How long will SA’s power cuts last?
Eskom CEO André de Ruyter has told South Africans to expect load-shedding for the next 18 months while Eskom catches up on maintenance and takes units out of service on a planned schedule. But looking at the performance of Eskom’s plant, the time it will take to procure and build new capacity and the regulatory hurdles to self-generation, 18 months is optimistic. A more realistic time frame is three years.
The Integrated Resource Plan (IRP) — the government’s long-term planning tool for energy — published in October 2019, projected a 2,000MW-3,000MW shortfall in supply for the next two to three years. Every 1,000MW shortfall is one stage of load-shedding. This is now widely believed to be an underestimate, mainly because it was based on the assumption that Eskom’s plants would perform better than they have done.
The IRP assumed a 71% “energy availability factor” (EAF) in 2020, rising to 75% by 2030. The EAF is the percentage of Eskom plant that is able to dispatch energy to the grid at a particular time. But Eskom’s EAF has not averaged anything near that in 2020 due to ongoing, unplanned breakdowns.
Council for Scientific and Industrial Research (CSIR) modellers Jarrad Wright and Joanne Calitz, who have done detailed modelling work on the electricity system, say the average EAF is 66.1% for the year to date. As EAF is on a declining trend — it was 79% in 2017 — their model assumes the EAF will further decline rather than improve. On this basis, their calculations show a shortfall of 4,000MW.
In response to questions on Friday, Eskom said it now shared the view that the shortfall was more like 4,000MW and that the IRP estimate had been too low. But unlike the CSIR, Eskom says it remains confident the steps it is taking will improve plant reliability, which will reach 70% of EAF in financial year 2021, thereafter increasing incrementally.
The next question then is how long will it take to build 4,000MW of new generation capacity and bring it on to the grid?
Some additional capacity is belatedly in the pipeline. The renewable energy independent power producer programme — which stalled in 2015 due to political opposition and was eventually unblocked three years later — includes 27 projects with a capacity of 2,200MW. The three-year delay, which would have mitigated load-shedding, is now almost over, with projects ready to deliver.
This though will not be enough to fill the gap. Two procurement processes by the department of energy are now slowly getting under way.
The first is for 2,000MW of “emergency” or “risk mitigation” capacity, which the department identified back in October 2019 as necessary to meet the energy gap identified by the IRP. The request for proposals has now at last been issued and closes in mid-November, a full year after the problem was identified in the first place. These projects are required to deliver energy by June 2022 and must at all times have dispatchable energy, ruling out stand-alone renewable projects that do not partner with battery storage.
Energy analyst Chris Yelland says that because of these constraints, the real technological option will be wind and solar photovoltaic projects that are supported with battery storage. Deputy director-general of energy Jacob Mbele says he expects interest from gas-to-power projects too. While liquefied natural gas (LNG) power stations will require infrastructure, such as pipelines to be built, Mbele says it will be possible to begin gas-to-power projects using liquefied petroleum gas (LPG), which is easier to supply.
The second procurement — which will really be a series of procurements — is the 11,813MW the National Energy Regulator of SA (Nersa) has just endorsed. Minister of mineral resources & energy Gwede Mantashe announced the Nersa decision last week, a welcome signal to the market and economists that the procurement process would soon get under way.
This procurement arises from the IRP and will open up various bid windows, including the fifth round of renewable energy projects. The renewable energy component will be 6,800MW, with 513MW to be provided by storage options, 3,000MW from gas and 1,500MW from coal. The first projects — most likely the renewable ones, as these are quickest to build — are expected to begin generating energy by mid 2022.
With so much time having passed since the IRP was approved, the time line of June 2022 is tight. Once adjudicated, projects take six to 12 months to reach financial close. After that, in the case of renewable energy, an 18-month construction period must follow.
Mantashe, who became energy minister in May 2019, has refused to be rushed, particularly in opening a renewable energy bid window, insisting that all technologies will be treated the same, despite the supply crisis and load-shedding. In a small concession last week, indicating that it understood the need for urgency, the department said it would have the first request for proposals out by the end of 2020, six months earlier than it had initially planned.
The energy system should become less constrained from 2022, but will still be at risk of load-shedding. There is also the problem of what to do until we get there.
Analysts such as University of Cape Town professor Anton Eberhard say the quickest way to reduce strain on the system is to free up self-generation by industry, property companies, agriculture and mines. An estimated 1,500MW could be added to the grid with relative ease and speed if the exemption for licensing was raised from 1MW to 10MW, he says. This though remains constrained by Mantashe’s red tape. He has insisted that all self-generation projects over 1MW must be licensed by Nersa.
It is inordinately difficult to get across the Nersa line, says Eberhard. Only five projects since 2013 have met the regulatory requirements. Under pressure to expedite matters, Mbele says he is engaging with Nersa to streamline the licensing process but is adamant that licensing is a requirement essential for the department’s energy planning purposes.
After years of delays brought about by political opposition to renewable energy, followed by foot-dragging and inefficiency by Mantashe and his department, there are now inklings that the government is aware of the urgency of the crisis. It is late in the day though to get real, and the economy has several years ahead still to suffer.
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