South Africa

THE INTERVIEW

Outgoing Eskom COO Jan Oberholzer supports coal plant life extension, but doubts energy availability target

Outgoing Eskom COO Jan Oberholzer supports coal plant life extension, but doubts energy availability target
Eskom’s outgoing chief operating officer, Jan Oberholzer. (Photo: Waldo Swiegers / Bloomberg via Getty Images)

Eskom’s outgoing chief operating officer (COO), Jan Oberholzer, says he supports the idea of extending the life of some of the utility’s ageing coal-fired power plants, but believes that the power utility’s current target for improving their performance by the end of March next year is unrealistic.

Speaking before news broke of Electricity Minister Kgosientsho Ramokgopa’s controversial proposal to revise the shutdown schedule for some of Eskom’s oldest plants, Eskom’s outgoing COO, Jan Oberholzer, described the minister’s earlier public comments on the strategy as “responsible”, given South Africa’s worsening shortage of generation capacity. 

“If it makes economic sense, if we can do it in a responsible way, within legislation, I believe we need to look at this seriously, because we’re not going to have additional capacity that soon on the grid,” he said in an exclusive interview with Mariam Isa. 

Oberholzer, who is due to retire from Eskom at the end of April, pointed out that according to Eskom’s current generation strategy, more than 20,000GW of generation capacity from the coal-fired power plants which form the backbone of its fleet is due to be retired by 2035. After that, only six coal-fired plants would be left online: Medupi, Matimba, Kusile, Kendal, Lethabo and Majuba. 

“Can we perhaps, while we have this challenge, look at some of the power stations that are coming to end-of-life, and by investing some money in them, perhaps get an additional year, or whatever the case may be, out of them? You have people there, you have coal, you have everything. So, let’s see if we can extend this a little. 

“If we can, some units, at some of these stations, extend a little bit, I believe we must not be naive and say it’s not clean so we’re not going to do it. I believe everything needs to be done in parallel.”  

Implementing Ramokgopa’s plan may undermine South Africa’s international climate change commitments set by its carbon emissions reduction targets, and jeopardise $8.5-billion of international finance pledged to support the country’s Just Energy Transition programme.

Formidable challenges

Ramokgopa’s proposal was endorsed by the ANC’s National Working Committee on 17 April. But there are still formidable challenges, given the lack of alignment with a number of standing government policy positions.  

Public Enterprises Minister Pravin Gordhan has said that a full retrofit and refurbishment of the fleet to upgrade the coal-fired power stations to meet South Africa’s current minimum emission standards would cost about R400-billion. Ramokgopa has suggested extending exemptions from the minimum emission standards for some of the power stations to facilitate their life extension. 

However, the Cabinet refused to accept Ramokgopa’s proposal when he presented it at an emergency meeting called by President Cyril Ramaphosa on 19 April. Instead, the Cabinet instructed him to take it to the next meeting of the Presidency’s National Energy Crisis Committee to ensure consensus and consistency with the positions of the relevant ministers and ministries involved. 

Oberholzer said that Eskom had already looked at the possibility of extending the lives of the Grootvlei, Camden and Hendrina power stations, which were commissioned in 1969, 1967 and 1970, respectively. 

Eskom’s Komati power station, which began operating in 1961, was the first to be fully decommissioned, in October 2022, and is being repurposed into a wind and solar energy plant, with finance from the World Bank.  

“Bringing Komati back now, I don’t believe that that is going to work because there’s very little left at Komati,” Oberholzer said, adding that although he was also in favour of ‘going green’, it was “important to understand what was practical in South Africa” in the short term.  

“Do we want to have power, or do we want to adhere to policies? We are where we are… We need to decide: do we want electricity, or don’t we want electricity?” 

Oberholzer said that work was on schedule to address the problems at Eskom’s newest and biggest coal-fired stations — Medupi and Kusile — and to extend the life of Koeberg, its only nuclear power station.  

