Business

Eskom blows through its diesel budget

2020-01-20 13:00

Eskom has exceeded its budget for diesel by almost 50% in a desperate attempt to keep the lights on.

This is with just two months of the financial year remaining.

The National Energy Regulator of SA (Nersa) has previously put a cap on how much money Eskom should spend on diesel and how many hours the emergency diesel turbines should be racking up, but these limits have apparently been ditched.

It costs Eskom at least R27 to buy one kilowatt-hour (kWh) of electricity from private diesel turbines, while their average selling price is about R1 per kWh.

Eskom could also face difficulties in recovering these additional diesel costs from the public

Nersa thinks it is acceptable for Eskom to use diesel turbines 1% of the time, but the power utility is currently using them 5% of the time. That’s because it cannot increase the availability of its fleet of coal-fired power stations to an acceptable level.

Eskom could also face difficulties in recovering these additional diesel costs from the public, which could have the effect of making its deplorable financial situation even worse.

In its tariff application, the power utility initially asked to recoup R880 million from electricity tariffs for the current financial year. That would have made allowance for 118 gigawatt-hours (GWh) to be generated with its diesel turbines.

These diesel plants – situated in the Western Cape at Gourikwa near Mossel Bay, and at Ankerlig in Atlantis – were built to supplement power supply for a short period during peak times and emergencies.

But as Eskom’s fleet of coal power stations continue to crumble, they are being put into action far more frequently.

Eskom also buys power for similar turbines from the private sector, namely Avon in Shakaskraal, Kwazulu-Natal, and Dedisa in the Coega industrial area in the Eastern Cape.

During the process of establishing Eskom’s tariffs, however, it became clear that the power utility would be unable to live up to the assumption that the availability figure of its coal power station fleet would be 78%.

The figure was modified to 71.5%, and the figures for the use of its diesel turbines were also adjusted proportionately.

Eskom wanted R9 billion to finance the generation of 2 174 GWh with its diesel turbines.

Nersa, however, only approved R1.9 billion for generation with the diesel turbines, which translates to about 456 GWh.

Nersa also approved the purchasing of 88 GWh from private electricity generators, but the actual use is already at 436.3 GWh – more than five times the amount approved.

For the rest of the power that was needed, Nersa said Eskom had to make a cheaper plan by concluding short-term contracts with independent power suppliers.

Eskom said it tested the market, but there was no interest, leaving it with its expensive diesel turbines as its only option.


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February 23 2020