Rating agency Moody’s said in a research note yesterday that Eskom will most likely fail to improve its Energy Availability Factor (EAF) to its stated aims as the utility faces mismanagement, coal supply issues, a lack of skills, and sabotage and theft.
Eskom previously announced ambitious targets to improve its EAF across its fleet to 65% by March 2024 and 70% by March 2025. Currently, Eskom’s fleet has an EAF of 57%.
Electricity minister Kgosientsho Ramokgopa said that one per cent of EAF equates to roughly 500MW of generation capacity.
“These targets are ambitious given the difficulties that the company faces and its track record”, Moody’s said.
According to the rating agency, Eskom’s generation fleet will remain under pressure this year despite efforts to improve its performance.
The performance of Eskom is one of the factors which Moody’s takes into consideration when making decisions about South Africa’s sovereign debt rating.
Joanna Fic, Moody’s vice-president for Europe, the Middle East, and Africa, said that Eskom’s unreliable power stations require significant refurbishment to reach its targets.
“Performance has also been affected by coal supply issues, mismanagement, a lack of skills, corruption, theft, vandalism, and sabotage”, Fic said.
Moody’s warned that Eskom’s system would remain under pressure until there is a significant increase in new generation capacity to the grid, which will take time and require substantial investment.
An unstable electricity supply will continue to hobble growth for the foreseeable future.
Electricity Minister Kgosientsho Ramokgopa said South Africa would “see significantly reduced load-shedding” before the end of the year and will soon “be saying that load-shedding is behind us”.
Ramokgopa made these comments in an interview on eNCA, where he gave an update on the implementation of the government’s Energy Action Plan (EAP).
The minister is encouraged by the progress in increasing the Energy Availability Factor (EAF) of Eskom’s generation fleet and adding capacity to the grid through private investment.
Ramokgopa claims that in the last month, there has been a 7% improvement in the EAF of the fleet, with a 1% equalling roughly 477MW of output.
This has resulted in an additional output of over 3,000MW, equating to four load-shedding stages.
However, load-shedding has not been reduced because of increased winter demand “eating up the increased supply”.
Last Friday, Eskom’s generation fleet breached the 60% EAF mark, which shows that the utility is “ahead of the curve” with regard to its performance targets.
The key focus for Ramokgopa now is stabilising the supply of electricity and ensuring that the increased EAF is maintained.
Energy expert Chris Yelland said that while Eskom still faces a shortfall, the country will have a more reliable experience in these next three months compared to the past three months.
This is because the electricity supply in winter is far more than some may think, and demand is far lower for some projects.
He said there are four main reasons why South Africa could avoid a dark winter.
- Maintenance is performed in summer.
- Lower maintenance in winter and air-cooling power stations.
- Renewable energy.
- Decreased industrial demand.
Professor Anton Eberhard added that Eskom’s data on their power plant unplanned outages (UCLF) is not encouraging.
He highlighted that the average percentage of plant output unavailable because of breakages and partial load losses is worse than a year ago.