Eskom VGBE Energy, and the UAE?
Why aren't we valuing our "scarce skills"?
Why aren't we valuing our scarce skills?
Two significant events, that might seem unrelated, although they are not, unfolded during this week. The United Arabic Emirates (UAE) started up the fourth reactor from the Barakah Nuclear Power Plant, and the South African government released the long awaited VGBE energy report on the status of the coal fleet.
We can draw lessons from both events as they both involved South Africans. They serve as instructive examples highlighting the importance of scarce skills and expertise.
Moreover, they underscore the pitfalls of excessive debate, emphasizing the contrast between 'paralysis by analysis' and the efficacy of simply 'getting on with it’.
VGBE Energy report
The subsequent report officially titled as “Independent Assessment of Eskom’s Operational Situation” stayed hidden from the South African public, emerging only after substantial political pressure and numerous Promotion of Access to Information Act (PAIA) requests forced the government to reveal the status of the coal fleet. For those deeply engaged in the energy debate, the report doesn't come as a shock; rather, it merely validates suspicions that we've been fed a lot of untruths about Eskom.
As the VGBE Energy Report highlights, Eskom’s issues are systemic with the root cause clearly stated on page 60.
The main root cause for the low EAF is the dysfunctional management system of Eskom. It is characterised by inefficient processes – especially in procurement –, a lack of authority and an opaque decision-making structure.
The 612 page long report shows the following (see Appendix of this blogpost for direct quotes).
The real issue isn't just about money, in fact Eskom has more than enough money to do maintenance.
Cumbersome procedures, laws, and red tape make it nearly impossible for Eskom to execute their responsibilities.
Deteriorating plants due to a severe lack of quality control and negligence, across Eskom’s various sub-systems.
Eskom prioritizes a single factor, EAF, incentivizing operators to strain the plants and effectively break it.
If Eskom is truly committed to maintenance, it must implement a structured approach to permanent load shedding and initiate a comprehensive overhaul.
Despite being new, Kusile is already experiencing breakdowns under Eskom's management, due to operators not following the right procedures and the ancillary structures not being completed.
Managers may possess theoretical knowledge, but practical expertise is lacking.
Numerous systems, including boiler tubes, cooling water, and ash handling, require immediate attention.
Morale is understandably low in such an institution.
The VGBE Energy Report does have one shining light in the midst of this depression issue: Eskom's transmission infrastructure is in good shape, and, generally speaking, the management is top-notch.
While the system may be aging, it is evident that Eskom's transmission office is diligently prioritizing maintenance. This aligns with my own positive experiences when engaging with them, leaving little room for criticism.
Despite the high proportion of old equipment, the overall condition is excellent due to intensive maintenance measures. Nevertheless, it is essential to continue the modernisation process of these outdated plant components, which has been underway for several years.
The urgent need for these measures has already been recognised by management and has led to an increase in approved investment budgets in recent years. It has also been included in the Transmission System Development Plan (TDP).
In essence, the primary root cause of load shedding lies in the management of Eskom, comprising a complex mix of procedural inefficiencies and political challenges, rather than solely an engineering issue. From my perspective, the root cause stems from the indecisive political environment.
Several systemic issues within Eskom Generation, in my view, include but are not limited to:
The presence of three ministers in South Africa's energy sector, which could be streamlined to one, preferably the Minister of Minerals and Energy.
Empowering the minister to appoint the board and establish clear policies.
Enabling the board to appoint the CEO, who would then execute the established policies.
Reevaluating the Department of Minerals and Energy's (DMRE) involvement in tenders and the Integrated Resource Plan (IRP), shifting these responsibilities to Eskom for more streamlined operations.
Restricting the planning of generation and transmission lines to only being the responsibility of the executive. they should not be done by politically conflicted bodies around the president, bankers, or DMRE.
The various red tape such as the PPPFA, Tresaury note 3 and mandatory localisations have to be eliminated.
Before many of these obvious issues are resolved, we should not expect Eskom, even with the most competent CEO, and an “unbundled framework” to be able to fix load-shedding.
We should not expect one of the many plans out there “to fix Eskom” to be successfully implemented.
Barakah nuclear power plant
In stark contrast to the above story, the entanglement of South Africa in numerous intellectual and racial considerations led to indecisiveness and “paralysis by analysis” resulting in the eventual exodus of engineers from the state owned entreprises. These professionals sought greener pastures abroad and notably excelled in completing a nuclear plant in the UAE, boasting a team of over 150 South African engineers.
As a former colleague who is acquainted with the site told me, “Currently there are 150 South Africans working on that plant including: Personal Advisor to the CEO; VP: Engineering; Heads of all four reactors; Plus more senior positions.”
This international experience has markedly elevated their capabilities, rendering them even more adept at undertaking similar projects back in South Africa.
Let’s look at their achievements? The UAE was so proud of the Nuclear Reactor that they put it on their currency.
