Hitting Turbulence: Eskom’s Ambitious Goals Questioned
Noted rating agency Moody’s voiced apprehensions on Thursday regarding South African utility Eskom’s ability to boost its Energy Availability Factor (EAF). Eskom is wrestling with internal mismanagement, coal supply conundrums, skill shortages, and theft and sabotage issues. Consequently, meeting its ambitious EAF improvement targets looks increasingly unlikely.
Eskom has publicly set its sights on enhancing its EAF to 65% by March 2024, with a further goal of 70% by March 2025. Currently, the EAF of Eskom’s fleet sits at a modest 57%. According to Electricity Minister Kgosientsho Ramokgopa, a one per cent increase in EAF equates to approximately 500MW of generation capacity.
Yet, Moody’s isn’t quite as optimistic about these aims. The agency pointed out, “These targets are ambitious given the difficulties that the company faces and its track record”.
Under Pressure: Eskom’s Generation Fleet and South Africa’s Debt Rating
Moody’s anticipates that Eskom’s generation fleet will remain under stress this year, despite efforts towards performance enhancement. Eskom’s performance forms an integral factor in Moody’s decision-making regarding South Africa’s sovereign debt rating.
Joanna Fic, Moody’s Vice-President for Europe, the Middle East, and Africa, shed light on the situation: “Performance has also been affected by coal supply issues, mismanagement, a lack of skills, corruption, theft, vandalism, and sabotage.” Fic warns that Eskom’s system will continue to buckle until substantial new generation capacity is added to the grid, necessitating significant investment.
Heading Towards Brighter Times?
Electricity Minister Ramokgopa, however, paints a hopeful picture. He expects South Africa to “see significantly reduced load-shedding” before year-end, hinting at the possibility of load-shedding becoming a thing of the past.
In a recent eNCA interview, Ramokgopa updated the nation on the progress of the government’s Energy Action Plan (EAP). He lauded the efforts in augmenting the EAF of Eskom’s generation fleet and incorporating private investment to increase grid capacity.
The minister cited a 7% EAF improvement over the past month, roughly equivalent to an extra output of over 3,000MW, or four load-shedding stages. However, he noted that the increased winter demand was offsetting this additional supply.
Notably, Eskom’s generation fleet surpassed the 60% EAF mark last Friday, which Ramokgopa praised as being “ahead of the curve” concerning their performance targets.
Experts Weigh In: Pathway Ahead for Eskom
Energy expert Chris Yelland offers a cautiously optimistic viewpoint, stating that the country should anticipate a more stable power supply in the coming three months compared to the past quarter. Yelland credits this to increased winter electricity supply, decreased demand for certain projects, efficient summer maintenance, and increased use of renewable energy.
However, Professor Anton Eberhard throws a spanner in the works, asserting that Eskom’s data on their power plant unplanned outages (UCLF) leaves much to be desired. He points out that the average percentage of plant output unavailable due to breakdowns and partial load losses is, in fact, worse than a year ago.
Eskom’s journey to its EAF targets is fraught with challenges, but with expert intervention and efficient management, the ambitious goals may yet be within reach.