Billions blown — Eskom on track to overshoot emergency diesel budget for year
The monopoly energy utility is devouring diesel to run its emergency generation fleet — which was intended only for dire emergencies or use during peak demand periods — forking out R24.3bn in eight months.
Eskom has only about R3.6-billion left of its diesel budget for the 2023/2024 financial year, which ends on 31 March 2024. Considering the power utility has blown, on average, R3-billion a month on diesel this year, it seems Eskom is on track to deplete its diesel coffers before the year is up.
To stave off higher stages of rolling blackouts between 1 April and 28 November, the power utility spent R24.3-billion of its total diesel budget on its emergency diesel-powered generation fleet, Eskom confirmed to Daily Maverick this week.
In May, Daily Maverick reported Eskom had blown R12.4-billion on diesel in just four months. To put this into perspective, it took eight months for Eskom to spend R12-billion on diesel last year. With R24.3-billion blown as of 28 November, this means its diesel expenditure has more than doubled for the same period this year.
Read more in Daily Maverick: Billions blown as Eskom burns through its emergency-use diesel
In the past few years, Eskom has been forced to rely increasingly on its open-cycle gas turbines (OCGTs) because of a rising number of breakdowns within its ageing coal-fired power fleet. This year is no different, and it seems Eskom is well on track for another year of overspending on diesel to run its OCGTs.
Electricity Minister Kgosientsho Ramokgopa has repeatedly defended spending billions on diesel to keep the lights on.
It’s been the worst year for power cuts by Eskom. On Thursday, South Africa was 334 days into a year that had had 322 days of load shedding.
Load shedding in October was less intense than it had been for a very long time. But November was particularly dim, with the return of crippling Stage 6 power cuts. And the forecast doesn’t look good. Ramokgopa’s statement that there will be fewer blackouts over December is not borne out by the data, Daily Maverick’s Ray Mahlaka reported.
Read more in Daily Maverick: Eskom contradicts Ramokgopa – forecasts more crippling blackouts over the coming months
December is usually dicey for the electricity outlook because the hot summer conditions make Eskom’s ageing power plants and their parts more susceptible to overheating and breakdowns.
The grid has required power cuts at stages 4, 5 and 6 this week. Stage 4 load shedding was implemented from 8pm on Thursday to 5am on Friday. Stage 3 will be implemented from 5am to 4pm on Friday.
Stage 3 loadshedding remains in force until 16:00 today. Thereafter, various stages of loadshedding will be implemented until Sunday pic.twitter.com/spxESlDQBa
— Eskom Hld SOC Ltd (@Eskom_SA) November 30, 2023
From 1 to 28 November, Eskom blew R4.1-billion on diesel to keep the lights on.
Energy analyst Chris Yelland told Daily Maverick: “In November, Eskom hit record figures for diesel usage… It was very high in April and May, but it’s even higher now.
“Eskom was hoping that in the last months of the year — from November, December, January, February, March — that diesel usage would significantly drop because of the units coming back on stream from Kusile, as well as the synchronisation of Kusile Unit 5 to the grid … which is scheduled for the end of the year.”
Kusile Unit 1 returned to service last month and followed the recommissioning of the power station’s Unit 3 at the end of September. On Tuesday, Eskom announced that Kusile Unit 2 had been synchronised to the grid, two days before the planned return date. This means a combined 2,400MW has been added back to the grid, which is equivalent to about two stages of load shedding.
“It doesn’t seem to have helped. We’re sitting at stages 3, 4, 5 and 6 even with units 1, 2 and 3 at Kusile on, so there are clearly other problems that are worsening the situation,” Yelland said.
“Although we’re getting extra [megawatts], something else is dragging things down again so that, overall, the situation hasn’t improved, and they’re still using high levels of diesel.”
Monique le Roux at Stellenbosch University’s Centre for Renewable and Sustainable Energy Studies told Daily Maverick that the limited remaining diesel budget put South Africa in a concerning situation when it comes to load shedding levels.
“We had the same situation last year over December (when they ran out of their diesel budget as well) and had to implement near continuous Stage 6 load shedding, so it looks like we are in the same boat this year as well,” Le Roux said.
“[Eskom is] very dependent on diesel to keep load shedding in check. They were probably hoping their other plants would perform better with the addition of Kusile units but this is not the case,” she added.
“Eskom generated around 1,200GWh from OCGTs more than in 2022 (from April to November), so it seems like they are burning more diesel every year to keep the lights on.”
Yelland said it appeared Eskom would overshoot its diesel budget for the 2023/2024 financial year.
“That means Eskom is going to go cap in hand, as it did last year, to try and get extra money — and it’s going to have to find it probably from its own resources as well — and it’s going to put a lot of stress on Eskom’s financials for the year,” said Yelland. “If they carry on at this pace — R3-billion a month — they would have about a R9-billion overshoot.”
In response to Daily Maverick’s questions, Eskom said it “cannot borrow more money as per the conditions of the National Treasury’s Equity Support. However, overruns on the budget for Eskom and IPP OCGTs will be funded from other budgets if required.”
Festive season demand
At his weekly press conference on Sunday, Ramokgopa maintained that bringing back Kusile units 2 and 5 would have an impact on available capacity. He projected electricity demand for the festive season to be lower, saying: “What we also know about December is that the energy-intensive major industry is closing, so you’re going to have a demand that is going to dip.” This, he said, should ease load shedding.
However, in a response to Daily Maverick, energy analyst Lungile Mashele said that although there would be a dip in demand, South Africa should expect load shedding throughout the festive season.
“Industry will slow down from 14 December. This will result in lower demand; however, this does not mean a reduction in load shedding, as Eskom may use this time to ramp up maintenance. Bar a few days of no midday load shedding, we will most likely load shed in the evenings only,” she said.
Eskom is indeed ramping up its summer maintenance. Its latest system status report shows that it plans to take out as much as 8,977MW on planned maintenance on Christmas Day — probably because it expects demand will be low.
‘They hold us to ransom’
The OCGTs have become a vital lifeline in the face of the loss of generation capacity at Eskom’s coal-fired power stations. It’s a double-edged sword because, without them, the cost of increased load shedding is far greater.
“They hold us to ransom in the sense that the cost of not running the open-cycle gas turbines is increased load shedding,” Yelland said. At a political level, this is what the ruling ANC wanted to avoid. The blackouts which kneecap South African businesses and livelihoods will be a key voting point in next year’s polls.
Read more in Daily Maverick: ANC support plummets to 33%, but it is still likely to form a government next year, new study finds
“To have this increased load shedding in the weeks before the election is exactly what they didn’t want,” Yelland said. DM