy.
• The coal fleet is managed centrally, and very limited authority is given to the plant management. The plant management has to follow complex procedures and is therefore unable to manage day-to-day operations and maintenance challenges in a timely and effective manner.
• Eskom generation has been trapped within this complex management system for so long that it is no longer able to maintain or improve the technical performance of the coal-fired power plants.
• Although the problems and their solutions are known, the Eskom management has not been able to implement appropriate measures in a sustainable and successful manner.

The report said that all appropriate solutions to these challenges can be summarised as follows:

“Operation and Maintenance (O&M) must be improved and conducted according to industry standards.”

EAF focus is a dead end

The report added that Eskom’s fixation on EAF numbers is a “dead end” as it ultimately leads to poorer plant performance over time.

“Outage and maintenance activities have been deferred over the last months and years to lift – or at least to maintain – the EAF,” said the report.

“The priority of the Eskom coal fleet operation has been to quickly fix the actual bottle-necks in generation capacities rather than to restore the plants to ‘as new conditions’ after an outage.”

“The cycle has now gained so much momentum that it could lead to the collapse of plants or to further capacity losses.”

“It must be stopped immediately by executing proper maintenance and outage work – even if this means a higher level of load-shedding for a limited period of time.”

• Download the full report here.

Eskom responds

Eskom has welcomed the recommendations of the report and said it is thankful to the National Treasury both for commissioning the report and giving debt relief to Eskom.

As a result of these two things, Eskom said, it has achieved many positive results in the nine months since the report’s assessment period, including:

• Addressed design-related issues at Medupi and Kusile power stations through modifications – significantly improving plant availability.
• Recovered 3,510MW as of January 2024 through concerted efforts focusing on priority power stations – with each of these power stations having its own detailed recovery plan that is centrally monitored.
• Started work at Kusile Unit 6, Medupi Unit 4, and Koeberg Unit 2 that is expected to add 2,500MW to the grid by year-end.
• Reduced the Unplanned Capacity Loss Factor (UCLF) from 34% in January 2023 to 30% in January 2024.

“The Generation Operational Recovery Plan has, so far, arrested the decline of the EAF,” said Eskom.  

“Our objective remains to achieve an average of 65% in the month of March 2024 and an average of 70% in the month of March 2025.”

“The Board has asked our new Group Chief Executive, Dan Marokane, to assess the Generation Operation Recovery Plan with the view to accelerate its execution,” added Eskom Generation Group Executive Bheki Nxumalo.

“He will also make sure that VGBe recommendations are implemented. As a team, we know that ending load-shedding largely depends on disciplined execution of our recovery plan.”

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