The Electricity Minister recently revealed that Eskom only has R4 billion of its R29 billion diesel budget left for the current financial year ending in March 2024.
Energy analyst Fanele Mondi told eNCA that this is a significant problem, as the utility spends approximately R2.5 billion on diesel every month in a “bad month”.
Eskom uses diesel to power its open-cycle gas turbines (OCGTs) during periods of high demand.
However, the diesel used to power them is costly, making them more expensive to run than a traditional coal power station.
Mondi said Eskom’s remaining budget for the year is particularly problematic as the next two and a half months will likely be high-demand months, and the OCGTs will, therefore, likely be needed to meet this demand.
He emphasised that the OCGTs are only a small component of electricity generation in the country, and there have been marginal improvements in Eskom’s electricity availability as units at Kusile are in the process of synchronising to the grid.
However, he warned that the reliability of Eskom’s supply is still uncertain, as the utility still regularly faces unplanned capacity loss at its generation units.
The risk is, therefore, still high, and Eskom could run out of money for diesel before the end of the two-and-a-half months.
In 2023, the cost to run Eskom’s OCGTs skyrocketed to R21.46 billion from R10.10 billion in 2022. These OCGTs produced 3,018 GWh in 2023 compared to 1,826 GWh the previous year.
Eskom said it had to rely on diesel this much in 2023 due to supply constraints at its coal plants.
Frequent breakdowns impacted its coal plants, “requiring higher use of diesel and fuel oil for unit start-up procedures and combustion support”.
Eskom’s diesel budget running low was already highlighted as a problem in November last year when the utility had used R20 billion of the budgeted R29 billion.
The utility’s management and board chair made a presentation regarding its financial health to Parliament’s Portfolio Committee on Public Enterprises in November.
Acting CEO Calib Cassim said Eskom expects to spend the full R29 billion on its OCGTs in the current financial year. “Use of diesel is necessary but unsustainable,” Cassim said.
“Although diesel spending is still unacceptably high, it is in line with expectations and still driven by the shortfall in supply by renewable and short-term IPPs, as much as by Eskom’s own poor generating plant performance.”
This article was first published by Daily Investor and is reproduced with permission.