Eskom stuns South Africa

Eskom performed a remarkable turnaround of its operations in 2024, drastically improving its energy availability factor (EAF) over the previous two years and significantly reducing its unplanned capacity loss factor (UCLF) compared to 2023.

Energy expert Chris Yelland described the state-owned power utility’s turnaround efforts as a “great performance”, which, in combination with reduced demand and increased supply, has allowed for load-shedding to remain suspended in South Africa.

At the same time, Eskom carried out markedly more planned maintenance in 2024 than it did in 2023.

“From April 2024, the week-on-week EAF trend graph for the 2024 calendar year is consistently higher than that for 2023, with planned maintenance (PCLF) consistently higher for the full 2024 calendar year and UCLF consistently lower for the full 2024 calendar year,” said Yelland.

For reference, EAF shows the percentage of time power stations were available for use when needed. It is a core measure of performance for any power utility.

PCLF is effectively a measure of the ratio of Eskom power stations that are offline for planned maintenance, while UCLF can be viewed as the percentage of generating units that are offline on unplanned outages.

The reduced demand on Eskom’s grid and improvements in generation capacity enabled the power utility to suspend load-shedding on 26 March 2024, and the demand reduction mechanism has yet to be reintroduced.

According to its latest power alert, load-shedding had been suspended for 282 days as of Friday, 3 January 2025.

“Eskom reached 282 consecutive days without implementing load-shedding since 26 March last year, further signalling the structural improvements in generation performance,” it said.

Many South Africans were sceptical about the abrupt and long-lasting load-shedding suspension.

However, the state-owned power utility said its improved performance came through the implementation of its Generation Operational Recovery Plan, which commenced in March 2023.

The plan focused on accelerating planned maintenance, increasing preventative maintenance, and completing major plant refurbishments and life extension projects.

Eskom focused on its six worst-performing power stations, which had contributed 70% of Eskom’s unit failure in previous years.

It noted that five power stations were performing well and thus focused on poorly performing plants as they present a higher threat of preventing the utility from meeting demand.

According to Eskom board chair Mteto Nyati, the Generation Operational Recovery Plan is markedly different from the one under former CEO André de Ruyter, as Eskom has partnered with original equipment manufacturers for the new plan.

“When we take a plant down, we work with people with deep expertise about the equipment used at that plant,” he said.

In prior years, maintenance was carried out by people with limited or no understanding of the equipment at Eskom plants.

The charts below show Eskom’s EAF, UCLF, and PCLF data for 2024, courtesy of Chris Yelland.

Major financial turnaround expected

During an overview of Eskom’s performance during the first half of the 2024/25 financial year, CEO Dan Marokane revealed that the power utility is forecasting a R10-billion profit.

This would be a marked turnaround from the R55 billion loss in the previous reporting period. It would also be the first time Eskom has turned a profit since 2017.

Marokane’s revelation came after Eskom released its financial statements for the 2023/24 financial year, which showed the monetary impact of the worst year of load-shedding in South Africa’s history.

The power utility reported a R55-billion after-tax loss, which was attributed to an accounting adjustment and increased fuel expenditures to prevent higher load-shedding stages.

With cost-cutting measures, the accounting adjustment being a once-off hit in 2023/24, and the power utility’s heightened performance, Eskom expects to report an after-tax profit of R10 billion in 2024/25.

Its improved performance will be a primary contributor. CFO Calib Cassim said poor operating performance translates directly into poor financial performance.

If the power utility cannot meet demand, it loses out on electricity sales and is expected to use more expensive generation methods, such as open-cycle gas turbines (OCGTs).

Eskom burns diesel in OCGTs when required to compensate for the deficit between demand and its available generation capacity.

It has already saved billions by using significantly less diesel to run OCGTs. Between 1 April and 22 August 2024, Eskom spent R3.59 billion on diesel, roughly 75% less than during the same period the year before.