Koeberg’s operating licence expires in July 2024, but Eskom has since applied to the National Nuclear Regulator (NNR) for two operating licences to extend the plant’s life by 20 years — one for Unit 1, which would expire in July 2044, and the other for Unit 2, which would expire a year later, because Unit 2 was commissioned a year after Unit 1. Oberholzer says he is confident the NNR will agree to this, which will give an additional year for the completion and licensing of Unit 2. 

But Oberholzer says it would be a mistake to think that the entire coal-fired fleet could be fixed quickly, and added that near-term targets to raise the utility’s overall energy availability factor (EAF) — which measures the availability of all the units in the Eskom fleet to produce electricity over a certain period — were likely to be missed.  

By mid-April, Eskom’s overall week-on-week EAF had dropped to 50.24%, with the average EAF of 56.56% for the financial year (FY) 2022/23 significantly missing the 60% EAF target set by Gordhan and Eskom chairperson Mpho Makwana. The EAF targets for FY 2023/24 and FY 2024/25 are 65% and 70%, respectively.  

“My view is we need to turn this nosedive around. If we achieve — and this is my view — 60% EAF for FY 2023/24 we will have done well. I don’t believe the target of 65% is achievable based on where we are now. I just don’t believe it’s realistic,” he said. 

Easing of load shedding

Oberholzer said that 2023 would continue to be a difficult year in terms of power cuts, but there should be a substantial easing of load shedding intensity by early next year, following repairs at Kusile and Medupi and the refurbishment of Koeberg for a 20-year life extension. 

He said he was confident that units 1, 2 and 3 at Kusile, which had to be taken offline after ducting to their common smokestack collapsed in October 2022, would be back online by the end of 2023 after the construction of three temporary smokestacks and new temporary ducting that would bypass the flue gas desulphurisation plants. 

Although the three units would then not comply with South Africa’s minimum emissions standards, an exemption from these regulations has been obtained from the Department of Forestry, Fisheries and the Environment. This would restore 2,100MW to the grid, equivalent to two stages of load shedding.  

Unit 5 at Kusile, taken offline after a fire in 2022, would be back in full commercial operation by the end of April 2024, he said. 

Oberholzer further confirmed the target date to bring the last unit at Kusile — Unit 6 — into commercial service by the end of 2024 might slip to early 2025, but that Unit 4 at Medupi, which was taken offline after a massive hydrogen explosion in August 2021, was on track to return to service in September 2024.  

Oberholzer said he was also confident that Unit 1 at Koeberg, currently offline for the replacement of three steam generators would be returned to service by early August 2023.  

“That will be the first unit to have its three steam generators replaced. The three old steam generators have been disconnected, cut out and are in interim storage. Now we need to install the three new steam generators on Unit 1. While we are doing this, we are also doing extensive maintenance.” 

Oberholzer said Koeberg’s second nuclear reactor, Unit 2, would be taken offline in October 2023, for between 200 and 210 days for the replacement of its three steam generators. 

Koeberg has been in operation since 1984 and generates nearly 2,000MW of power. The plan is to prepare it for another 20 years of service by July 2024 when its current operating licence expires, but the refurbishment and life-extension process has been hindered by delays, and time is running out.   

Eskom spent about R22-billion on diesel fuel for its open-cycle gas turbines in the Western Cape in FY 2022/23. But for the current FY 2023/24 ending on 31 March 2024, Oberholzer estimates that Eskom would need to spend between R30-billion and R40-billion on diesel. It is expected that this may reduce load shedding by up to two stages at times. 

Much of the money for this should be available within Eskom following substantial debt relief from Treasury, he said. DM

Mariam Isa is an independent journalist. Chris Yelland is managing director at EE Business Intelligence.

© Copyright 2023 – EE Business Intelligence (Pty) Ltd. All rights reserved. This article may not be published without the written permission of EE Business Intelligence.

