Stage 7 load shedding already here: economists

 ·12 Dec 2022

As power utility Eskom spent much of last week avoiding the dreaded stage 7 load shedding threshold, economists at the Bureau for Economic Research (BER) said it has already technically been crossed.

“At a point last week, Eskom was technically ‘shedding’ at stage 7, spread between rolling blackouts and load curtailment on heavy industrial users,” the economists said.

Load-shedding was ramped up to stage 6 on Thursday following a high number of breakdowns and the need to preserve emergency generation units. While rolling blackouts were reduced to stage 5 by the weekend, Eskom had to manoeuvre and dance around an extremely volatile situation to avoid the crisis getting worse.

This includes curtailing heavy industrial users, the BER said, as well as delaying the outage of Unit 1 of the Koeberg Nuclear Power Station to Saturday (10 December) until the system stabilised.

But even this was not enough to get load shedding back to lower stages – following more breakdowns, Eskom’s plan to deescalate load shedding to stage 2 by Monday (12 December) was scuppered, and stage 5 load shedding remains in effect until further notice.

With Koeberg 1 now offline, South Africa’s energy future is on shaky ground. The unit can produce up to 900MW – almost one stage of load shedding – and it will remain offline until at least the middle of 2023. After Unit 1 is back online, Unit 2 will start its shutdown in October 2023, prolonging the outage.

The diesel problem

Eskom has warned that load shedding risks being prolonged at higher stages for the next year. The utility has two ‘solutions’ to the shortfall, neither of which are the silver bullet the country needs.

The first solution is diesel. Eskom is able to burn diesel in its Open Cycle Gas Turbines (OCGTs) to help keep around two stages of load shedding at bay.

However, the group has blown its budget for diesel purchases, and National Treasury has so far nixed any ideas that it will be handing over more money to help, saying Eskom has not followed the required parliamentary budget processes to get such aid.

As its budget to procure additional diesel to run the OCGTs is depleted, Eskom keeps the remaining fuel stocks for “extreme emergency situations”.

According to the BER, National Treasury’s argument that it does not have these funds as it was not applied for during the budgetary process is technically correct, but “it is not difficult to argue that the situation has changed materially since then”.

“Not supplying the funding comes at an enormous cost to the economy – much more than the roughly R19 billion Eskom is asking for,” it said.

“To be sure, load-shedding would not be solved with more money for diesel, but the higher, more damaging stages could possibly be avoided.”

The economists said that, while third-quarter economic activity data has remained fairly resilient, South Africa will likely only see the real impact of intense load-shedding in the coming months as the ‘reopening’ boost to the economy and other normalisation effects fade, the group said

“Our October forecast of only around 1% real GDP growth in 2023 is firming up,” it said.

The bid window problem

The second ‘solution’ to Eskom’s woes is getting more power onto the grid – but even though mineral resources and energy minister Gwede Mantashe signed 13 new agreements as part of the country’s bid window 5 (BW5) last week, the longer-term outlook is on shaky ground with bid window 6 (BW6) falling short so far.

BW6 was released in April 2022, and 56 bid submissions were received on 3 October  2022.

Following the evaluation, only Solar PV projects have been appointed as preferred bidders, at a total of 860MW. An eligible sixth bidder has also been identified, and the department is discussing with the potential bidder on conditions for appointment to fill the remaining gap of up to 1,000MW.

According to the BER, the round would have allowed for about five times the amount of MW to be allocated.

“Furthermore, not a single wind power project has been appointed, despite a significant number of bids.”

This is worrying for the longer-term outlook, the economists said.

Adding to the overall strain on Eskom, even the 1,800MW concluded in BW5 is still years out.

With the signing of the 13 agreements on Thursday (8 December), the Department of Mineral Resources and Energy has concluded 19 out of the 25 announced projects under Bid Window 5, which will add an overall total of 1,759MW renewable capacity to the national grid. This comprises 784 MW from onshore wind technologies and 975 MW from Solar PV.

However, these projects are only expected to come online in 2025.


Read: More breakdowns for Eskom – stage 5 load shedding extended indefinitely

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