Eskom in a spiral of doom

Eskom’s increased unplanned outages have resulted in the utility being unable to perform adequate maintenance, resulting in further breakdowns and even less maintenance, resulting in an increasingly severe downward spiral. 

This spiral can only be averted if large amounts of new generation capacity are added to South Africa’s grid, giving Eskom space to repair and maintain its ageing coal fleet. 

The downward trajectory of Eskom was explained by Standard Bank’s chief economist, Goolam Ballim, at the company’s annual Economy event. 

Eskom’s performance has steadily declined over the past two decades, with the downward trajectory accelerating in recent years. 

In 2023, South Africans experienced record load-shedding at higher levels. The total load-shedding for the year was over double that in 2022. 

This rapid deterioration is largely due to Eskom’s failure to conduct adequate maintenance at its ageing coal-fired power plants. 

Eskom simply does not have a margin of safety, and proper maintenance requires that a unit be taken off the grid for a significant length of time. It would, therefore, necessitate more load-shedding or greater capacity to create a buffer. 

Ballim explained that this creates a major issue for Eskom as the lack of safety margin means that when there are unplanned outages, the country has to be plunged into load-shedding. 

To avoid this situation, Eskom has not conducted sufficient maintenance over the past few years to create a margin of safety and increase capacity. 

This, in turn, results in further unplanned outages as units are not maintained properly and break down.

In response, Eskom limits its maintenance to reduce the severity of load-shedding South Africa experiences.  

Thus, with rising unplanned outages, Eskom is in a vicious cycle of unplanned outages, reducing its capacity for planned maintenance, which in turn results in more unplanned failures in the future. 

This cycle is shown in the graph below, courtesy of Ballim and Standard Bank. The graph emphasises the widening gap between unplanned outages and maintenance.