Brace yourself for a long, cold, dark winter as SA teeters on the edge of Stage 7/8 rolling blackouts

Kgosientsho Ramokgopa, who has been President Cyril Ramaphosa’s electricity czar for just over two months, is reluctant to state bluntly how dire rolling blackouts will be during winter, ­traditionally a nail-­biting period for SA’s fragile grid.

But the new electricity minister has a way of suggesting that blackouts might rise to higher and even unprecedented stages (possibly Stage 7 and 8) this winter, without explicitly saying so.

Asked about the outlook for rolling blackouts during a Daily Maverick interview from his office in Pretoria, Ramokgopa pointed to the numbers, mainly the demand for electricity by households and industries in recent days against what Eskom supplied in the face of daily breakdowns of generating units at its floundering coal-fired power stations.

Ramokgopa said Eskom head honchos had generated a best-case scenario of electricity generation capacity losses – as a result of unpredictable unit failures – being about 15,000 megawatts during winter. Such failures usually necessitate Eskom ramping up blackouts to Stage 5.

“But looking at the past two weeks, we are north of 16,000MW in capacity losses. We are closer to 17,000MW of losses,” said Ramokgopa, adding that the electricity system had already been fragile before the official start of winter. There is usually high demand for electricity during this season of between 34,000MW and 37,000MW, which Eskom struggles to cater for.

At more than 16,000MW of capacity losses, SA is teetering on the edge of Stage 7 or 8 rolling blackouts, which, if officially announced, would spell disaster for the quality of life of citizens and the economy. Put differently, at such higher blackout stages, electricity would be off for up to 13 hours a day.

The only thing that Ramokgopa was prepared to say about the electricity situation during winter was that the government planned to limit rolling blackouts to Stage 5.

“The worst-case scenario is above Stage 6. We are doing everything to keep it to Stage 5,” he said.

Interventions to ease the crisis

Since his monthlong tour of Eskom power stations and meetings with its executives, Ramokgopa has come up with a “short-term and multipoint plan” that would “hopefully” stave off higher stages of blackouts.

There is arguably nothing innovative or anything to see about most of his interventions that focus on the next six months, beginning in May.

In theory, the interventions could make an “additional 4,500MW” available, which could help to limit the impact of far higher demand in the winter months. But there are several holes in Ramokgopa’s interventions.

Essentially, he and his Cabinet colleagues want Eskom to spend more money in 2023 by burning diesel (about R30-billion, from R21-billion in 2022) to run open-cycle gas turbines (OCGTs) at the Ankerlig and Gourikwa plants.

The OCGT plants are usually used for dire emergencies and compensate for generation losses when there are breakdowns at Eskom’s power stations.

There are several problems with this R30-billion diesel-burning budget mooted by the government. Ramokgopa has conceded that the R30-billion diesel procurement budget won’t be enough to get Eskom through 2023 and early 2024, and the power utility will be forced to approach the government for help (or more money).

Another challenge is that there is a limit to how much diesel Eskom can burn, as the power utility can’t burn and use diesel worth more than R2.5-billion a month. Even with an unlimited diesel budget, Eskom cannot burn more diesel than that, owing to the physical and logistical constraints in transporting it to the OCGT plants.

Eskom will also focus on its five worst performing coal power stations and improve their maintenance. Some additional power will be imported. Ramokgopa wants National Key Points including hospitals, communications infrastructure and police stations to be exempted from rolling blackouts.

A new feature of his rolling blackouts intervention would be installing devices that would enable municipalities and Eskom to remotely switch off the 8 million installed geysers at homes across the country.

Remotely switching off geysers for periods of between two and four hours a day had the potential to free up an estimated 400MW, said Ramokgopa. An open tender process for a supplier of the devices is yet to be started. But winter is a few days away, and Ramokgopa’s fix-it plan has barely been implemented.

Ramokgopa’s powers

Another factor that undermines the credibility of Ramokgopa’s short-term interventions is that he has not yet been assigned any ministerial powers by President Ramaphosa that are required for him to implement the proposals.

“At the last Cabinet meeting, the President confirmed that he will make a decision in due course on my powers. The President is applying his mind and getting a legal opinion,” said Ramokgopa.

