Business Maverick

ELECTRICITY CRISIS

Ramokgopa’s power plan to ease rolling blackouts could be undermined by Eskom’s diesel budget

Burning more diesel to run Eskom’s open-cycle gas turbines is at the centre of Electricity Minister Kgosientsho Ramokgopa’s short-term plan to ease rolling blackouts over the next months. But a lack of funds could undermine the plan.

Burning diesel to run Eskom’s open-cycle gas turbines (OCGTs) — intended only for dire emergencies or use during peak demand periods — is a centrepiece in Electricity Minister Kgosientsho Ramokgopa’s short-term plan to stave off higher stages of blackouts, especially during winter. 

But Ramokgopa has warned that Eskom’s yet-to-be-finalised budget for diesel might not be enough to sustain the power utility throughout its current financial year or ease power cuts, which could undermine his plan. 

A month into its new financial year, which started on 1 April, Eskom has not finalised a diesel budget to run OCGTs, which the power utility has increasingly relied on in recent months to momentarily keep the lights on. 

Diesel is used for powering the OCGTs at Ankerlig and Gourikwa, which have a combined energy generation capacity of 2,000MW — equivalent to two stages of rolling blackouts. The OCGTs are used to make up for a shortfall in generation capacity when there are outages and breakdowns at Eskom’s coal-fired stations. 

In an interview with Daily Maverick on Tuesday, Ramokgopa said preliminary estimates suggested that R30-billion would be available for Eskom to fund its diesel purchases during its current financial year. 

Electricity tariff increase

About R8-billion could be freed from the 18.65% electricity tariff increase that was recently approved by the National Energy Regulator of SA for Eskom during 2023/24, and R22-billion from the funds allocated to the power utility from the fiscus in February. 

“At the rate that we want to burn diesel to prevent higher stages of load shedding, we will exhaust the R30-billion before the end of the financial year. We will need to come to the table much later in the year to find more money,” said Ramokgopa. 

He expects the R30-billion to be “sufficient” for winter but not enough to cover Eskom for the rest of the year and early 2024. This implies that Eskom is on track for another year of spending massively on diesel to run OCGTs, which have become essential in the face of the loss of generating capacity at Eskom’s power stations. 

There is arguably a problem in the mooted R30-billion budget for diesel procurement. There is effectively a limit in how much diesel Eskom is able to burn, as it is not possible for the power utility to burn and use diesel worth more than R2.5-billion a month (about 100 million litres at current wholesale prices).

Even with an unlimited budget, Eskom cannot burn more diesel than this due to the physical and logistical constraints in transporting it to the OCGT plants.

In 2022 alone, Eskom ran out of money to buy diesel and the power utility exceeded its initial diesel budget of R6.1-billion by spending R21-billion. When Eskom ran out of money for diesel purchases, it was forced to approach the government for additional help. The National Treasury denied Eskom’s request for additional funding for diesel. Eventually Minister of Public Enterprises Pravin Gordhan “found” 50-million litres of diesel at PetroSA for Eskom.

Eskom might have to approach the government for help again if it runs through its diesel budget, said Ramokgopa. He also recommended that “the government should consider buying directly from suppliers … so whatever savings can be made by cutting the middle man”.

But former Eskom CEO André de Ruyter made this exact proposal on numerous occasions. In late December, the Department of Mineral Resources and Energy denied an application by Eskom for a wholesale licence for diesel. Eskom’s ability to borrow money from commercial banks to fund its operations has been severely restricted by the National Treasury over the next three years as part of the condition set by the government for taking over a portion of its debt. 

Read more in Daily Maverick: Government comes to Eskom’s rescue by taking over R254bn of its debt 

The only thing that might prevent Eskom from approaching the government with a begging bowl is if it improves its generating capacity. Ramokgopa said Eskom was hoping to generate an additional 2,800MW from at least three units at Kusile Power Station (Eskom’s newest coal-fired power plant) that are expected to enter commercial operation between December 2023 and February 2024. “Then we hope to make improvements on the generating capacity and we will burn less diesel.” 

Ramokgopa’s short-term plan

Ramokgopa recently presented a short-term plan to his ANC colleagues to ease load shedding over the next six months, beginning in May and covering the winter season, which traditionally sees energy demand outstripping Eskom’s supply. 

Ramokgopa’s plan includes ramping up the use of OCGTs and managing demand by installing devices in households that can remotely switch off high-energy appliances such as geysers. 

