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South Africa on the edge of emergency: expert

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    Nat Quinn

    South Africa is on the cusp of an energy emergency, with a shortfall of capacity as high as 10,000MW due to critical failures at Eskom’s power stations and the national government’s failure to get more generation onto the grid.

    This is according to energy expert Chris Yelland, who says that the state-owned power utility is currently living “hand to mouth” as it struggles to scrounge up enough diesel and other available power sources to keep the lights on.

    South Africa is experiencing high stages of all-day load shedding, with rolling blackouts hitting households, businesses and society at large every day of the new year so far. This is a continuation of the worst-ever load shedding experienced in 2022.

    Eskom is currently implementing blackouts alternating between stage 4 and stage 5, after non-stop stage 6 last week. Analysts have warned that worse is to come.

    According to Yelland, critical outages at the Medupi and Kusile power stations have pulled a combined 3,500MW from the grid, most of which will not be available until 2024.

    The offloading of Koeberg unit 1 in December 2022 has taken another 1,000MW offline, which will only return in the middle of 2023 – but unit 2 will be taken offline soon after, so the 1,000MW will still be missing from capacity this year.

    “When you add this large, combined outage to the country’s existing power generation gap of 4,000 to 6,000MW declared by Eskom more than three years ago — which has still not been addressed — it is clear that South Africa is teetering on the edge of an electricity emergency,” Yelland said.

    Given the figures, South Africa is sitting with a generation shortfall of 10,000MW.

    Diesel emergency

    Compounding Eskom’s woes is the fact that the group has effectively run out of diesel and it has become a constant struggle to find money to buy more.

    While the power utility announced this week that it had secured an additional 50 million litres to address shortages right now, it must be noted that the 50 million barrels secured near the end of 2022 – which was supposed to last until March 2023 – barely lasted long enough to see in the new year.

    According to Yelland, the diesel, which powers Eskom’s open-cycle gas turbines (OCTG), is only supposed to be used in emergency situations to help stabilise the grid. However, Eskom has become reliant on the fuel as a primary generator.

    Eskom’s OCGTs can produce over 2,000MW, which can stave of two stages of load shedding at any given point.

    Eskom’s chief operating officer Jan Oberholzer told the expert that the latest batch of diesel would only last until the end of January and that Eskom needs 200 million litres to make it to the end of March.

    This would cost the company R6 billion. When added to the other fuel spend for the latest financial year, this would bring the total to R21 billion.

    The overuse of diesel and the OCGTs was flagged by energy regulator Nersa as a major sticking point during its deliberations on whether or not to grant the power utility a massive tariff hike for 2023. The regular ultimately decided to extend Eskom’s diesel budget to R8.6 billion for the year – but this is far less than what it needs.

    Yelland added that Eskom’s diesel problem isn’t a procurement one, but a financial one.

    “Eskom is peering into an abyss. Its second batch of diesel is expected to run out at the end of January 2023, and the Eskom board is looking at ways of coming up with the cash to keep the OCGTs running until the start of the new financial year on 1 April 2023. But none of the options on the table looks like quick fixes,” he said.

    One option would be to receive some of the arrear debt of more than R50 billion which Eskom is currently owed by municipalities. Another would be the receipt of a hefty diesel tax rebate claimed from the South African Revenue Service (SARS), which Eskom’s financials show as just over R3 billion for the year ending 31 March 2022.

    “However, the diesel fuel rebates anticipated by Eskom have been disputed by SARS for more than a year, and the clock is ticking,” Yelland said.

    Everything crisis

    The energy crisis in South Africa is seeping into all sectors and spheres of society across the country.

    For households, the immediate impact is clear – South Africans are sitting for hours in the dark each day, disrupting lives and damaging appliances and generally making life miserable.

    In communities, neighbourhoods and cities, the impact is extensive. From increased traffic on the roads and damage to critical infrastructure which is not designed to be switched off and on, to heightened and elevated levels of crime which take place while the power is out.

    On an industry level, the damage being done is even greater. Entire industries are being forced to shut down, resulting in massive losses for individual companies and billions of rands’ worth of damage to the economy. Businesses have to incur higher costs to source alternative power, and the outages are now putting food and water security at risk.

    On a macroeconomic scale, the damage to South Africa is incalculable, with analysts and economists not braving the task of trying to determine how much economic growth South Africa has lost – directly and indirectly – to load shedding over the last 15 years.

    South Africa on the edge of emergency: expert (businesstech.co.za)

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