He was not willing to be drawn into a discussion about his powers wish list, saying he doesn’t want to “pre-empt the President’s decision”.

Clearly defining his powers and role is important because four other ministers are involved in the matrix of the Eskom crisis, which has persisted for 16 years.

There is Public Enterprises Minister Pravin Gordhan (in charge of Eskom’s governance affairs); Mineral Resources and Energy Minister Gwede Mantashe (who has powers to procure additional electricity from coal, nuclear and renewable energy sources); Finance Minister Enoch Godongwana (in charge of funding Eskom’s operations); and Minister of Forestry, Fisheries and the Environment Barbara Creecy (in charge of the environmental impact of Eskom’s operations and SA’s decarbonisation plans).

It’s a case of having too many cooks in the kitchen on the energy matter, says Chris Yelland, energy analyst at EE Business Intelligence. “This is a complex governance structure and explains why decision-making on energy has taken a lot of time.

“If you have a big problem like load shedding, you sometimes have to break it down into different responsibilities and allocate those responsibilities to different people.

“That would be a good response if all ministers were on the same page, with a clear, common and coordinated vision for fixing the power situation. But the ministers are not on the same page.”

Mantashe is deeply suspicious of renewable energy and favours the coal industry. He sees the state playing a big role in the running of coal-fired power stations.

Meanwhile, Godongwana wants Eskom’s coal-fired power stations to be concessioned to private operators, essentially running them. Though open to renewable energy sources, Gordhan is seen as a micromanager who tends to be involved in the day-to-day running of Eskom, going against best governance practices.

Ramokgopa insists that he has a “good” working relationship with his Cabinet colleagues.

Decommissioning of the coal fleet

Ramokgopa said the four ministers and Eskom had agreed with the plan to delay the decommissioning of coal plants, although the final decision lays with the Cabinet.

“This is a long-term intervention that is being mulled over by the government to improve SA’s electricity generation capacity.”

Now Ramokgopa has been asked to do modelling on the impact that extending the lifespan of the coal plants will have on emissions, “because delaying decommissioning has got implications”, and what the additional cost would be.

“The cost is a function of the length you want to extend it by and, once the modelling is concluded, we will be able to say the rescheduled decommissioning will be by this time,” said Ramokgopa.

But he did confirm that the three power stations - Camden, Hendrina and Grootvlei - which are meant to be decommissioned by 2025 and 2027, essentially would not be decommissioned.

Daily Maverick previously reported that, when Ramokgopa first indicated that he wanted to extend that time frame, Jesse Burton from the Energy Systems research group at the University of Cape Town, who provides analysis and policy advice on coal transitions in SA, said: “There is no economic reason to extend the running of a plant that was commissioned in the ’60s/’70s, except as an emergency measure, and if it were still needed as an emergency option after 2027, then that could only mean that SA has failed to build enough new affordable energy and the SA power system is in an even graver crisis.”

More renewable energy

Ramokgopa said he couldn’t say until when the plants’ lifespan would be extended but, asked if it would be for another decade or two decades, he said: “I don’t think it will be that long, even before the modelling.” He added: “It’s also a function of the speed it will take us to bring new generation capacity.”

Ramokgopa said that in addition to delaying the closure of Eskom’s coal fleet, the government was considering extending the procurement of renewable energy under the Renewable Energy Independent Power Producer Procurement Programme.

This programme has had six bidding rounds of procuring energy from independent power producers. The last bidding round (aiming to procure 5.2 gigawatts) flopped, with Eskom saying it couldn’t provide grid capacity to link more of the renewable projects to the national grid.

Despite this, Ramokgopa made waves recently by proposing the possible launch of a “mega-bid window” to procure more than 15,000MW (15 gigawatts) of renewable energy as a long-term intervention to end rolling blackouts. But for this “mega-bid window” to be successful, at least R100-billion is required for upgrading Eskom’s transmission infrastructure to be able to link independent power producers to the national grid.

Eskom doesn’t have this money and Ramokgopa wants private sector investors to provide funding for this big infrastructure upgrade.