Other aspects of the plan include exempting national key points including hospitals, communications infrastructure and police stations from blackouts; and improving Eskom’s five worst performing power stations — Tutuka, Kendal, Majuba, Duvha and Matla — in terms of generating capacity. 

The five power stations have recorded an energy availability factor (EAF) of below 50%. An EAF measures the average percentage of power that plants have available to dispatch energy at any one time. A high EAF indicates that plants are well operated and maintained, helping the utility to produce electricity cheaper. 

Asked about the electricity situation during winter, Ramokgopa said Eskom and the government want to limit blackouts to a maximum of Stage 5, especially when OCGTs are ramped up. “The worst-case scenario is above Stage 6. We are doing everything to keep it to Stage 5,” he said. 

Breakdowns at Eskom power stations happen so often that it is becoming difficult to predict the energy situation, said Ramokgopa. 

“Eskom has generated a best-case scenario of the [capacity] losses, as a result of unit failures, will be about 15,000MW during winter. But looking at the past two weeks, we are north of 16,000MW. We are closer to 17,000MW of losses,” said Ramokgopa. 

Winter has historically ushered in an average demand of about 35,000MW, peaking at 37,000MW. At current levels, Eskom cannot cater for this demand. DM/BM

Gallery

Comments - Please in order to comment.

  • Lothar Böttcher says:

    Sounds like a frantic short term solution to buffer against negative sentiment in the upcoming elections.
    Do the math… R30b bucks of diesel will buy you 1,428billion litres at R21.00 p/l. How does one get that volume of liquid to the actual OCGT?
    You’ll need to coordinate 28500 tanker trucks to collect and deliver this amount…
    Public money must equate public scrutiny.

    • Johan Buys says:

      around half the price of diesel should not apply to Eskom diesel so your quantum is closer to 3 billion liters. 3 billion liters is very hard to picture. Take 3 billion over 365 days 8h a day. It is a million liters per hour for those 8h it is operating. Imagine 35 swimming pools. Per hour. Or a swimming pool every two minutes.

      That 100 tonne generator is not on wheels so RAF does not apply, neither does the roads levy. If you see an Eskom diesel unit on a road near you, take a picture.

      There should not be a retail or wholesale margin as Eskom should be buying at wholesale.

  • Dirk Els says:

    Welcome to the real world Minister – where the facts of limited resources clash with the fantasies of unlimited demands.

  • Wilhelm Boshoff says:

    Were the back-up open-cycle gas turbines designed to work this hard? It seems like load shedding will be much more erratic (and severe) if they were to fail.

    • . . says:

      No they weren’t, and of course that also need maintenance, more frequently the more they are used.

    • David Tarrant says:

      Actually most machines prefer to operate continuously at a steady load, so long as that load is within the design parameters for the turbine and generator. Constantly varying the load doesn’t help – but stop/starts are the worst case scenario for power generation equipment. The industry standard is that each stop/start cycle adds between 20 and 30 Equivalent Operating Hours to the life of the equipment, i.e. if you stop and restart the gas turbines twice a day (morning and evening peak), you are adding 40 plus hours to the operating hours of the machine.

  • John Forbes says:

    While it is relatively easy to use the Open Cycle Gas Turbines (OCGT), other than for the need for diesel which is clearly unaffordable, to my understanding, are originally intended to run only during peaks and not continuously, i.e. they are designed as a stop gap measure or peak power. The next thing is that they will reach the end of lives prematurely and start breaking down. I also understand they can operate on gas with the minimum of a conversion. Why are we not getting gas from Mozambique to run them?

    • D'Esprit Dan says:

      Hi John, the gas in Mozambique is spoken for already, through long-term contracts and offtake agreements. Sasol produces limited amounts of gas in the south of the country and is trying to increase these reserves or risk running out, whilst the ENI FLNG project in Cabo Delgado is unavailable to SA – 100% offtake with BP for 20 years.

      However, the 25% Domgas (Domestic gas) share that the Mozambican government carries in the two onshore projects could be used to supply SA, when they eventually start producing in four or five years time – I don’t think there’s a restriction on that. We could also be buying gas from Angola, which has upped it’s output from not much more than 1bn cubic metres in 2016 to approaching 18bn cubes last year – and still has potential for more. Should be relatively easy to ship it down to the Cape as well. However, there is talk of a grand pipeline from Angola to Cape Town for this – which would take years to plan and build, when a ‘virtual pipeline’ in the form of LNG ships would be better. But less lucrative for those in the know.

  • Has anyone thought about re-introducing the former Eskom programme of paying a subsidy to householders to fit solar geysers? An attractive programme could reduce national demand very significantly.

