Diesel is necessary, but unsustainable – Eskom

Eskom said in its latest results that using diesel for additional electricity supply is necessary but unsustainable, as the utility spent around R30 billion on diesel in the 2023 financial year.

Eskom presented its results for the year through March 2023 on Tuesday, 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.

Eskom interim CEO Calib Cassim said the 2023 financial results reflect the company’s challenging operational performance.

The utility’s energy availability factor worsened from 62.02% to 56.03% in 2023 due to generation supply constraints and shortfall from the IPP programmes.

To make up for supply constraints, Eskom used its open-cycle gas turbines (OCGTs) and, therefore, burned diesel.

In 2023, diesel production sources accounted for 19% of Eskom’s total cost but only 2% of total production.

“Use of diesel is necessary but unsustainable,” the utility said in its results presentation on Tuesday.

“Although diesel spend is still unacceptably high, it is in line with expectations, and still driven by the shortfall in supply by renewable and short-term IPPs, as much as by Eskom’s own poor generating plant performance.”

In 2023, the cost to run Eskom’s OCGTs skyrocketed to R21.46 billion in 2023 from R10.10 billion in 2022.

These OCGTs produced 3,018 GWh in 2023 compared to 1826 GWh the previous year.

Eskom said it had to rely on diesel this much in 2023 due to supply constraints at its coal plants.

Its coal plants were impacted by frequent breakdowns, “requiring higher use of diesel and fuel oil for unit start-up procedures and combustion support”.

In addition, the average coal purchase price increased by 9.2%, linked to mine input costs, which were affected by higher fuel costs and the weakening of the rand.

In the 2023 financial year, the average diesel price increased from around R18 per litre in April 2022 to R23 by March 2023.

The utility’s nuclear output was also affected by long-term outages and increased production costs due to nuclear fuel cost escalations and other inflationary pressures.

The total energy Eskom produced in 2023 decreased by 5% to 12.2 TWh due to these supply constraints.

Storing fuel

Bloomberg recently reported that South Africa has been using ships to store diesel as part of an effort to ensure supply to run generators and reduce electricity outages.

Diesel-fired turbines typically intended for peak use have been increasingly run to meet demand, while Eskom’s poorly maintained coal plants remain susceptible to frequent breakdowns.

Since South Africa doesn’t have enough storage capacity onshore, this prompted the use of vessels off the southern coast near Mossel Bay to store the fuel.

“As there is limited storage, PetroSA has taken a process of using floating tankers to ensure that product is readily available as and when required according to forecasts as agreed with Eskom,” PetroSA said.