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5 minute read
9 May 2022
6:05 am

R1.5 billion diesel per month: Eskom burning more than ever during load shedding

Moneyweb

Eskom spent hundreds of millions last week, even with load shedding.

Eskom head office in Sandton, Johannesburg. Photo: Getty Images

During the evening peak last week – when Stage 2 load shedding was implemented – Eskom utilised its diesel-burning open cycle gas turbines (OCGTs) for all but one of the 24 hours that made up the time of day where demand is greatest.

Public data from the utility shows that Eskom made use of its OCGTs between (at least) 4pm and 10pm every day between Tuesday and Friday.

Monday was a public holiday, yet it still used these turbines between 5pm and 9pm.

In addition, it called on independent power producer (IPP) operators at the Avon and Dedisa peaking power plants to operate their diesel turbines for the same 23 of 24 peak hours.

The only hour neither Eskom nor the IPP OCGTs were used was at 9pm on Friday, when demand is far lower than on other weekdays.

Eskom will argue, as COO Jan Oberholzer did in March, that:

“They were always intended to be used […] early in the morning and late in the afternoon when there is a lot of demand on the country.”

But it is obvious that they were not intended to be used for practically every single hour of peak every single weekday.

It also used the OCGTs fairly extensively in the morning peak last week.

Stage 2 load shedding

This as Eskom implemented Stage 2 load shedding at 5pm on Tuesday and said this would continue to Monday.

It reduced this to Stage 1 on Friday night at 10pm and suspended load shedding altogether at 12 midday on Saturday.

The usage of the OCGTs last week equates to hundreds of millions of rands of diesel, but usefully its pumped storage schemes had recovered sufficiently for these to be able to supplement baseload power between 6am and 8pm daily due to the poor-performing coal fleet.

On Thursday night at 6pm, the Eskom and IPP OCGTs provided 2,854 megawatts (MW) to the grid, equivalent to the total amount Eskom imports from the Cahora Bassa hydroelectric plant plus its total normal generation from the Koeberg Nuclear Power Station (where unit two remains offline until June for refuelling and maintenance).

Regulator Nersa approved a load factor for OCGTs of 3% for 2022/23, less than half of what Eskom had originally requested (7%).

This equated to approximately R3 billion in March (diesel prices are up steeply since then).

Eskom’s load factor

So far, the load factor for Eskom’s own OCGTs is at 15.91% for the first five weeks of its financial year. For IPPs, the load factor is not much lower than this, at 11.03%.

Of course, Eskom’s financial year still has a long way to run but it is optimistic to see a situation where Eskom achieves a load factor for the OCGTs of less than 10% (roughly the figure from its last financial year).

In April, it used OCGTs (its own and those run by IPPs) to generate 327 gigawatt hours (GWh) of electricity.

This is a 52% increase on the 215.9GWh in April 2021.

A scenario shared publicly in its most recent system status and outlook briefing (in January) envisaged 61 days of load shedding between April 1 and August 31.

At that stage, this was the worst case which saw a maximum of Stage 2 with average unplanned availability of 13,000MW across the period.

Spike in diesel costs

In this scenario, it estimated it would use R3.4 billion in diesel at its own OCGTs as well as those run by the IPPs.

The spend is almost certain to be far worse than this for two reasons.

One, it’s had a terrible start to winter with those load factors of 15.91% (Eskom’s OCGTs) and 11.03% (IPP OCGTs).

But, more importantly, diesel prices are up 28% between January and now.

Much of this is due to Russia’s invasion of Ukraine which, for a multitude of reasons, has resulted in a global shortage of diesel.

Oberholzer told the media in March that Eskom’s diesel turbines cost around R700,000 per hour to run. Since then, prices are up a further 13%, meaning those costs are now roughly R800,000 per hour.

Eskom said in January that “history has shown that it is not possible to use more than about R1.2 billion of diesel in a month due to the physical limitations of moving the diesel to the OCGT stations”.

But factor in that 28% price increase and the upper limit is now R1.5 billion.

What options?

The only way to decrease this spend is to switch the OCGTs to run on gas.

But Eskom has been talking about this practically since their commissioning around 15 years back.

A few years ago, it implemented dual burners to allow these to run on either diesel or liquefied natural gas (LNG). That’s about as far as it has progressed.

While liquefied petroleum gas (LPG) prices are also up significantly, this is a cheaper fuel source than diesel.

Oberholzer said in March Eskom would go to market “soon” to invite the supply of gas for these plants as well as the old coal-fired Komati Power Station in Mpumalanga (which it will repurpose to run on gas).

The spike in global diesel prices may focus Eskom’s efforts a little more intently.

That, and the fact that its “extreme” worst-case scenario for winter is now as much as 100 days of load shedding.

That’s a big jump from 61.

ALSO READ: Pravin Gordhan: Stop calling us thugs, we’re trying to fix Eskom


This article first appeared on Moneyweb and was republished with permission. Read the original article here.