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  • Eskom has relied extensively on Open Cycle Gas Turbines powered by diesel to meet electricity demand.
  • Soaring global diesel prices will impact Eskom’s diesel spend, estimated to exceed R15 billion this financial year.
  • South Africans have experienced 32 days of load shedding so far this year, according to Eskom.

As Eskom relies on open-cycle gas turbines, which feed off diesel to meet energy demand, it expects to feel the impact of soaring global fuel prices.

Eskom’s management team on Wednesday provided an update on the state of the power system. Since January 2022, South Africa has experienced 32 days of load shedding, outnumbering that over the same period last year.

While load shedding has persisted for 14 years, CEO André de Ruyter warned against accepting it as the “new normal”. During the briefing, De Ruyter reiterated that to address load shedding, new generation capacity – between 4 000 MW and 6 000 MW – of power must be added to the grid.

Overall the power utility’s Energy Availability Factor (EAF) – a measure of the power fed from Eskom’s power stations to the rid – is at 62%, below a target of 74%. Acting head of generation Rhulani Mathebula, who has taken over from Phillip Dukashe, explained that existing generation plants were not performing at full capacity. Eskom’s planned maintenance programme was a key contributor to the low EAF, with unplanned breakdowns adding to the challenges.

To plug the gaps, Eskom has been running Open Cycle Gas Turbines. The expenditure on these amounted to R6.4 billion for the year ended March 2022. In the previous financial year, this was R4.1 billion.

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But in the current financial year, Eskom expects diesel spending to exceed R15 billion – influenced by global price surges.

Globally, energy costs have spiked, to new records in some cases, amid the Russia-Ukraine war. There is currently a shortage of diesel supply due to lower exports from Russia. Domestically this has seen diesel prices rise.

Chief operating officer Jan Oberholzer said global fuel prices would impact Eskom “quite significantly”.

The rising price of diesel also negatively impacts the cost of a ton of coal – as some mines rely on plants using diesel.

“We tried our best to quantify what the impact may be. It is between R15 billion and R20 billion, currently in the financial year,” said Oberholzer.

“Anything south of R15 billion is what we believe the current impact will be on the cost of our business,” he emphasised.

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Speaking more broadly on the load shedding outlook for the remainder of the year, Eskom anticipates that generation availability will improve over winter. This is because the maintenance programme will be ramped down to meet demand.

In its scenario planning, Eskom expects to have as much as 104 days of load shedding over winter – a revision from 101 days previously. The highest stage of load shedding to be implemented will be Stage 3. However, Eskom’s managing director of transmission, Segomoco Scheppers, stressed that this was not a projection, but purely scenario planning.

Overall, Eskom’s generation business is still underperforming compared to its transmission and distribution businesses. But De Ruyter said that the priority was to get the additional needed generation capacity.

Due to plant breakdowns, the power utility will implement Stage 2 load shedding on Wednesday evening, from 17:00 to 22:00.

SOURCE:

R15bn, maybe more: Eskom braces for soaring diesel costs as it battles load shedding | Fin24 (news24.com)