Eskom burns up R8bn of diesel

• Expenditure during April and May • Money set aside not enough

Eskom has spent almost R8bn on diesel to power emergency generation reserves in April and May, a rate that puts it on track to surpass this fiscal year what the utility spent in the previous two fiscal years combined as it struggles with the worst loadshedding in its history.

With few other short-term solutions available, both Eskom and electricity minister Kgosientsho Ramokgopa have said that the utility would have to rely on its diesel-power open-cycle gas turbines — meant to be used for emergencies or during peak demand periods — to compensate for the poor performance of its coal-fired generation fleet and ease load-shedding during the winter months.

In an emailed response to Business Day, Eskom said it spent R2.34bn in April and R3.19bn in May on running its own open-cycle gas turbines and R2.3bn on privately owned ones over the two months.

According to Ramokgopa, at the rate at which Eskom is now burning through diesel to run the open-cycle gas turbines, it is likely that the R30bn the utility has available for diesel this financial year (until end-March 2024) will be insufficient.

In the previous financial year to end-March 2023, Eskom spent R21bn on diesel — more than three times the budgeted amount for the year. It spent just more than R10bn in 2022.

The high consumption of diesel is a result of Eskom’s inability to maintain its ageing coal-fired power stations, some of which have been targeted by saboteurs and corrupt contractors and run on an electricity availability factor of around 56%.

It heaps pressure on Ramokgopa to make good on his promises to end load-shedding and the utility’s board to ramp up Eskom’s electricity availability factor to 75% over the next two years.

Last week Ramokgopa told journalists they did not have any estimate yet of how much additional funding Eskom would need as it ramps up the use of the open-cycle gas turbines to prevent a “worst case scenario” where load-shedding will have to be escalated beyond stage 6.

“We are working on what that amount is […] but if we cannot get additional funding that would mean additional loadshedding,” he said.

Should additional funding be required this would either come from future electricity tariff increases or directly from the fiscus — either way, it will “ultimately be the taxpayer who will pay”, Ramokgopa said.

The cost of diesel, he said, has to be weighed against the cost of higher stages of load-shedding to the economy.

According to estimates by the Reserve Bank, stage 6 loadshedding can cost the economy as much as R900m per day.

Eskom owns two open-cycle gas turbines, Gourikwa and Ankerlig, with a combined generation capacity of about 2,000MW and it has access to privately owned turbines with another 1,000MW of capacity.

As part of its plan to reduce

the level of load-shedding this winter, Eskom said it will be running the open-cycle gas turbines at a load factor of 20% (an indication of the amount of energy provided by the gas turbines to support the power system) over the winter months, contributing roughly 500MW to 600MW to the grid.

However, Eskom told Business Day that it operated its own open-cycle gas turbines at 27% load factor in May and the privately owned turbines at an average of 24% in April and May.

Eskom has previously said that it is not possible to use all the gas turbines at full capacity due to logistical limitations.

Diesel is delivered to Gourikwa by pipeline but it has to be trucked into Ankerlig, limiting the amount of diesel that can be delivered per day.

Ramokgopa said that Eskom is receiving support from the private sector through the national energy crisis committee (Necom) to find a solution to these logistical challenges.

In its system outlook for winter Eskom’s base case scenario for the next three months assumes unplanned outages of about 15,000MW and demand peaking at about 32,500MW. This will require load-shedding to be implemented at stages 3 to 5 on most days.

ESKOM IS RECEIVING SUPPORT FROM THE PRIVATE SECTOR ... [VIA NECOM] ... TO FIND A SOLUTION TO LOGISTICAL CHALLENGES

However, on an assumption of 18,000MW of unplanned outages assuming peak demand and low utilisation of OCGTs stage 7 and 8 load-shedding would have to be implemented every day from June to August.

Over the last two weeks, unplanned outages were sitting between 17,000MW and 18,000MW, but Eskom was able to bring back some megawatts at the weekend to decrease breakdowns to 15,800MW.