Energy - 04 March 2024

04 Mar 2024

ENERGY

An expert assessment of the state of Eskom’s 14 coal-fired power stations conducted between March and May 2023 describes the prevailing “fixation” on the coal fleet’s energy availability factor (EAF) as a “dead end” that is leading to poorer plant performance. Conducted for the National Treasury by a Vgbe-led consortium, the report noted that outage and maintenance activities had been deferred over the last months and years to lift – or at least to maintain – the EAF. Rather than restoring the plants to “as new conditions” after outages, the priority had instead been to “quickly” fix generation bottlenecks, which resulted in plants being forced to continue operating at the expense of their technical condition. 

“The consequences are reflected in the high number of incidents, trips and partial load losses,” the authors state. The cycle, they add, has gained so much momentum that it could lead to the collapse of plants or to further capacity losses. “It must be stopped immediately by executing proper maintenance and outage work – even if this means a higher level of loadshedding for a limited period of time. “Moreover, up to 6 000 MW in partial load losses could be reactivated by fixing the plants’ defects and applying prudent operation and maintenance practice.” 

That said, the report also notes that, at about 51%, Eskom’s coal fleet EAF is much lower than international norms of 78% despite Eskom’s maintenance budgets being higher. Nevertheless, the EAF recommendations in the assessment appear to conflict with Eskom’s Generation Recovery Plan, which is still premised on recovering the EAF to 65% by the end of March and to 70% by March 31, 2025. The National Treasury said that some of the reports findings would be incorporated into Eskom’s 2024/25 Corporate Plan but did not offer specifics. 

The assessment, which was compiled as part of an effort to understand the state of the coal fleet after the National Treasury extended a R254-billion debt-relief package to Eskom, attributed the low EAF to a “dysfunctional” and overly complex management system within Eskom Generation. The report concludes that the solution lies in improving operation and maintenance and conducting these activities according to industry standards, including by decentralising decision-making and providing power station managers with “full budget responsibility and accountability”. “This change in governance requires changes in the management structure of the Generation Division. “The Vgbe team proposes decoupling the coal fleet from the rest of the generation busines . “The sole objective of this coal division should be the revitalisation of the existing power plants.” (Source)

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South Africa is set to run out of natural gas in two years after Sasol announced that it will cut natural gas production in June 2026. This poses a big threat to South Africa’s manufacturing sector. 

This is the warning from Jaco Human, executive officer of the Industrial Gas Users Association of South Africa (IGUA-SA). Starting June 2026, Sasol will stop supplying gas from Mozambique, halting supply to downstream consumers in KwaZulu-Natal, Gauteng and Mpumalanga. This will lead to a ‘day zero’ for gas users. Human said Sasol’s decision to cease the gas supply is driven by the dwindling supply and their decarbonisation needs. Gas has a finite supply as a natural resource, making shortage inevitable. “It’s not a new problem to the government or industry players. However, it is now real,” said Human. 

The sudden decision by Sasol means the threat of day zero to South African households and the manufacturing sector is more urgent. According to Human, Sasol’s plan to stop production will devastate the economy and could threaten upwards of 60,000 jobs. The looming gas crisis is particularly concerning as electricity supply, the primary substitute for natural gas, is threatened by load-shedding. 

Many households rely on gas for cooking, lighting, and heating. In the manufacturing sector, gas is the cheapest source of energy. There is currently no alternative to gas for most manufacturing industries which use it, especially given the unstable electricity supply. Other energy sources, such as diesel, fuel, and oil, are prohibitively expensive. It means many large-scale manufacturers depend on gas. 

Sasol’s proposed cuts will cause an immediate halt in production in these industries. According to Human, there is no plan to transition away from natural gas. Last year, the government promised a major gas plan, laying out the next steps for a transition, to be released by the end of 2023. No such plan has yet been finalised. South Africa is unlikely to find new domestic sources of natural gas within ten years. The country will likely rely on imported gas from mid-2026. The high cost of importing gas will put a squeeze on manufacturing firms in the years to come if the government fails to intervene. (Source)