Eskom CEO says there is light at the end of the tunnel

Eskom acting CEO Calib Cassim said there is “definitely light at the end of the tunnel” for South Africa’s electricity crisis as the utility has managed to improve its performance over recent months.

Eskom recently presented its results for the year through March 2023, which revealed its sixth consecutive loss and a concerning financial position.

The power utility reported that its net loss for the year increased to R23.9 billion – a 101% jump from the R11.9 billion loss reported in 2022.

Cassim said the 2023 financial results reflect the company’s challenging operational performance.

One of the stand-out features of the 2023 financial year was the “dismal performance” of the utility’s generation fleet. 

“Plant unavailability over 30%, coupled with a shortfall in supply by IPPs, resulted in severe capacity constraints,” he said.

It resulted in 280 days of load-shedding during the year. It amounted to about five days per week for the entire year.

“The capacity constraints limited sales to local customers and exports to neighbouring countries, negatively impacting potential revenue growth.” 

In the past year, Eskom saw the lowest levels of plant availability, with the energy availability factor (EAF) dropping to 56.03% for the year and below 50% during March 2023. 

“We also had the highest unplanned unavailability and the longest continuous load-shedding at the highest stages the country has ever suffered,” he said.

To mitigate against higher levels of load-shedding, Eskom had to employ its open-cycle gas turbines (OCGTs) to support the power system. 

This resulted in the highest OCGT usage the utility has ever experienced. It spent almost R30 billion on Eskom-owned and IPP OCGTs during the year, at load factors of 14.3% and 12.5%, respectively. 

“We also experienced high coal demand from more expensive power stations due to generation performance challenges,” Cassim said.

“This all comes at great financial cost, which is not sustainable.”

However, the acting CEO was optimistic about the utility’s future.

“We are painfully aware that the poor performance of the unpredictable and unreliable power system is inhibiting economic growth and employment opportunities, with a devastating effect on businesses and the lives of all South Africans,” he said. 

“We want to deliver successfully on our mandate to provide a reliable supply of electricity to the country by effectively operating our infrastructure.”

He said the utility’s immediate focus is reducing the intensity and frequency of load-shedding, which will be achieved by improving the availability of the generation fleet through effective implementation of the EAF recovery programme.

This programme aimed at reaching an EAF level of 65% in March 2024. It will be delivered through “an intensified focus on recovering performance at the six priority stations, while sustaining performance at stations that already deliver reliable performance”.

He pointed to Eskom’s performance over the past few months as a sign that the utility’s performance is improving.

“At the start of the winter period, there was much talk of us having to implement stage 8 load-shedding during winter, but our generation teams did well to avoid that,” he said. 

“Yes, we did see a significant amount of stage 6 load-shedding, but we did not go beyond that.”

He said the utility has also seen an improvement in unplanned unavailability over recent months, with EAF reaching around 60% late in July. 

“Early in August, we reached a point where no load-shedding was implemented during the daytime, with load-shedding only required during the evening peak and overnight to support building up emergency reserves,” he said. 

“So there is definitely light at the end of the tunnel.”

He pointed to projects already in the pipeline to support this optimism, saying that procuring additional capacity to enable the execution of outages by creating maintenance space in the constrained system will be a critical enabler of Eskom’s improved performance. 

Approximately 2,900 MW has been identified that can be connected in the next two years. In addition, the rooftop solar PV initiative has the potential to deliver 10 GW by 2030. 

“We will also be intensifying our demand-side management interventions to reduce demand.”

However, Cassim admitted that “Eskom alone cannot solve the electricity crisis”. 

“To this end, we welcome the Energy Action Plan launched by President Cyril Ramaphosa in July 2022 to address the electricity crisis.”

He said Eskom would work with the Electricity Minister and NECOM to ensure that the Electricity Action Plan is implemented “expeditiously in collaboration with all key stakeholders”.