Worried about the national grid going down? Here’s why we should be okay
One of my mates — Branko Brkic, of the Daily Maverick — has a recurring nightmare: that the lights in SA will suddenly go off and never come back on again.
He has sweats about the national grid going down, never to recover. And I must confess, whenever there is an unexpected power outage, even when it’s City Power’s fault and not Eskom’s, I too get paranoid.
Attending the postponed March 2017 Eskom results presentation prompted me to revisit our power capacity.
Way back, Eskom executives planned well ahead and built new power plants accordingly. That all went awry in the late 1980s and by 2007, there was a 20-year gap in terms of matching supply and demand.
Slowly but surely, and way behind schedule, Eskom’s two new coal-fired power stations, Medupi and Kusile, are coming onstream. When both are fully up and running by about 2022, they will add 9,600MW to the national electricity grid.
The first unit at Medupi came onstream in August 2015; and the second in April. The four remaining Medupi units should come onstream by May 2020.
Kusile’s first contribution to the grid should materialise in July 2018 and its fifth unit, by November 2021.
Additionally, all four units of the Ingula pumped storage system, providing 1.3GW of peaking power, have been commissioned. While these units do not generate any additional new capacity, they provide very welcome power during peak periods. And the biggest advantage of Ingula is that it can be used to provide a “black start” in the event of a catastrophic loss of all of Eskom’s plants.
Eskom now operates 29 power stations, with total nominal capacity of 44.1GW. Considering that peak demand for electricity in a normal, cold July is about 38GW, its “reserve margin” should grow in line with the final commissioning of Medupi and Kusile. Eskom expects another 8GW to be commissioned over the next few years from these two builds, taking theoretical installed capacity to about 52GW.
Weighed against this good news is that older coal-fired plants are being progressively decommissioned at the end of their useful lives. For example, the three previously mothballed plants that were recently recommissioned — Camden, Grootvlei and Komati — have been earmarked for decommissioning. Collectively, that will remove 3.5GW from the grid.
Thankfully we have the independent power producers, with 5GW of their power now connected to the grid. Of this, 3.1GW is from renewables, predominantly solar and wind power.
Eskom is a grudging user of renewable energy and insists it is more expensive to produce than traditional baseload coal and nuclear plants.
This stance is not surprising, because the state utility tends to view renewable energy as competition to its near monopoly, rather than complementary in an optimal mix of energy sources.
Historically, new builds were funded through the issue of Eskom bonds, thus matching long-term liabilities with longterm projects. Today, there is no such co-ordinated approach. For some years now, the utility has been desperately scraping around attempting to pay for new builds via a combination of specific government-backed guarantees and horrendously high tariff increases.
It is an unstable situation, and one that will be aggravated in the event of a further ratings downgrade, making the cost of borrowing on Eskom’s R355bn of debt even more onerous.
So, fear not, Branko. While Eskom’s corporate governance and balance sheet are national disasters, the lights should stay on, provided no one messes with the coal supplies.
It should at least be able to complete its current new build programme and even if a calamitous total blackout occurred, normality would be restored within a few hours.
Chris Gilmour is an investment analyst.