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Diesel logistics, costs come to fore in SA's power 'balancing act'

Eskom CEO Tshediso Matona

Photo by Duane Daws

8th December 2014

By: Terence Creamer

Creamer Media Editor

  

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With plant breakdowns having increased drastically at Eskom since 2009, the State-owned utility has increased its use of diesel materially, having burnt around 140-million litres of the energy carrier in November alone.

This rise in consumption has placed major strain on the group’s finances, as the open cycle gas turbines (OCGTs) in the Western Cape, which are designed to operate for around three hours a day over peak periods, have at times operated for up to 12 hours a day.

The electricity utility spent a whopping R10.5-billion on diesel fuel in 2013/14 to operate the Ankerlig plant in Atlantis, which consumes 425 000 l/h and the Gourikwa facility, in Mossel Bay, which burns 236 000 l/h. Together the plants produced 3 621 GWh, translating to a load factor of over 19.3% last year and CEO Tshediso Matona has indicated that the group is likely to spend a similar amount in 2014/15.

However, he has also indicated that the group is at risk of breaching its budgetary allocation for diesel in early 2015, which is partly why the utility is currently forecasting a high risk of load shedding in February and March.

More recently, however, there have also been logistical problems at both Gourikwa and Ankerlig, which are supplied primarily by PetroSA and Chevron respectively.

The failure of PetroSA to supply Eskom in late November precipitated a second bout of load shedding in a month that began with load shedding, when the Majuba coal-silo collapsed. But Matona acknowledged that internal procedural problems caused it to miss an order for the supply of diesel in early December, which then precipitated five days of confidence-sapping rotational power cuts from December 4 to 8.

The February and March prognosis will only be improved, however, if the utility is able to arrest its unplanned outage problem, which has resulted in the energy availability factor (EAF) from its power stations falling to below 75% against a target of 85%.

A five-point plan – which focuses primarily on performing maintenance as planned, as well as improving the quality of the maintenance being performed – has been developed in a bid to support a recovery in the EAF.

But Matona says that, in the context of an extremely constrained system, it is a “delicate balancing act” to ensure adequate supply while also executing on the planned maintenance schedule.

“The power system will be severely constrained and will only begin to ease once at least two units at Medupi and one unit at Kusile are running,” he says.

The synchronisation of Medupi Unit 6 is now expected only in the second week of January, which will be followed by ramp up to full commercial operations over the subsequent six months.

The interval between Unit 6 and Unit 5 at Medupi has not been finalised, but Eskom is hoping for first synchronisation at the end of 2015. The first Kusile unit is expected to follow in early 2016.

No timeframe has been provided for a recovery in the EAF to 85%, which, together with the first Medupi and Kusile units, is key to stabilising the electricity supply system.

Matona indicated that the “costly” OCGTs may be used beyond budget under emergency conditions and indicates that work is currently under way in an effort to find a way to fund that extended use.

It is likely that Eskom will make a strong argument for the National Energy Regulator of South Africa to allow the above-budget consumption of diesel to be passed on as a “prudently incurred” expense in its next Regulatory Clearing Account (RCA) application.

Using the RCA, Eskom has already clawed back R7.8-billion for the second multiyear price determination period (MYPD2), which means that the tariff will rise by 12.7% from April 1, 2015, instead of the 8% originally sanctioned.

Further RCA claw-backs relating to the MYPD3 determination, which granted Eskom five yearly increases of 8% from April 1, 2013, to March 31, 2018, are anticipated. The utility initially applied for yearly increases of 16%.

Edited by Creamer Media Reporter

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