While it is critical that Eskom needs to do what it can to keep the lights on as South Africa focuses on its economic recovery post-lockdown, this cannot be at the expense of the country’s overburdened fiscus, writes Patrick O’Driscoll, who represents Karpowership South Africa. Photo: EPA file
While it is critical that Eskom needs to do what it can to keep the lights on as South Africa focuses on its economic recovery post-lockdown, this cannot be at the expense of the country’s overburdened fiscus, writes Patrick O’Driscoll, who represents Karpowership South Africa. Photo: EPA file

OPINION: An immediate, cost effective way to keep the lights on

By Patrick O’Driscoll Time of article published Jun 28, 2020

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JOHANNESBURG - Eskom’s recent announcement that it expects only three days of load shedding or load shifting as its now being called during the winter period is welcome news for South Africans. 

As the country’s economy begins to reopen under alert level 3 of the lockdown, businesses  that were forced to remain closed during the first nine weeks of the lockdown can ill-afford disruptive power outages as they focus on rebuilding.

During a briefing in Parliament recently, Eskom provided more detail on its outlook for the coming winter months. It revealed that it was able to increase its short-term maintenance to more than 9800 Megawatts (MW) during the national lockdown, which is the main reason why it has been able to revise its former prognosis of 31 days of load shedding during July, down to only three days. 

However, its parliamentary submission also revealed that this scenario hinged on two important factors. 

First, unplanned breakdowns and system losses had to remain below 11 000 MW during this period. While the short-term maintenance implemented during the lockdown has improved the condition of the grid, Eskom continues to acknowledge that the country’s power supply will remain unpredictable and unreliable until  its longer-term reliability maintenance programme is completed in August 2021. 

As the economy starts coming back online post-lockdown, the demand for electricity will increase, placing further strain on the country’s aging power plants, which will increase the risk of unplanned breakdowns. It is clear that it is going to be a tough balancing act for Eskom over the next few months. 

Second, the three days of load shedding / load shifting scenario is also reliant on Eskom spending an average of R334 million per month to run its diesel powered open cycle gas turbines (OCGTs). These plants are only meant to help meet peak demand in times of constrained electricity supply and are much more expensive to run than other sources of power, costing around R3.60 per kilowatt hour (kWh).  

Yet, over the past few years Eskom has increasingly relied on using these expensive peakers beyond what they were designed for, resulting in hundreds of millions of rands in over-expenditure. 

It is clear that in order to keep the lights over the next few months, Eskom plans to continue using the OCGTs for extended periods of time, in order to plug the power supply gap, despite its current debt burden standing at R450 billion.  

However, there is another solution that’s immediately available that is significantly more cost effective over any of the country' peakers , cleaner and can begin supplying energy to the grid within in just two months of being given an instruction to proceed by Eskom. These are self-contained floating power stations called ‘Powerships’ that are fuelled by regasified Liquid Natural Gas (LNG) under an integrated energy / power solution from Karpowership SA .

These Powerships have their own generation facility, fuel storage, electricity control system and grid substations on board and are able are able to connect to the national grid via overhead aerial cables, offering a ‘plug-and-play’ power solution at short notice. These Powerships can provide up to 2000 MW of additional power to the country’s grid within five months.

Most importantly, LNG fuelled powerships can produce electricity around R1.70 per kWh, which is half the cost of Eskom’s diesel powered OCGTs. By using powerships, instead of its diesel-powered generators, Eskom could save around R28bn  every year.

Furthermore, unlike Eskom’s peakers, powerships, are designed to supply base load power 24 hours a day, seven days a week guaranteeing the continuous delivery of power in excess of 98 percent of reliability. Their flexible, modular design means they are also able to operate while maintenance work is being conducted, unlike the country’s nuclear and coal power plants, which will need to shut down for extended periods while Eskom’s reliability maintenance programme is being implemented over the next 18 months. 

Finally, powerships operating on regasified LNG are a much cleaner source of energy than Eskom’s diesel fuelled OCGTs and ageing coal power plants. 

While it is critical that Eskom needs to do what it can to keep the lights on as South Africa focuses on its economic recovery post-lockdown, this cannot be at the expense of the country’s overburdened fiscus. Particularly, when there are immediate, cost effective alternative solutions that can begin to plug the energy supply gap within two months. 

Patrick O’Driscoll represents Karpowership South Africa. 

BUSINESS REPORT 

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