Thought Leadership

Busisiwe Mavuso | More crisis management for Eskom – and again it’s too little, too late

25/11/2022 | By Busiswe Mavuso

Government is again scrambling to find “emergency solutions” as we’re being hit by up to Stage 5 load shedding with more power cuts to come over the summer months (as predicted), having floundered in its attempts to resolve the crisis through the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP).

To put it bluntly: time and again it has missed the opportunity to address the underlying causes of load shedding.

Had things run on schedule, the REIPPPP process would have ended load shedding. Between 2011 and 2015, the state procured 6,800MW through four bid windows. Had we continued on that path we could easily have had an extra 7,000MW on grid from renewable sources – Eskom estimates the current energy deficit at 4,000MW to 6,000MW.

Financial close for the last of those bid windows was held up by the corrupt Eskom leadership at the time refusing to sign the power purchase agreements (PPAs) with the winning bidders, but when Jeff Radebe was appointed energy minister in February 2018, he wasted little time in getting things moving. He forced Eskom to sign the PPAs and secured financial close, published the long-overdue draft integrated resource plan in August and announced that the fifth bid window would take place in November.

In May 2019 Gwede Mantashe was appointed energy minister and the fifth bid window was issued only in April 2021, with only 500MW successfully procured, while not 1MW has actually been added to the grid through the REIPPP during his tenure after the disastrous risk mitigation or “emergency” bid window that aimed to get 2,000MW onto the grid in an accelerated time frame was stillborn.

We’ve now run out of options to fix the short-term problem of load shedding. Fully liberating the embedded generation market by lifting the 100MW cap and streamlining the approval process will help but in the long term only.

In the meantime, load shedding will get worse – as Eskom and other analysts have been forecasting for years. What has been keeping us from suffering higher stages of load shedding this year has been Eskom’s use of diesel to supplement capacity. It has already spent R11.1 billion on diesel since 1 April – that’s almost double its budget of R6.1 billion and it’s money it cannot afford.

Eskom approved the expenditure on the premise that the cost of load shedding to the economy is far greater – Business Unity SA estimates that Stage 4 load shedding costs the economy R1 billion a day – but it has run out of cash and the National Energy Regulator of SA is refusing to allow it to fully recover its costs for diesel from consumers through increased tariffs.

Other systemic problems have simply been ignored. Municipal debt (Eskom is owed R53 billion!) as well as residential non-payments (R5 billion is owed just by Soweto residents) are problems caused by politicians but are being left to Eskom to resolve. When Eskom does threaten to act against municipalities or residents, it finds no political support whatsoever.

Another extremely dangerous threat that government is skirting around is the widespread sabotage of Eskom equipment that results in more power cuts and Police Minister Bheki Cele has been missing in action on this issue.

Both municipal debt and sabotage could be at least partially resolved in the short term – if government had any will to do so.

In the meantime, government has been kept fully informed for a long time by Eskom that this summer is going to be a particularly bad one. In its latest update it predicts 126 days of load shedding if 1,500MW of generation capacity above its baseline is lost to breakdowns and/or sabotage and burning diesel to keep the lights on would cost R23.7 billion. If 3 000MW above baseline is lost – which is the average amount – this would increase load shedding days to 193 and R44.7 billon in diesel costs.

Clearly Eskom – which is also under political pressure to increase maintenance spending to improve energy availability – can no longer afford to spend such astronomical amounts on diesel, which means higher stages of load shedding for some time to come. There is no easy solution – that train left the station long ago and government hadn’t climbed aboard.

The Department of Public Enterprises issued a statement after Minister Pravin Gordhan met the Eskom board on Sunday night saying it was working urgently with National Treasury and Eskom “to find the money to buy supplies of diesel”. Its efforts also include assessing “exceptional interventions” needed and “urgently seeking the aid of law enforcement bodies to immediately stop local-level disruption and criminal activities that affect power stations”.

Why only now?

This government has proven itself incapable of planning ahead even when presented with hard evidence of what the future holds. It then postures into “emergency crisis management mode” when the forecasts become reality. This is bleak, yes, but the sooner we accept the fact that load shedding will be with us for a good few years more, and focus on the real underlying problems rather than the spin, the shorter our path towards affordable and reliable electricity.

*Busisiwe Mavuso (@BusiMavuso2) is the CEO of BLSAThis article first appeared in News24 Business.