100 years of Eskom – from world’s best power producer to embarrassing disaster
Eskom was founded on 1 March 1923 – exactly 100 years ago – by Hendrik van der Bijl to “ensure the delivery of cheap electricity in the public interest”. Since 2008, it has failed to deliver on this mandate.
For 85 years, the power utility provided South Africa with reliable, affordable electricity. It was a well-run company which supplied more than half of the electricity in Africa in 1990.
Eskom even won the Power Company of the Year at the Global Energy Awards in 2001, showing just how great a power utility it used to be.
Fast forward twenty years, and Eskom has become a company in freefall which struggles to keep the lights on.
Over the last 14 years, Eskom’s financial and operational performance plummeted, and it is now selling less electricity than it did in 2008.
Eskom is even starting to import power from neighbouring countries in southern Africa, like Botswana and Zambia, which have more electricity capacity than they require.
It raises the question of what caused the destruction of such a proud and efficient institution.
The root of South Africa’s power crisis tracks back to the early nineties and the transition to a democratic government.
By 1990, Eskom had completed a massive build programme over three decades to ensure energy self-sufficiency. It had a total capacity of 40,000MW and provided some of the lowest-cost electricity globally.
In 1994, South Africa’s electrification policy was shifted by the democratically-elected ANC government to prioritise increased access to electricity in rural areas.
There was a rapid uptick in demand for electricity, with rural access to electricity doubling by 1997 and nationwide access increasing by 20%. This greatly increased the strain on Eskom’s existing infrastructure.
An Electricity White Paper on the Energy Policy of South Africa was released in 1998, which warned that Eskom’s generation capacity would be fully utilised by 2007.
Eskom made a request to the government for additional budget allocations to expand their generation capacity. However, it was rejected by the Mbeki administration, which sought to run a tight fiscal ship.
As the White Paper predicted, Eskom was unable to meet electricity demand in late 2007, which resulted in the first national power outage in South Africa’s history.
In 2008, the government responded to the supply-demand imbalance by implementing load-shedding, which artificially lowered electricity demand by rotating power outages across the country.
The government refused to allow private sector participation in electricity generation and instead commissioned Eskom to build two new coal-fired power plants – Medupi and Kusile.
The design of these two power plants was rushed, resulting in numerous design flaws and, when coupled with rampant corruption, resulted in lengthy construction delays.
These two power plants are still not fully operational 15 years later, with an estimated combined cost of R464 billion. Eskom produces less electricity post-Medupi and Kusile than it did before.
Due to their design flaws, these plants are highly inefficient, and their units are constantly breaking down.
The problems at Medupi and Kusile compound the rapid decline in the operating performance of Eskom’s ageing coal-fired power plants.
In turn, it results in increasing electricity supply deficits, causing prolonged load-shedding at higher stages to artificially reduce demand.
One of the solutions promulgated by the government was the Renewable Independent Power Producer Programme (REIPP) which aimed to facilitate private power generation to reduce the pressure on Eskom’s ageing coal-powered fleet.
However, multiple Eskom CEOs prevented this Programme from being implemented. Begrudgingly, Mineral Resources and Energy Minister Gwede Mantashe revived it nearly a decade after its inception.
This programme has been implemented slowly and at a scale that is too small to properly address South Africa’s electricity generation shortfall.
Energy expert Clyde Mallinson added that there is not enough new capacity to cover the declining output of the coal fleet.
Furthermore, it has run into a fundamental problem – a lack of grid capacity which prevents independent power producers from connecting their plants to the grid.
Currently, the electricity supply deficit ranges between 4,000MW and 6,000MW at peak demand, with Eskom’s Open Cycle Gas Turbines and Pumped Storage working overtime to soften the level of load shedding required.
The factors outlined below form the crux of South Africa’s current power crisis – many of them decades in the making.
- Ageing power infrastructure – South Africa’s power infrastructure is old and in need of significant investment to be upgraded and modernized. The ageing power plants are poorly maintained, resulting in breakdowns, outages, and poor performance.
- Delays in the construction of new power plants – The construction of new power plants has been delayed due to bureaucratic red tape and other issues.
- Corruption and mismanagement – Corruption and mismanagement are causing damage to power stations, including poor maintenance and sabotage. It has also prevented investment in the power sector.
- Lack of skills – Many skilled Eskom staff have left the company and were replaced by poorly skilled employees.
- Transition to renewable energy – South Africa is in the process of transitioning to renewable energy. However, the process has been slow and has not yet resulted in significant increases in renewable energy capacity.
- Insufficient power generation capacity – These factors have created a significant gap between the country’s electricity demand and its capacity to generate power, leading to frequent blackouts and load shedding.
President Cyril Ramaphosa’s solution to the problem is to appoint a new energy minister to the Presidency.
“The minister will focus full-time and work with the Eskom board and management on ending load shedding and ensuring that the Energy Action Plan is implemented without delay,” said Ramaphosa.
Many experts highlighted that it could hamper decision-making and hurt Eskom rather than help it.
South Africans should, therefore, brace themselves for more years of load-shedding.