The reactor accomplished remarkable economies of scale, achieving the cost of the last unit equivalent to that of the nth unit in South Korea's domestic market. Notably, there were zero overruns, setting a record for a reactor built abroad, as affirmed by the Norwegian Consultancy Rystad Energy.
The recent commencement of the fourth reactor presents an excellent opportunity for the South African Minister of Energy to consider booking a plane ticket to the United Arabic Emirates, the UK, France, the USA, or Australia, and perhaps ask two questions:
Can you lend your expertise to help address the challenges at Eskom and consider returning home to contribute?
Would you kindly share the insights and lessons you've gained abroad?
Appendix - Direct Quotes from VGBE Report:
The real issue isn't just about money, in fact Eskom has more than enough money to do maintenance.
The analysis shows that the specific maintenance costs budgeted by Eskom for its coal fleet between 2013 and 2027 are above or at least within the bandwidth given by international benchmark figures, taking into account the technology, size and age of the coal fleet.
Cumbersome procedures, laws, and red tape make it nearly impossible for Eskom to execute their responsibilities.
The main root cause for the low EAF is the dysfunctional management system of Eskom. It is characterised by inefficient processes – especially in procurement –, a lack of authority and an opaque decision-making structure. The plant management, with its limited authority and high level of interference from the headquarter is unable to focus its attention on its primary responsibility: reliable plant O&M. Currently, even a mediocre level of performance (e.g. EAF) is accepted as sufficient.
Deteriorating plants due to a severe lack of quality control and negligence, across Eskom’s various sub-systems.
In O&M management, many deficits were identified. The quality of operations has suffered from a lack of ownership and leadership, as well as a lack of training and high staff turnover. The planning and execution of maintenance work need to be more stringent, more goal-oriented and more carefully executed.
Otherwise, deliveries are made by rail and/or truck. In the case of delivery by truck, in addition to the question of whether it makes economic and ecological sense, there is the issue that continuous quality control has not yet been optimally implemented by Eskom at all power plant locations.
The plant lacks a dedicated quality control and quality assurance department, relying on line engineers for quality control, which is not a standard practice. While there are approved quality control plans (QCPs) in place, they need further improvement and strengthening
Eskom prioritizes a single factor, EAF, incentivizing operators to strain the plants and effectively break it.
The fixation on the EAF is a dead end and leads to poorer plant performance.
− The plants have been forced to continue operating at the expense of their technical condition. The consequences are reflected in the high number of incidents, trips and partial load losses (PLL).
Serious about maintenance? Implement phases of permanent load shedding and initiate a comprehensive overhaul.
The EAF of Eskom’s coal fleet is currently at about 51% whereas international benchmarks are in the range of 78%1 . The only way to improve the EAF is to ensure the execution of thorough operation and maintenance practices and procedures.
Despite being new, Kusile is already experiencing breakdowns under Eskom's management, due to not following the right procedures and the ancillary structures not being completed.
The Kusile power plant is soon expected to become an important contributor to generation capacity, with Unit 5 starting within the next few months and Units 1 to 3 starting once construction of the temporary chimney has been completed. However, it should be noted that the achievable capacity is limited, due to the incomplete coal handling system, restrictions in water supply and the ash discharge situation. These restrictions result in a very high risk that the Kusile site cannot be operated with more than three units at any one time – hence, only 2 400 MW instead of 4 800 MW would be available.
Managers may possess theoretical knowledge, but practical expertise is lacking.
Within the scope of the evaluations, the majority of management showed a high degree of theoretical knowledge. This was also reflected in the results of the written assessment, with an average score of 78% (pass mark 50%). With regards to practical knowledge, however, the picture was very different. With regards to implementation of projects and measures, opinions and knowledge varied considerably. Differences in opinions were particularly visible between plant management and management at headquarters. This lack of agreement makes the implementation process even harder than it already is.
Numerous systems, including boiler tubes, cooling water, and ash handling, require immediate attention.
− The water treatment plant at Kendal is in a very poor condition and needs urgent maintenance and refurbishment. If the existing plant fails, six units – 3 840 MW – would be off the grid.
The boiler tube mid-life refurbishment programme was deferred from FY2010, and it is still uncertain when it will take place. There is a current backlog of boiler tube maintenance and this, as well as boiler tube spares not being available, has resulted in tube replacements not being completely carried out during outages. The current lead time for boiler tubes is 5 months. Budget approval, procurement of spares and completion of the full scope of work are essential. The current situation poses a paramount risk to station performance
Among other high-risk areas are the ash filter and ash handling plants in Matimba and Kusile. The required maintenance and operation care are lacking with high risk of additional load losses.
Morale is understandably low
As a result of the continuous crisis mode, many employees are frustrated and demotivated. In many areas, a working atmosphere characterised by indifference, ignorance and blame-shifting has been fostered. Salaries have not been increased for several years and there is no system in which good performance is rewarded.