Eskom has an old age problem

Eskom’s operational performance is suffering from increased energy losses from the deteriorating equipment at its ageing power stations.

Apart from the energy losses, these plants are also relatively more expensive to operate, as they require additional maintenance to keep them running. 

The Organisation for Economic Co-operation and Development (OECD) recently outlined the need for reform in South Africa’s electricity sector in its latest economic survey of the country. 

The OECD dedicated an entire chapter to analysing South Africa’s electricity challenges and how they can be addressed. 

It said that inadequate electricity supply remains one of the significant drags on the local economy, with any potential economic growth being limited by a lack of energy. 

South Africa’s state-owned electricity supply via Eskom has deteriorated significantly in recent years, largely due to shortfalls in investment in new generation capacity and insufficient maintenance of its ageing fleet. 

Capital expenditure by Eskom has declined substantially since the late 2010s, the OECD said, with this translating into electricity generation from the utility being a fraction of what it was in the early 2000s. 

The OECD explained that this is primarily due to the utility’s ageing coal-fired fleet, which has become increasingly inefficient over time as its components near the end of their lifespan. 

Eskom’s average coal-fired plant is 41 years of age and has a maximum lifespan of around 60 years, resulting in significant energy losses due to deteriorating equipment. 

Some units at power stations have been shut down for safety reasons due to the failure of their old components, necessitating complete replacement. 

The lifespan of power stations can be extended, and old plants can run efficiently, but this requires increased maintenance expenditure. 

Furthermore, due to inadequate maintenance over the past decade, when Eskom has operated its coal fleet at full capacity, it will have to completely replace many components to extend the lifespan of its plants.

The graph below illustrates the steady decline in electricity generated by Eskom, accompanied by a dip in capital expenditure on maintenance. 

Eskom on the edge

Eskom is increasingly struggling with unplanned power outages at its plants, with the utility running close to having to implement load-shedding. 

This is despite significantly reducing load-shedding through a combination of new energy supply from privately-owned renewables and a halt in the declining performance of Eskom’s coal fleet. 

Throughout the longest periods of no load-shedding so far in 2025, Eskom’s unplanned outages have still averaged around 12,000 MW. 

These unplanned outages remain stubbornly high at 28% of the utility’s fleet, dragging down its Energy Availability Factor (EAF). 

EAF is a measure of operational capacity, calculated as the ratio of actual energy output to maximum electrical energy capacity. 

This has long been trending down at Eskom, reaching a low point of 55% in 2022 compared to more than 90% in 2000. 

Eskom’s EAF for its latest financial year, from 1 April to 31 March 2025, was 60.6%. This is a meaningful improvement from 2022, but it remains far below the levels needed to enable economic growth. 

In 2022, Eskom set a target of returning its EAF to above 70%, which would effectively eradicate load-shedding for some years to come. 

These targets were staggered over the coming years, with the utility aiming to improve its EAF to 65% by March 2024 and 70% by March 2025. Eskom has failed to meet these targets. 

For a large part of its history, Eskom has delivered cheap and reliable electricity, producing over half of all of Africa’s electricity and being named Power Company of the Year in 2001. 

In the late 1990s, the government implemented a policy to increase electricity access in rural areas and previously underserved urban townships. 

This created a rapid rise in electricity demand, which put pressure on Eskom’s existing infrastructure. In 1998, a White Paper warned that the utility’s capacity would be fully utilised by 2007. 

The government under Mbeki, intent on running a tight fiscal ship, did not want to spend billions building new power stations and refused to enhance Eskom’s capacity. 

As predicted, Eskom faced a severe shortfall in 2007, leading to South Africa’s first nationwide power outages and the introduction of load-shedding in 2008.

“The decision not to invest in new generation capacity in the early 2000s was the main cause of the trouble we ran into beginning in 2006,” Eskom chairman Mteto Nyati told the Centre for Development and Enterprise. 

“Then, this miscalculation was compounded by the hasty decision to construct Medupi and Kusile. Building large-scale infrastructure like that requires skilled professionals and planning, and it takes time.”

Eskom did not have the capacity or technical expertise to build these two huge coal-fired power stations, as engineers and skilled professionals left the utility to join the private sector or retire. 

“All of this led to incorrect technical specifications, and then, of course, there were massive delays and cost overruns as corrupt individuals and unqualified companies siphoned off money.”