South Africa’s power utility Eskom seen overshooting emergency diesel budget for FY23/24

2023 has been the worst year for power cuts implemented by South Africa’s state-owned power utility Eskom. On November 30, Africa’s most advanced economy was 334 days into a year that had 322 days of rolling power outages, locally called load shedding.

The struggling power utility is using diesel to run its emergency generation fleet, reports Daily Maverick, spending on average ZAR3bn ($158mn) a month. According to the media outlet, Eskom has only about ZAR3.6bn left of its diesel budget for the 2023/2024 financial year, which ends on 31 March 2024.

Eskom’s diesel expenditure has more than doubled this year in comparison with the same period last year. The utility has been forced to increasingly rely on its open-cycle gas turbines (OCGTs) because of a rising number of breakdowns within its ageing coal-fired power fleet.

November was a particularly grim month for South Africans, with the return of crippling Stage 6 power cuts. And the forecast, by Eskom’s own admission, doesn’t look good. Its assessment, however, contradicts the recent claims made by Electricity Minister Kgosientsho Ramokgopa, as reported by bne Intellinews.

Ramokgopa during his recent media briefing said that there would be fewer blackouts over December. He also noted the return online of units 2 and 5 at the Kusile power station in December, which would provide Eskom with “sufficient capacity” to stave off high levels of power outages.

The minister has repeatedly defended spending billions of rands on diesel to keep the lights on, writes Daily Maverick. From 1 to 28 November, Eskom blew a record ZAR4.1bn on diesel to run its OCGTs, which are only supposed to be used for emergency generation.

“In November, Eskom hit record figures for diesel usage… It was very high in April and May, but it’s even higher now,” energy analyst Chris Yelland told Daily Maverick.

The return of Kusile units 1, 2 and 3 online in the past three months meant that a combined 2,400 MW have been added back to the grid, which is equivalent to about two stages of load shedding. According to Yelland, it did not seem to have helped, so clearly other problems were worsening the situation.

“Although we’re getting extra [megawatts], something else is dragging things down again so that, overall, the situation hasn’t improved, and they’re still using high levels of diesel,” the analyst was quoted as saying.

Monique le Roux at Stellenbosch University’s Centre for Renewable and Sustainable Energy Studies told Daily Maverick that the limited remaining diesel budget put South Africa in a concerning situation when it comes to load shedding levels.

Last year in December, when Eskom ran out of its diesel budget, the utility had to implement near-continuous Stage 6 load shedding. “It looks like we are in the same boat this year as well,” Le Roux said. “They were probably hoping their other plants would perform better with the addition of Kusile units, but this is not the case,” she added.

Yelland estimated that Eskom would overshoot its diesel budget for the 2023/2024 financial year by about ZAR9bn.

“That means Eskom is going to go cap in hand, as it did last year, to try and get extra money — and it’s going to have to find it probably from its own resources as well — and it’s going to put a lot of stress on Eskom’s financials for the year,” Yelland warned.

Ramokgopa projected electricity demand for the festive season to be lower owing to the energy-intensive major industry closing for holidays. According to energy analyst Lungile Mashele, this does not mean a reduction in load shedding, as Eskom may use this time to ramp up maintenance.

Indeed, Eskom’s latest system status report shows that it plans to take out as much as 8,977 MW on planned maintenance on Christmas Day — probably because it expects demand will be low, writes Daily Maverick.