Eskom CEO Andre de Ruyter has acknowledged that the country’s competitiveness in the global export market is at risk unless the state-owned utility can address rolling blackouts and its high carbon footprint.
Addressing Exporters Western Cape in Cape Town this week, De Ruyter said it would take a collective effort from the public and private sectors to fix the electricity crisis in the country.
“I cannot fix Eskom on my own. We have to acknowledge that this is a national asset and we need to work together to address the challenges if we want to deliver growth to the export industry.”
According to De Ruyter, there is no denying the very real and challenging legacy issues that Eskom has to deal with daily. “As far back as 1998, Eskom warned the government that it was running out of capacity and that new power stations had to be built. The government opted to not do so. The result was that power stations in the country were run harder and it was only a matter of time before infrastructure started to pack up. We are now at the point that no matter how much money one throws at the problem, we simply cannot extend the life of the mechanical equipment that is subject to these high temperatures, pressures and wear and tear.”
He said the instruction to keep the lights on in the country had led to structural under-maintenance from 2002 onwards. Whilst Medupi, Kusile and Ingula came online in the 2000s, these power stations were poorly planned and executed, with massive design defects thanks to corruption in the awarding of contracts.
“We now have Medupi running at design capacity, but we are still struggling at Kusile,” said De Ruyter, emphasising that it was critical for the utility to improve plant performance to increase capacity.
At the same time, it had to bring new capacity online while reducing energy demand in the country.
“This has to happen in an environment where all our trade partners have committed to net-zero by 2050. At least 56% of South African exports are at risk of a carbon border tax,” he said, highlighting the importance of the energy transition.
It was, however, not as simple as just switching off the country’s unmaintained and dilapidated coal power stations.
“We need R1.2 trillion of investment in new generation infrastructure by 2030,” said De Ruyter.
This had to be done by a utility that had a structural cash flow problem. “Municipalities in the country owe Eskom R54 billion. We are not collecting enough money to do the work we have to do, and at the same time our skills have been depleted.”
He said the focus for the next 12 months at Eskom was to close the capacity gap of 6 500MW by improving the performance at six power stations in particular – Tutuka, Kendal, Duvha, Majuba, Matla and Kusile. This could see at least 2 200MW added to the grid. Plans were also in place to procure an additional 2 295MW, either through private sector investment into power generation or through imports.
“The private sector has demonstrated that it is willing and able to invest in power generation. Given our financial constraints at Eskom and our proven inability to execute projects, we are saying that where the private sector is ready to invest, we rather want to be the enabler and bring this power on board than try to block it.”
In conjunction with these efforts, energy efficiency and the saving campaign will be launched. “We have to manage the demand side,” said De Ruyter. “We waste too much energy in South Africa. We are several generations of technology behind when it comes to energy saving.”
He said over the long term, enabling policy would be required to ensure more efficient energy use in the country, including incentive schemes and the like, but a collaborative approach between government, labour and business would also go a long way towards bringing change. At least 1 450MW could be brought online through demand-side management alone.
“If we reduce demand during peak hours, it ultimately reduces the effects of load shedding,” said De Ruyter.
Looking towards the longer term, Eskom needed to accelerate the repurposing and repowering of its power stations, while actively pursuing a share of renewable energy allocation.
He said at least 50 to 60GW of renewable capacity had to be added to the grid by 2030, even if there was no incremental demand from economic growth.