  • Patrick O'Shea says:

    So is there a maintenance program in place for the open cycle turbines that are being over-utilized, or is it a case of “we’ll fix it when it breaks”?
    Oh dear, I foresee a Winter of very discontented voters coming up.

  • Geoff Krige says:

    So we now have a 37 million rand Electricity Minister to tell us what everybody already knew, and to propose doing what Eskom has been doing for years – using expensive emergency back-up generators as part of its base-load generating capacity. Wish I could have 37 million rand a year to blow doing nothing!

    • Michael Shepstone says:

      Exactly! Our electricity minister has come up with absolutely nothing new! Same old, same old! We must increase generation capacity, but meanwhile we will run our OCTG’s into the ground!

  • Dragon Slayer says:

    Typical of this government – treat the symptoms! The truth is Eskom can never be fixed by the same people that broke it. The only solution is to auction off all the power stations with a reserve price of 75% of remaining useful life. This will enable efficient management. Retain and maintain transmission infrastructure. That will buy time to allow public-private partnerships to be established and manage municipal reticulation.
    The fact is that even it the ANC is routed in the 2024 election – they have poisoned the civil service for years to come with sheltered employment legislation.

    • Kanu Sukha says:

      Not only Eskom but all SOEs (read recent article on police services) have become shelters for mostly or many delinquent state employees, who can hold the populace to ransom (they learnt from Putin) for their incompetency and ANC greed ! They have a monopoly on state capture .

  • Peter Tuffin says:

    Maybe they should ask the Russian “friends” for money, or just for the diesel.

  • Katharine Ambrose says:

    Does anyone other than a government minister keep their geyser on 24/7? Has anyone told the minister about diesel theft? He seems to think the government is a handy piggy bank for novel toys and wasteful spending. Oh silly me! Of course it is exactly that.

  • Bryan Bailey says:

    Other than nothing, does anyone really know what the State / Eskom are ACTUALLY doing to sort out the electricity crisis? What really is happening with Medupi and Kusile Power Stations to rectify the design and manufacturing problems and who is involved in the rectifications? These are the REAL questions that are not in the public domain. Consider that we are now into the 15th year when the electricity problem was first mooted and look to where we are now!

  • Confucious Says says:

    So they hire this guy, pay him his $$$ and the genius comes up with a well conceived and considered solution in his first week like an absolute expert because it’s new and never been tried before. Now there’s a threat to this genius solution that absolutely nobody could have ever foreseen. Incredible!!!

  • D'Esprit Dan says:

    So the wisdom of our new Electricity Minister is simply to burn more diesel, even if we’re physically not able to burn more diesel? Wow.

    And then this gem: We will need to come to the table much later in the year to find more money

    Why? Why can’t you actually do the damned planning and budgeting now? Why does this useless government of ours always wait until the crisis is imminent (or mostly when it’s already beyond control) before acting? If Ramokgopa knows they’ll need to find more money, why can’t he do it now? Eish! It’s frustrating watching people with no ability swaggering around, throwing out telephone number budgets, which are stop-gap measures to cover up for the mess they’ve made and then expect us to take them seriously!

  • Neil Parker says:

    Every single effort that can be made should be made to put solar down on the ground as widely as possible. Frankfort muni should have been a shining light for the government to pick up and follow. And what do they do – they litigate to prevent that happening on completely specious grounds. This is sunny South Africa for goodness sake – whilst solar cannot yet replace coal/gas turbines, it can certainly go a long way towards lightening the load and enabling independent power providers. Those who can come off the grid should – indeed they must be encouraged to do so. De Ruyter said as much and could not understand why there was so much “kick-back” from the government on his active promotion of renewables.

    • Belinda Cavero says:

      Exactly! The stupidity of not supporting solar YEARS ago astounds me! Oh, the dream of having intelligent leadership that just does the RIGHT thing.

  • Brian Cotter says:

    So Mr Minister when is the Cavalry, the new power coming to the grid to save us? Can we have a clue.

  • Kanu Sukha says:

    Why is this ‘electric’ minister having to pay for diesel ? One would have thought he and his boss CR would get their pal Putin to be sponsoring it … for all the bending over backwards (or is it sideways? or flip flops?) that they have been doing for this international criminal ! OR maybe that is the case but Chancellor House is pocketing all the moola to keep their criminal enterprise going … not too far fetched an idea is it … and keeping gweezy smiling ?

  • David Katz says:

    What happens when the unserviced, emergency turbines breakdown. They were not designed for the purpose of permanent generation.

