Ignoring risks and coal: IRP2023 echoes mistakes of 5 years ago

Article for Independent Online

Engineering Dissent: Ignoring Risks and Coal: IRP2023 Echoes Mistakes of 5 Years Ago

By Hügo Krüger, MSc in Civil Nuclear Engineering

The public participation hearings of the South African Integrated Resources Plan (IRP2023) is currently in progress, but it seems the Department of Minerals and Energy (DMRE) may be overlooking a critical aspect related to risks by not being realistic with Eskom's performance. 

A basic principle in risk management is to not assume a biased position that performance will always improve, but rather to be on the lookout for errors that might occur in the system. In fact, this failure in risk management may have been a contributing factor to the failure of the 2019 IRP in predicting South Africa’s future electricity mix and the various stages of loadshedding that we are experiencing today.

As shown in Table 6 from the 2019 IRP, Eskom predicted an Energy Availability Factor (EAF) of 73.36% across the coal fleet for 2024.

Yet in 2023 as per Eskom’s own data, Eskom’s EAF was close to 50%!

By implication the IRP2019 predicted that Eskom would have had 10 GW more power than it currently is able to generate. The difference is a loss of Eskom’s Safety Margin (5 GW) and 5 stages of loadshedding! The situation that we are experiencing today!

The IRP2023 repeats this mistake again as the graph below shows. This oversight means that DMRE has a plan that assumes an improvement in Eskom, despite the more likely scenario being a drop in EAF, shown in red below. This should raise major concerns in the eyes of the public, because it could imply that even more loadshedding is on the horizon and that the government is deliberately ignoring this outcome!

Eskom's current shortfall with a 50% EAF is around 13 GW. With a further deterioration to 30% over the next decade, South Africa will need an additional 10 GW, a total of 23 GW, just to replace the existing coal power stations. The IRP2023 Ignores this major risk.

Various options could be on the table to fill this gap. They include expanding wind and solar, building nuclear power (with a 10-year lead time), and natural gas being imported at Richards Bay. The IRP considers all of them in its reference scenarios, but they do this with the wrong assumption as an input value – that the coal fleet will continue to improve, despite Eskom’s past performance showing otherwise. 

By making this mistake, the most unconstrained option to alleviate loadshedding seems to be neglected by Minister Gwede Mantashe’s office – a genuine commitment through law by Eskom’s leadership and DMRE to invest more money in fixing the broken coal fleet, that includes bringing back the abandoned coal power stations and those around the municipalities.

This suggested pathway was allegedly recommended to South Africa's Presidency and Treasury after the release of Sir Mick Davis's report. Davis, a former Chief Financial Officer of Eskom, advised President Ramaphosa and the rest of the cabinet in 2019 on a turnaround strategy for Eskom. His 9 point plan, which addresses the state of Eskom, is shared with every Eskom CEO candidate. Three former Eskom CEO candidates, as well as various people close to Davis have expressed to me that based on this report, they would seriously consider addressing the issues with the coal fleet so that South Africa could buy time to explore alternative energy options. One candidate did refer me to Eskom's 2020 submission to the Portfolio Committee on Public Enterprises Strategy. As shown in the figure below, the submission included a 9-point turnaround strategy that focused on new plants, full load losses and trips, units on long-term forced outages, partial losses and boiler tube leaks, outage duration and slips, human capital, preparation for increase OCGT usage, a reduction of emissions and coal management. These points mostly speak to an improvement in the coal fleet. See Figure below. 

Figure: Submission to the Parliament Portfolio Committee in 2019, allegedly based on Sir. Mick Davis’s Recommendation.

Davis was not the only one who pointed to the broken status of the coal fleet, because Dr. Frans Cronje also proposed this pathway during the investigation into Eskom's decline by The Social Research Foundation. The findings from Mick Davis's report and the noises made by many engineers within the energy sector could plausibly shed light on why the government sought consultation with the German-based company VGBE energy to assess the status of the coal fleet. Despite the completion of both reports, they have not yet been made public, and all the CEO candidates have refused to provide me with the reports, citing “confidentiality agreements”. Is this a form of censorship by omission regarding South Africa's departure from coal?

During the public participation process, this concern was underscored by the IRPs own data during the presentation (that showed that fixing Eskom’s EAF could potentially be the least cost option). The error was pointed out by former Eskom CEO Jacob Maroga, as well as Mthunzi Luthuli, an electrical engineer and grandson of Chief Albert Luthuli. Both asked why DMRE isn’t seriously considering the serious maintenance of the existing system in the light of a more rapid decline in EAF?

Notably, DMRE evaded their questions that related to the maintenance of the existing coal fleet and the inquiries about reactivating Eskom’s abandoned coal stations as well as those located near municipalities. They could be brought back within a 1 year to 3-year period if an engineering team is dispatched to assess what is wrong with them. This evasion therefore raises concerns about a potential oversight of the risks associated with a significant loss in power generation during the next 5 years. From an engineering standpoint, it should be obvious that maintaining a system is more affordable than building a new one.

In the interest of the public, it is crucial to contemplate the comprehensive refurbishment of the entire coal fleet as a least-cost scenario to alleviate loadshedding – even if it means an increase in carbon emissions in the short terms. The reports by Sir Mick Davis and VGBE Energy should not be state secrets, they should rather be made public before the finalization of the IRP2023.

In neglecting the risk of a substantial generation loss, South Africa's DMRE appears to be repeating the same mistakes made in the 2019 IRP. DMRE simply got Eskom’s performance wrong, because of a too optimistic prediction of Eskom’s future performance, as well as by committing to a too hasty departure from reliance on King Coal in South Africa - the world’s most coal dependent country.