Eskom shooting the lights out

The majority of Eskom’s power stations are operating above an energy availability factor (EAF) of 70%, with one performing at 91.1%. 

This is remarkable considering the age of the utility’s coal-fired fleet and brings Eskom the closest it has been to reaching the 70% EAF for its entire fleet. 

The utility still faces major challenges in the coming years, particularly with regard to the decommissioning of some of its older coal power stations. 

It is also under increasing scrutiny regarding its push to increase electricity tariffs in South Africa, which have risen by over 1,000% in the past twenty years. 

This is feedback from Electricity Minister Kgosienstho Ramokgopa, who praised Eskom and said its EAF will hit the elusive 70% target by the end of 2025. 

Ramokgopa also told Newzroom Afrika that Eskom projected it would post a mid-year profit on the back of its improved operational performance. 

This would be the first such profit in years and will help the utility finance its extensive maintenance programme and manage its debt load. 

More recently, Ramokgopa revealed that eight of Eskom’s 14 power stations are registering EAFs of 70% and higher. One station is performing at an EAF of 91.1%. 

“This is a remarkable improvement from the average low of 48% recorded in early 2023 when the country was regularly plunged into stage 6 load-shedding,” Ramokgopa said. 

The improvement in the performance of Eskom’s coal-fired power stations has ensured that South Africa’s experience of intense load-shedding is firmly in the past. 

However, Ramokgopa and Eskom chairman Mteto Nyati are reluctant to categorically state that load-shedding is a thing of the past. 

Eskom is still benefitting from lacklustre demand from a stagnant economy, enabling it to keep load-shedding at bay with a subpar performance. 

If South Africa’s economic growth accelerates in the coming years, demand is likely to outstrip supply and result in load-shedding, stifling growth once again. 

Thus, South Africa’s economic growth is effectively capped by the lack of expansion of electricity generation. 

This problem may become more acute in the coming decade, when some of Eskom’s coal-fired power stations have to be decommissioned. Questions surround whether enough new capacity is coming online to fill this gap. 

Electricity price changes

One of the major challenges Ramokgopa and the utility face is the rising scrutiny around repeated above-inflation electricity price increases. 

While one crisis appears to have been solved, South Africa’s electricity prices are posing a new headache for the minister, as they have risen 1,000% in the past 20 years. 

Apart from the immense strain this has placed on households, it has also complicated the Reserve Bank’s efforts to reduce interest rates and plans to move to a lower inflation target rate.

Ramokgopa has said previously that reviewing South Africa’s electricity pricing structure is the main focus of his ministry. 

“We are now focusing our energies on addressing load-reduction and putting measures in place to resolve the rising cost of electricity,” he said. 

“I will make announcements in this regard in the very near future. I do understand the urgency.” 

Ramokgopa has been calling for a new electricity pricing plan for nearly a year, and it has been the ministry’s main focus since the end of July 2024. 

“Our electricity pricing plan needs to kick in, and that is the primary preoccupation of the ministry now, working with Eskom’s Distribution division and municipalities,” Ramokgopa said last year. 

More engagements will also be held with South Africa’s energy regulator, Nersa, regarding ways to limit the increasing cost of electricity and expand access to affordable energy.

The head of the energy secretariat at the South African National Energy Development Institute (SANEDI), Professor Sampson Mamphweli, said the institute has been tasked with looking into the electricity pricing framework. 

“We will look into the pricing framework and various other things that can be done to bring the cost of electricity down and expand the access to energy in South Africa,” he said. 

Mamphweli said there are some low-hanging fruit that can be achieved as part of this process to bring down the price of electricity. 

Such fruits include reducing fixed charges or making them variable to be tied to the amount of electricity used as these fees are usually used to fund maintenance of transmission and distribution infrastructure. 

This makes it logical that the more electricity a user consumes, the more they use the transmission and distribution infrastructure and, therefore, the more they should pay. 

On the other hand, if one uses less electricity from the grid, they should pay less of a fee to fund its maintenance. 

“We will be looking closely at the pricing framework at SANEDI, and the minister will make an announcement in terms of the particular areas where changes can be made,” Mamphweli said.