It has taken the sixth phase of load-shedding to push the government to add private sector generation capacity to the grid
When Group Chief Executive at Eskom André de Ruyter debated with Minerals Council of South Africa CEO Roger Baxter at the Mining Indaba last week, the pair spoke passionately. Maybe it’s because they’ve known each other for years, or because they’ll both be leaving their roles in the coming weeks, so they’re more open than usual. Despite their rather casual interaction, the topics the pair discussed were serious.
As the Minister of Mineral Resources and Energy Gwede Mantashe has highlighted the previous day, waste-vomiting costs the South African economy around R1 billion per day. And, as indicated by President Cyril Ramaphosa, mineral production is contracted by 9% annually in November 2022, largely due to the energy crisis. “The electricity crisis has had a big impact on the mining industry, as well as on other industries,” he said, adding that the government has been working hard to solve the problem. He also emphasized that the private sector has an important role to play.
During the conversation, Baxter recalled being involved in the compilation of an energy policy paper in 1998. A few years later, he was part of a team that sat down with the government to discuss the findings. At the time, he explained that Eskom would have to start carrying out blackouts around 2007 if they were not given approval to start building new power plants. This suggestion was not well received, and in 2007 and 2008 the first period of load-shedding began.
“Ultimately, we need more capacity, and we’ve needed it since 1998,” De Ruyter said. This additional capacity, he explained, is necessary to give Eskom the room it needs to carry out essential maintenance on its coal fleet. “For this reason, we are really fighting to keep our system at its best. And obviously ‘the best’ is not enough. They are quick to point out that the situation is not going to get any better. If you add the amount of power generation capacity that is currently down, for various reasons, South Africa lost up to 4GW of capacity. “So 2023 will be a difficult year,” he warned.
Painting a picture of the challenges Eskom faces every day, he suggests that license delays, outstanding invoices, long maintenance lead times, security and slow legislative reforms are the main stumbling blocks. For example, while Eskom has done a lot of maintenance and increased the speed of maintenance on coal-fired power plants, the lead time to get parts and spare parts is sometimes up to two years. Paying to complete this maintenance is a challenge, he added. “Some customers do not pay us. In fact, if you add certain municipal debts, the total is about R57 billion. This is the money we need to carry out the maintenance program.
But instead of just looking back at what needs to be done and focusing too much on the current situation, De Ruyter gave credit to those who have helped Eskom overcome the crisis. “I think the credit must go to the mineral sector for being a true partner in helping us overcome this crisis. I think the level of cooperation received from entities like the Minerals Council is very encouraging, because it overcomes the lack of trust in a better way than we could have done.
Moreover, he emphasized that there are many positive developments in the pipeline. “Increasingly, we are attracting more private sector generation capacity to the grid,” he said, adding that projects like this have the potential to add 9 000MW of new capacity. This means that from 2024, we will have to reduce the incidence of load shedding.
“I think the important thing to emphasize is that we cannot stop here. We have an aging fleet, and we have an unreliable fleet that is not well maintained. So, we can no longer sit back and be complacent. We are not can think that an additional 9 000MW means that now it’s okay. We have to double down,” he said.
De Ruyter and Baxter called the reforms detailed in the government’s electricity recovery plan, announced by the president in July 2022, a real step in the right direction. “In my view, these are some of the biggest structural reforms that will unlock the ability of the private sector to invest in the energy system,” said Baxter, outlining that reforms like this play an important role in lightening the current situation in Eskom.
“Unfortunately, it has gone through a major crisis and the sixth stage removes the burden to galvanize the government,” said De Ruyter. “I just wish it didn’t have to come, and we could take steps to solve this problem before. While the situation is improving, our obstacles are many and structural. If we can’t solve the many problems we have, we won’t be able to solve this crisis and continue advanced.
– Joanne Carew