The Eskom crisis update: What comes next?

Load$-$shedding is increasing as the supply gap grows Eskom has indicated that citizens and businesses should prepare for at least four hours of daily power outages for at least the next two years, with $2,000$ MW of the demand $$load$$ regularly being $$shed$$ to keep the grid stable $($load$-$shedding$).$ Experts, including the former Eskom CEO, expect eight hours or more of load$-$shedding to be the norm by July $2023.1$ Closing the supply gap would require $6-9,000$ MW in the immediate term. FIGURE $1$: Load$-$shedding per cumulative GWh shed per year $2018-2023$ Source: Bureau Economic Research, $2023.$

Eskom supply continues to decline and recovery is unlikely The energy availability factor $($EAF $2)$ of Eskom$$s plants decreased from $66\%$ to $58\%$ between $2019$ and $2022.$ This trend looks likely to continue. In the first two months of $2023$: energyforgrowth.org $1$

$$ EAF was consistently below $55\%,$ with an average of $52\%$ and low of $49\%($Figure $3).$

$$ The unplanned outage factor $3$ averaged $34\%$ compared to $30\%$ the previous year.

The declining performance of Eskom$$s coal fleet $$ which accounts for $86\%$ of its installed capacity $$ is the main cause. Most of the fleet is fast approaching or past retirement age $($Figure $3).$

After decades of poor upkeep and insufficient investment, it is unreasonable to expect improvements without massive and costly maintenance works $($which would also take power energyforgrowth.org $2$ offline$).$ But analysts suggest this approach would be more expensive than procuring new power and is unlikely to lead to a significant recovery in capacity due to the extent of damage at many plants. $5$ Old and damaged plants aren$$t the only issue; newer plants have also significantly underperformed. Many $$ including Eskom $$ attribute related delays, spiraling costs, design defects, and poor performance to corruption and sabotage. $6,7,8$

$$ Tutuka: With an EAF of around $33\%$ in January $2023,$ the $3,650$ MW Tutuka coal plant is the worst performing of Eskom$$s fleet despite being one of the $$younger$$ plants. $9$

$$ Medupi & Kusile: The biggest and newest plants are designed to run with an EAF above $80\%,$ but Medupi$$s EAF for January $2023$ was $58\%$ and Kusile $25\%.$ The two $4,800$ MW plants are planned to be completed over a decade late $($in $2023$ and $2026,$ respectively$)$ and the units currently in operation are already underperforming. The pipeline of new power outside Eskom is growing Recent amendments to the Electricity Regulation Act $($ERA$)$ allow for:

$$ More private power. Legal changes increased licensing thresholds from $1$ MW to $100$ MW$.($Previously$,$ any new generation capacity above $1$ MW could only be procured by the Minister of Minerals and Energy.$)$ The private sector response has been immediate. At the end of February $2023,$ renewable private projects at $$budget quote$$ phase $($a key step before financial close$)$ increased to $13\mathrm{.}4$ GW$,$ overshadowing the ~$3\mathrm{.}8$ GW in private power procured by the Ministry of Minerals and Energy through the REI$4$P$.$

$$ Municipal power. Municipalities can now procure power directly instead of going through Eskom. Some of South Africa$$s biggest $($and richest$)$ municipalities have already begun to do so$.$ For example, eThekwini plans to procure $400$ MW from gas and solar IPPs, Ekurhuleni has awarded tenders to $46$ IPPs for $680$ MW from renewables, and the City of Cape Town has tendered $300$ MW$,$ also from renewables. $10$ Municipalities also plan to increase solar rooftop. A $25\%$ national rebate for solar PV was announced in early $2023.11$ It should be noted that structural inequalities mean that not all municipalities or citizens can contribute to or benefit from the increased scope for private participation in the sector $$ government support and interventions will be essential to advancing energy justice. Nevertheless, these trends indicate that municipalities, the private sector, and individuals can be highly responsive to government actions that create opportunities for their involvement in the power sector.