Ignoring risks and coal: IRP2023 echoes mistakes of 5 years ago

Electricity power lines and cooling towers at Eskom Holdings Ltd’s Kendal coal-fired power station in Delmas, South Africa. File: Bloomberg

Electricity power lines and cooling towers at Eskom Holdings Ltd’s Kendal coal-fired power station in Delmas, South Africa. File: Bloomberg

Published Feb 14, 2024


By Hügo Krüger

The public participation hearings of the South African Integrated Resources Plan (IRP2023) is in progress, but it seems the Department of Minerals and Energy (DMRE) might be overlooking a critical aspect related to risks by not being realistic about Eskom’s performance.

A basic principle in risk management is to not assume a biased position that performance will always improve, but rather to be on the lookout for errors that might occur in the system. In fact, this failure in risk management might have been a contributing factor to the failure of the 2019 IRP in predicting South Africa’s future electricity mix and the various stages of load shedding that we are experiencing.

From the 2019 IRP, Eskom predicted an Energy Availability Factor (EAF) of 73.36% across the coal fleet for 2024.

Yet in 2023, as per Eskom’s own data, Eskom’s EAF was close to 50%.

By implication, the IRP2019 predicted that Eskom would have had 10GW more power than it is able to generate. The difference is a loss of Eskom’s Safety Margin (5GW) and 5 stages of load shedding. The situation that we are experiencing.

The IRP2023 repeats the mistake again. The oversight means that the DMRE has a plan that assumes an improvement in Eskom, despite the more likely scenario being a drop in EAF. This should raise major concerns in the eyes of the public, because it could imply that even more load shedding is on the horizon and that the government is deliberately ignoring this outcome.

Eskom’s shortfall, with a 50% EAF, is around 13GW. With a further deterioration to 30% over the next decade, South Africa will need an additional 10GW, a total of 23, GW, just to replace the coal power stations. The IRP2023 Ignores this major risk.

Various options could be on the table to fill the gap. They include expanding wind and solar, building nuclear power (with a 10-year lead time), and natural gas being imported at Richards Bay. The IRP considers all of them in its reference scenarios, but does this with the wrong assumption as an input value – that the coal fleet will continue to improve, despite Eskom’s past performance showing otherwise.

By making this mistake, the most unconstrained option to alleviate load shedding seems to be neglected by Minister Gwede Mantashe’s office – a genuine commitment through law by Eskom’s leadership and the DMRE to invest more money in fixing the broken coal fleet, that includes bringing back the abandoned coal power stations and those around the municipalities.

This suggested pathway was allegedly recommended to South Africa's Presidency and Treasury after the release of Sir Mick Davis's report. Davis, a former chief financial officer of Eskom, advised President Cyril Ramaphosa and the rest of the Cabinet in 2019 on a turnaround strategy for Eskom. His nine-point plan, which addresses the state of Eskom, is shared with every Eskom CEO candidate.

Three former Eskom CEO candidates, as well as various people close to Davis, have expressed to me that based on this report, they would seriously consider addressing the issues with the coal fleet so that South Africa could buy time to explore alternative energy options.

One candidate did refer me to Eskom's 2020 submission to the portfolio committee on Public Enterprises Strategy.

The submission included a nine-point turnaround strategy that focused on new plants, full load losses and trips, units on long-term forced outages, partial losses and boiler tube leaks, outage duration and slips, human capital, preparation for increase OCGT (Open Cycle Gas Turbines) usage, a reduction of emissions and coal management.

These points mostly speak to an improvement in the coal fleet.

Davis was not the only one who pointed to the broken status of the coal fleet. Dr Frans Cronje also proposed this pathway during the Social Research Foundation’s investigation into Eskom's decline.

The findings from Mick Davis's report and the noise made by many engineers within the energy sector could plausibly shed light on why the government sought consultation with the German company, VGBE Energy, to assess the status of the coal fleet. Despite the completion of both reports, they have not yet been made public, and all the CEO candidates have refused to provide me with the reports, citing “confidentiality agreements”. Is this a form of censorship by omission regarding South Africa's departure from coal?

During the public participation process, the concern was underscored by the IRP’s own data during the presentation (that showed that fixing Eskom’s EAF could potentially be the least costly option). The error was pointed out by former Eskom CEO Jacob Maroga, as well as Mthunzi Luthuli, an electrical engineer and a grandson of Chief Albert Luthuli.

Both asked why the DMRE wasn’t seriously considering the serious maintenance of the system in the light of a more rapid decline in EAF?

Notably, the DMRE evaded their questions that related to the maintenance of the coal fleet and the inquiries about reactivating Eskom’s abandoned coal stations as well as those located near municipalities.

They could be brought back within a year to three years if an engineering team was dispatched to assess what was wrong with them. This evasion, therefore, raises concerns about a potential oversight of the risks associated with a significant loss in power generation during the next five years. From an engineering standpoint, it should be obvious that maintaining a system is more affordable than building a new one.

In the interest of the public, it is crucial to contemplate the comprehensive refurbishment of the entire coal fleet as a least-cost scenario to alleviate load shedding – even if it means an increase in carbon emissions in the short term.

The reports by Davis and VGBE Energy should not be state secrets, they should rather be made public before the finalisation of the IRP2023.

In neglecting the risk of a substantial generation loss, the DMRE appears to be repeating the same mistakes made in the 2019 IRP.

The DMRE simply got Eskom’s performance wrong, because of a too optimistic prediction of Eskom’s future performance, as well as by committing to a too hasty departure from reliance on King Coal in South Africa – the world’s most coal-dependent country.

Hügo Krüger, MSc in Civil Nuclear Engineering.

* The views in this column are independent of Business Report and Independent Media.