What SA’s doing to keep the lights on
Eskom is mired in debt and isn’t selling enough power to cover all its costs, leaving it scrambling for money to replace aging plants. Theoretically Eskom should be able to generate about 47 000 megawatts (MW) of power, but output slipped to as low as 26 000 MW last year when several plants were being serviced or broke down.
Less than three quarters of installed capacity has been available this year, in part because a lack of money forced it to cut back on maintenance. It also lacks key technical skills to carry out the work. Plants that produce more than half Eskom’s power are at/ nearing retirement age. SA was able to produced more electricity than it needed in 1994, but the government didn’t foresee how sharply demand would spike as the economy expanded and previously neglected areas were connected to the grid.
Eskom announced a series of multi-billion dollar investments in the mid-2000s, but they came too late and took too long to build.
The first wide-scale outages occurred in late 2005. The Medupi and Kusile coal-fired plants, which were supposed to add almost 9 600 MW to the grid and be fully operational in 2015, are still years away from completion. Their projected costs have more than doubled to R292.5 billion. Very. It’s in a “death spiral.” It’s saddled with R419 billion worth of debt that it’s battling to service, and it anticipates showing a loss of about R20 billion for the year ended March. Sales volumes are at a decade low and continue to falls.
Increasing numbers of businesses and middle-class consumers have moved off the grid as renewable energy prices drop. Ramaphosa has announced plans to split Eskom into separate generation, distribution and transmission businesses under a state holding company.
He says this will enable each unit to manage its costs more effectively and make it easier for them to raise funding. Details on financial support will be released in the annual budget. Eskom has floated a proposal for government to take over some of its debt - an option not favoured by Finance Minister Tito Mboweni. – Bloomberg