As the liberalisation of SA’s electricity market matures, Eskom will face more competition from independent power producers, which can now enter into supply agreements with end users.
However, CEO Dan Marokane, who last week reached the milestone of having occupied the position for 100 days, said the power utility fully intended for the generation business to continue being a “significant” player in the local power market.
He said this meant that Eskom would not only have to compete on price even as it continued to drive towards increasing its tariffs to “a cost-reflective rate” but it would also have to compete against power producers that could offer customers clean energy.
Given the constraints on the state-owned power company’s balance sheet, it has not been able to build up its own new, renewable generation capacity portfolio. In fact, since building Medupi and Kusile power stations Eskom has added little new capacity.
Meanwhile, despite a recent decision to delay the decommissioning of coal plants that were to be shut before 2030, these old power stations would eventually have to close.
Transition
“There is a school of thought that says Eskom generation is dying because the coal fleet is going to be decommissioned. The view that we take, and the approach that has been signed off by the board, is that Eskom generation needs to reinvent itself by embracing the fact that we need to transition to clean energy and play a role in SA’s larger energy transition,” Marokane told Business Day in an interview.
Apart from ending load-shedding for good, Marokane said his main job over the next three years would be to ensure Eskom “pivots into an Eskom of the future ... This means addressing the need to reinvent the generation business and making sure we have a transmission business that is responsive to a changing electricity supply industry.”
In future, Eskom might no longer be the single, majority player in the generation market, but Marokane said it would continue to be a “significant” player. In the next two years Eskom wanted to acquire 2,000MW of “executable” renewable energy projects and wants to “firm up any opportunities that exist in the gas-to-power space... We see a generation portfolio going forward that has an increasing component of renewables, clean technologies, hydro and gas-to-power.”
Eskom would be open to considering its participation in new nuclear energy projects, he said. “We believe there is some appetite in the market for partnering with us in implementing these plans because we acknowledge that our balance sheet does pose a challenge.”
As for his other focus — ending load-shedding — Marokane is adamant that Eskom can reach the goal of running the generation system at 70% capacity within the next two years. The utility now has 46,000MW of installed generation capacity that it can deliver electricity to the grid if all stations are running at 100%.
However, due to breakdowns and maintenance, plant availability is sitting at an energy availability factor of about 63%, equivalent to 29,000MW. This is already an improvement from last year’s average of 54% and is part of the reason SA has been without load-shedding for more than 80 days.
Marokane said he believed station performance could get to 70% on a sustainable basis.
Anything above this would come at too large a trade-off — requiring too much investment for too little gain.
However, 70% should be sufficient to keep the lights on given the new capacity that would be coming through from renewables, he said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.