Years of poor management and corruption are finally catching up with South Africa’s electricity utility, Eskom, which is on the verge of bankruptcy, and couldn’t keep the lights on across the country this week. But failing coal infrastructure and the massive debt needed to keep it afloat could open the way for a speedy energy transition here, writes Leonie Joubert.

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It’s hard not to slip into tabloid-style exaggeration as I write this piece, after two hours of scheduled ‘load shedding’ earlier this morning, and before the next blackout hits my neighbourhood in Cape Town later tonight. Words like ‘emergency’, ‘crisis’, and ‘grid collapse’ aren’t an over-reach.

Eskom, South Africa’s national utility and the largest state supplier of electricity on the continent, hasn’t been able to get enough power onto the grid for over a week now. So it’s cutting electricity to different regions in two-hour slots, twice daily, according to this week’s roster, in order to spread the thin load and avoid complete grid collapse.

There’s no single reason for why the utility can’t meet demand. Older coal powered stations have been falling into disrepair for years, and the newer plants which where supposed to pick up the slack are running years behind on the building schedule and plagued with faults.
This week, for instance, one older plant developed boiler-tube leaks, causing ‘unplanned losses’ of 12 000 megawatts of electricity, according to Engineering News, since a maintenance contract for the plant ended in 2017 and hasn’t been renewed.

Meanwhile the half-completed mega-plant, Madupi, is still only running at 50 percent capacity. Since work began on the 4 800 MW coal plant in 2007, only three of the six boilers have been finished. These are delivering half of their intended power because of design problems and ‘thousands of defective welds’, reports Carol PatonBusiness Day’s infrastructure specialist writer. The cost over-runs and the plant’s under-delivery have even got some economists speculating that it might be more prudent to scrap this plant, and its sister plant Kusile which is in a similar state, because to complete the plants might simply be throwing good money after bad.

Eskom is also on the brink of bankruptcy, following years of mismanagement and systemic corruption. Its debt has grown to R420 billion, 15 percent of the country’s total debt, according to the Department of Public Enterprises. It needs to raise about R70 billion in the next three months to avoid insolvency.
The president has moved into crisis mode. He has appointed a special task team to advise government on urgent restructuring of the utility, and the national budget is being juggled to allocate R150 billion in support for Eskom over the next ten years.

But a collapsing coal infrastructure could open up the field for developing a cleaner energy system in the long-term. The Medupi and Kusile mega-plants would have done most of the heavy lifting for the national grid over the next few decades, as mothballing was due to begin on some of the older coal stations, with renewables and gas playing a supporting role.

But these two power plants were designed using old and relatively inefficient coal-burning technology. If the energy department agrees to abandon the completion of these two plants, it would allow for infrastructure development that could be cleaner and more efficient.

It might also force open the marketplace for many more renewable plants. South African initiated its utility-scale renewables initiative in 2011, where private companies were invited to bid for the opportunity to build and run mostly wind and solar installations around the country. This RE procurement process was scheduled to supply 5 000 MW of power by this year (almost what Medupi should be producing now) and another 2 000 MW by 2020. The projects have been delayed (as reported on previously in this column) but greater urgency to fill the energy gap might speed up procurement processes for more plants and expand the programme even further.

In order to meet the R150 billion needed to save Eskom over the next decade, the country is going to have to look beyond its borders to take on loans. There’s an opportunity here for lenders to place conditions on those loans, conditions which could force the energy department here to prioritize lower-carbon technologies and rapid decarbonization

Either way, longer-term planning to secure the national electricity grid isn’t what’s grabbing the headlines in South Africa this year. Everyone’s attention is on the fact that years of corruption and mismanagement have finally caught up with Eskom, and that the president is crisis-managing the situation as the rolling blackouts continue with no immediate end in sight.