For tickets to Daily Maverick’s The Gathering Earth Edition, click here.
Gallery
Absa OBP

Comments - Please in order to comment.

  • Francois Smith says:

    Absolutely no surprises here. The problem is that the ANC is permanently overestimating their and their cadres ability. Mix that with the fact that a quasi- socialist system will not work, Oberholzer’s comments are not only not a surprise, but spot on. It is time for the ANC to ask why they are continuing failing, and maybe they do. The answer is: We need a market driven meritocracy which we can’t deliver. They don’t like that answer.

    • . . says:

      Question, if Eskoms EAF from coal is 50% are we not already reducing emissions?

      Of course it makes sense to extend the life of the best performing stations, but the key part of that is the “in parallel” – currently there is no effort in a) expanding the grid in the NC b)training people in the NC to work on renewables c) rapidly building renewables in the NC

    • D'Esprit Dan says:

      When you elect the most celebrated failure in post-apartheid South Africa to the position of Secretary General on the basis of his Twitter spats and calling himself ‘Mr. Fix’, you know the ruling party hasn’t a blind clue about actual ability or a real commitment to service delivery – just pantomime politics and popgun populism.

  • Helen Lachenicht says:

    Sounds feasible, but I am sure our organised crime element are rubbing their greedy, criminal hands in glee!
    I would like to know the details about why it will take so long to get green energy in place?

    • William Stucke says:

      It will take so long, Helen, because there is 7 or 8 years of work required to extend and expand the grid to provide sufficient capacity to accept the Solar / Wind / Battery power in the NC and other suitable areas. We have known this since 1999.

      If our Government had half a brain, and allowed Eskom to do this from 2008 when we had the first LoadShitting, we’d be fine now.

      What people don’t seem to realise is that IDEOLOGY caused the ANC to nationalise a working, highly successful non-profit entity and put it under the ANC’s direct control. “The Levers of Power”, as Stalin used to say.

      Instead, we have the situation where Eskom is dictated to by no fewer than THREE Ministers, and isn’t allowed to fart without permission.

      They totally ignored the old maxim: If it ain’t broke, don’t fix it.

  • Nicholas De Villiers says:

    Hopefully that means the end of ANC government as voters should punish them for 15 years of worsening power cuts.

  • Samantha Vandersteen says:

    Why are people not more concerned by the “exemption of minimum emissions standards”. What will this mean for the communities living near these stations & their quality of life? Will they be trading Electricity for breathable, safe air?

    What about the environment in these areas? Will it be able to be revived in the next 10 years like these old forsaken stations?

  • Peter Oosthuizen says:

    At last someone from Eskom with common sense and an understanding of dates and deadlines instead of vague illusions that “alles sal regkom”.

    Unfortunately he’s leaving, so we have no idea if his successor will be pragamatic and direct with his planning and comments, or whether he’ll spout the bullshit required by his ANC masters to placate the electorate.

  • D'Esprit Dan says:

    Surely they can do an audit of which units at each power station are worth saving and only focus on those to keep them running optimally, rather than trying to fix all of them? No idea about the engineering of it all, but if some units in the overall fleet are too far gone, scrap them, use whatever parts are useable on better maintained units and stabilise what we’ve got left after 20 years of looting and corruption. Accelerate the build of battery storage and home rooftop, allow municipalities like Frankfort to mitigate Eskom losses and accept that what we’re doing is winding down a once great company over the next 10 or 15 years. That also gives even the luddites luddite, Gwede Mantashe, enough time to repurpose the coal miners who will need another form of income.

    The Philippines did this in the 90s, when their textile and clothing industry was being decimated by cheap competition from China: they looked at the skill set and repurposed the thousands of seamstresses into electronic boards technicians. With a bit of foresight, a bit of planning and the political will to implement these things, it’s possible to manage a transition like this and actually crete more jobs than you shed. But I suppose foresight, planning and management aren’t really what the ANC is about.