  • D'Esprit Dan says:

    One of the most frustrating things about this entire power crisis is the complete lack of ability within government to think positively and proactively. Everything is a zero-sum game to the idiots in charge: it’s always coal vs renewables, or coal jobs on the line, or (most pertinently) their coal boss buddies, from production to transport to sabotage, who will kick up a massive fuss if they turn off the taps to the riches they’re accumulating.

    How about this: GROW the economy so that power demand rises sharply, allow those who can to go off the grid, introduce huge new numbers of IPPs to serve the needs and then you don’t have to get rid of coal overnight. By creating demand for say, 60GW a year, you’ve increased demand by 50% and the share of coal in our mix drops accordingly – win-win.

    However, in order to GROW the economy, you need to unlock mining (same Minister sabotaging the power sector), massively rejuvenate our logistics sector (only by allowing private capital and management into it), unlock the ICT space, actually implement the Strategic Infrastructure Projects, valued at R900bn, most of which have been on the table for years, fast-track green hydrogen, repair and restore roads and water infrastructure and you would create the enabling environment for the private sector to do what it does best – invest, grown, create jobs. But, alas, no foresight, no will, no integrity, no chance!

  • Scott Gordon says:

    While I understand major flaws in designs , what incentive is for the ‘repair crews’ do do a decent job .
    How long do the repairs actually last ?
    Would love to see Escom’s spreadsheet on the above .
    If my car breaks down , take to garage and get fixed , do not want to be back for the same problem in a few months .
    The age of the plant should not be a major issue , they work overseas .
    At the moment we have about 5 Gigs off for ‘ maintainance ‘ and 15Gigs + broken !!
    So how good were the repairs ?
    The repair crews have jobs for life !!
    Again would love to see the operations wall at MWP , below the power station have all units listed .
    On / off line . Date of last service and basic details .
    Yes , aware of serious issues at a few plants , some will take years to fix .
    What about the units that are not working for some ‘other ‘ reason ?
    Is Escom saying we are not doing decent repairs for lack of funds ?
    Yes , well over 30 years since I went near a coal / power station . Tutuka was massive , back then had one spare line , for maintainance . Am well aware of the fact that some parts wear out . Records would give you a timeline . Then do checks and tidies on the rest of the line . Job done .
    Or not apparently !
    I like transparency 🙂
    Will ask Escom what they can tell me 🙂
    Obviously , best place is at the top , who is it ?
    Need an hands on person 🙂 Will see what I can find , even if a brick wall 🙂 ways and means of getting around it 🙂

  • fishingboy says:

    Either the lift doesn’t go all the way to the top or his advisors are a few nuts short of a fruitcake.

  • James Cunningham says:

    I wonder what portion of the 30Billion will end up on PetroSA’s bottom line? our energy crisis has been a boon for this organisation as it was about to go bust. Oh and are they now taking over the Avgas supply to airports too thanks to someone refueling a Russian plane?
    30 Billion isn’t chump change. Has a study been done to see how much the daily twin peaks could be reduced by introducing multiple time zones? But then any diesel savings would be a loss to PetroSA and that wouldn’t do, would it?

  • Roelf Pretorius says:

    ” . . . installing devices in households that can remotely switch off high-energy appliances such as geysers. . .” – I am absolutely stunned that this has been discontinued in the first place; in the 1980’s this was done where I stayed in Secunda, and not as part of an emergency plan, but as a permanent part of how the local municipality is managing its electricity supply to the users. I always thought that this was the situation countrywide? What has Eskom and the government been doing over the last 30 years that it has been discontinued in the first place? Has these politicians and managers completely lost their minds? To switch off geysers for about 2 hours from about 7pm to 9pm does not do anybody much harm, in fact the water stays warm for longer than that, unless a major hot bath marathon in the house is going on, and even then, the loss of hot water does not last for long. Now how long do we have to stay completely without electricity MULTIPLE DAYS EVERY DAY as a result? Why are these pumpkins still in their positions in the first place? I have to confer that these devices were removed in the time of Thabo Mbeki, the man who also stopped any increase in the building of new generation capacity. WHAT THE HELL DID HE THINK HE WAS DOING? After all he of all persons had a masters degree in economics; did he buy or steal it, because how else can a person that has such qualification does something like that? I am left completely speechless!

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

Daily Maverick Elections Toolbox

Download the Daily Maverick Elections Toolbox.

+ Your election day questions answered
+ What's different this election
+ Test yourself! Take the quiz