International partnerships

Extending the life of coal-fired power stations might breach the commitments made by SA’s government to the international community of retiring the power stations to reduce the country’s emissions.

After all, SA, through companies such as Eskom and Sasol, is considered one of the world’s worst polluters.

Asked about SA’s U-turn on its emission-reduction commitments, Ramokgopa said the country has to balance managing the electricity crisis and exploring solutions, while not compromising its relationship with the international community and funders.

He said the government had already started talks with the international community, informing it of the country’s plans to push the engineering and performance of coal-fired power stations, allowing them to run much longer than initially planned.

At the 2015 UN Climate Change Conference (COP21) in Paris, SA (along with 195 other nations) signed the Paris Agreement, which requires the country to submit its Nationally Determined Contributions (NDCs) every five years as a mechanism to track and reduce national emissions.

By extending the life cycle of coal-fired power stations, Ramokgopa said SA might be required to adjust the NDCs, but these revisions wouldn’t stop them from meeting time lines.

Its NDCs submitted in 2020/21 had committed the country to keeping annual greenhouse gas emissions in a range of 350 to 420 megatonnes of CO₂ equivalent by 2030.

Along with these commitments, South Africa secured a “watershed” financial ­partnership with the European Union, Germany, France, Britain and the US at the 2021 UN Climate Change Conference (COP26) in Glasgow.

Under this partnership, the developed nations pledged $8.5-billion to help finance SA’s move from its heavy reliance on coal to cleaner and renewable energy sources over the next three to five years.

The developed nations provided grants and concessional loans to help fund SA’s electricity sector and also support the roll-out of electric vehicles and green hydrogen.

Asked if extending coal would undermine this partnership and funding, Ramokgopa conceded that “it’s got direct implications”. He said the National Energy Crisis Committee had had its first discussions with the International Partners Group on 28 April.

“We think we have an obligation to share with them our position because SA’s reputation is on the line as a reliable partner.”

Ramokgopa met the representatives of the developed nations in person to explain SA’s position: “We were very frank ... sharing with them the [problems with] SA’s energy crisis.

“I can’t speak on their behalf, of course, but I’m talking about [SA’s U-turn on retiring coal-fired power stations]. They do understand – they’re residents here.”

Ramokgopa said the government approach was to be as transparent as possible to avert losing the support of the partners.

He said that, along with opening up the communication channel (with the partners now agreeing to monthly meetings), he was going to accept the partners’ offer to assist with the modelling “so they can see that we are not manufacturing the numbers”.

Role of the private sector

Although Ramokgopa is willing to embrace private sector players and the renewable energy industry in ending rolling blackouts, he also wants to toe the ANC party line.

“The ANC NEC [National Executive Committee] was explicit about not privatising existing assets of Eskom. We will not allow private sector players to take over generating units at power stations,” he said.

Where the private sector will be embraced gladly is in long-term interventions to end rolling blackouts, mainly to be responsible for new generation; to extend the life of Eskom’s coal-fired power stations; and to invest billions of rands to expand the grid capacity to link more of the renewable energy projects to the national grid after their two- to three-year build.

“We must make it possible to examine all the options considering that the fiscus is constrained,” said Ramokgopa.

He knows very well that public finances are under pressure and Eskom has no money to fund the added costs entailed in extending the life of coal power plants, including increased maintenance.

Eskom will face a big funding challenge.

Its ability to borrow money from commercial banks to fund its operations has been severely restricted by National Treasury over the next three years as part of the condition set by the government for taking over a portion (R254-billion) of its total debt (R423-billion). And commercial banks are reluctant to fund coal projects because of their emission-reduction goals.

Ramokgopa said his office was yet to come up with answers on how long to extend the life of coal-fired power stations or how they will be funded.

In attempting to solve the energy crisis, it seems as though the government is moving with haste and is even prepared to breach fiscal limitations (possibly asking the Treasury to provide more money for diesel despite public finances being under pressure) and to breach decarbonisation commitments it has made to the international funding community by planning to extend the life of coal-fired power stations.

To this, Ramokgopa said: “There is a cost of doing nothing to end load shedding and that’s the South African economy collapsing.” DM168

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R29.

 

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