    • Richard Worthington says:

      Such an independent audit of generation units is supposedly underway, by an international consortium, but seems Sputla’s not waiting for that intel

  • Peter Atkins says:

    It is not economic to invest ANYTHING in our old coal power stations, nor is it economic to invest in new ones. Numerous studies (by the CSIR, Meridian) show this. The only way forward that makes sense is investing in solar, wind and energy storage and the required transmission upgrades. However, I doubt that this will happen under the ANC, especially not with Mr Mantashe holding on to coal, gas and nuclear.

    • D'Esprit Dan says:

      You’ve kinda answered the question with your last statement – there is no political will to move completely onto renewables, and certainly I believe that the transition must be managed to cause the least amount of damage to an already battered economy. It would be lovely if overnight all restrictions on renewables were removed and massive grid extensions to the Northern, East and Western Cape regions that have the bulk of renewable potential were built. But this won’t happen, not in the short term and not whilst the money launderer in the presidency is beholden to Mantashe for his political survival. So, how do we keep the lights on, given this reality?

  • Brian Cotter says:

    Chris, Jan – “I believe we need to look at this seriously, because we’re not going to have additional capacity that soon on the grid,”
    Please give us the Portfolio of Projects coming onto the grid and individual milestones – dates and progress. So we all can have a clue. Dates, Project Names, location, power type and kW never seem to be published

  • Alan Paterson says:

    I would like to thank Jan Oberholzer for these frank and knowledgeable comments. As an honest man who has been at the coalface, so to speak, for many years he has insight and understanding that our noxious government will never have. I wish him well for his retirement although a part of me foresees him asked to come back in consultant capacity as the lights dim more. To the disgust of our precious unions, of course.

  • Roelf Pretorius says:

    In this we should stop thinking ideologically and get to listen to the engineering experts. The solution lies in assessing every power station on its’ own and then dealing with each one as such. And there is nothing wrong with some of the coal-fired power stations (or even all of them) still running for a few years; that is what the whole world is doing, and the crux here is to EVENTUALLY wean ourselves from coal. This weaning process will inevitably result in some, if not all, of the old coal power stations being revamped into sun-powered power stations; after all about two-thirds of a coal-fired power station can still be used for the sun-fired version. But in the process the coal workers also have to be brought along; they have to realise what advantages it brings for them also. At the same time the EC, WC and NC grid needs to be upgraded and a LOT of private renewable energy plants need to be connected, because eventually, say in 20-25 years of time, most if not all of the power will come from renewables, which is unstable by nature. So if in 25 years time SA will need about 100 GW of power, we need 150 GW of renewables together with enough storage capacity to store that other 50GW; we are speaking of about 600 GWh. Of this Ingula (a hydro-electrical pump storage power station, which is by FAR the most cost-effective option) represents 21GWh, so I propose an investment of 600 billion over the next 25 years for another 29 Ingulas in the case of 100GW needed by 2048.

  • Roelf Pretorius says:

    . . . Let me deal with another option that is wrongly put forward by certain politicians as viable, namely small modular nuclear reactors. The truth is that modular reactors will cost SA about 150 billion PER GIGAWATT; that means about R7.5 TRILLION. Compare that with the pump storage capability of 600 GWh costing R600 billion, to which R200 billion needs to be added for upgrading of the grid. That is about one-tenth of the cost of nuclear. So there is simply no comparison. A possible alternative is to enable communities to generate their own electricity, but that will also be costly. But eventually South Africans need to understand that, to solve our problems, including that of electricity, we have to start looking for solutions ourselves. This include getting rid of politicians and political parties, that stands in the way of solutions, at the voting box.

  • Marc Ve says:

    Solar energy will only be available during the day, and will vary depending on weather conditions. Why not allow households/ businesses the opportunity to draw cheap power from the grid while solar boosts it, so that they can recharge incentivized battery inverters while the grid is under load? Surely massive commercial solar installations are more efficient than rooftop installations?

Please peer review 3 community comments before your comment can be posted