Oberholzer supports coal plant life-extension, but casts doubt on EAF target

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  • Eskom’s outgoing chief operating officer, Jan Oberholzer, says he supports the idea of extending the life of some of the utility’s aging coal-fired power plants, but believes that its current target for improving their performance by the end of March next year is unrealistic.

Speaking before news broke of Electricity Minister Kgosientsho Ramokgopa’s controversial proposal to revise the shutdown schedule for some of the oldest plants, Oberholzer described the minister’s earlier public comments on the strategy as “responsible”, given the country’s worsening shortage of generation capacity.

“If it makes economic sense, if we can do it in a responsible way, within legislation, I believe we need to look at this seriously, because we’re not going to have additional capacity that soon on the grid,” he said in an exclusive interview with Mariam Isa.

Oberholzer, who is due to retire from Eskom at the end of April 2023, pointed out that according to Eskom’s current generation strategy, more than 20 000 MW of generation capacity from the coal-fired power plants which form the backbone of its fleet, is due to be retired by 2035. After that, only six coal-fired plants would be left online – Medupi, Matimba, Kusile, Kendal, Lethabo and Majuba.

“Can we perhaps, while we have this challenge, look at some of the power stations that are coming to end-of-life, and by investing some money in them, perhaps get an additional year, or whatever the case may be, out of them? You have people there, you have coal, you have everything. So, let’s see if we can extend this a little.”

“If we can, some units, at some of these stations, extend a little bit, I believe we must not be naive and say it’s not clean so we’re not going to do it. I believe everything needs to be done in parallel.”

Implementing Ramokgopa’s plan may undermine South Africa’s international climate-change commitments set by its carbon emissions reduction targets, and jeopardise $8.5-billion of international finance pledged to support the country’s just energy transition (JET) programme.

Ramokgopa’s proposal was endorsed by the ANC’s national working committee (NWC) on 17 April 2023. But there are still formidable challenges given the lack of alignment with a number of standing government policy positions.

Public Enterprises Minister Pravin Gordhan has said that a full retrofit and refurbishment of the fleet to upgrade the coal-fired power stations to meet South Africa’s current minimum emission standards would cost about R400-billion. Ramokgopa has suggested extending exemptions from the minimum emission standards for some of the power stations to facilitate their life-extension.

However, the cabinet refused to accept Ramokgopa’s proposal when he presented it at an emergency meeting called by President Cyril Ramaphosa on 19 April 2023. Instead, the cabinet instructed him to take it to the next meeting of the Presidency’s National Energy Crisis Committee (NECOM) to ensure consensus and consistency with the positions of the relevant ministers and ministries involved.

Oberholzer said that Eskom had already looked at the possibility of extending the lives of Grootvlei, Camden and Hendrina power stations, which were commissioned in 1969, 1967 and 1970 respectively.

Eskom’s Komati power station, which began operating in 1961, was the first to be fully decommissioned in October 2022, and is being repurposed into a wind and solar energy plant, with finance from the World Bank.

“Bringing Komati back now, I don’t believe that that is going to work because there’s very little left at Komati,” Oberholzer said, adding that although he was also in favour of ‘going green’, it was “important to understand what was practical in South Africa” in the short-term.

“Do we want to have power, or do we want to adhere to policies? We are where we are… We need to decide – do we want electricity, or don’t we want electricity?”

Oberholzer said that work was on schedule to address the problems at Eskom’s newest and biggest coal-fired stations –  Medupi and Kusile – and to extend the life of Koeberg, its only nuclear power station, by the time its operating license expires in the middle of next year.

Currently the Koeberg operating licence expires in July 2024, but Eskom has since applied to the National Nuclear Regulator (NNR) for two operating licences – one for Unit 1, which would expire in July 2024, and the other for Unit 2, which would expire a year later – because Unit 2 was originally commissioned a year after Unit 1. Oberholzer says he is confident the NNR will agree to this, which will give an additional year for completion and licencing of Unit 2.

But Oberholzer says it would be a mistake to think that the entire coal-fired fleet could be fixed quickly, and added that near-term targets to raise the utility’s overall energy availability factor (EAF) – which measures the availability of all the units in the Eskom fleet to produce electricity over a certain period – were likely to be missed.

By mid-April, Eskom’s overall week-on-week EAF had dropped to 50.24%, with the average EAF of 56.56% for FY 2022/23 significantly missing the 60% EAF target set by Public Enterprises Minister Pravin Gordhan and Eskom Board Chairman Mpho Makwana. The EAF targets for FY 2023/24 and FY 2024/25 are 65% and 70% respectively.

“My view is we need to turn this nosedive around. If we achieve – and this is my view – 60% EAF for FY 2023/24 we will have done well. I don’t believe the target of 65% is achievable based on where we are now. I just don’t believe it’s realistic,” he said.

Oberholzer said that 2023 would continue to be a difficult year in terms of power cuts, but there should be substantial easing of loadshedding intensity by early next year, following repairs at Kusile and Medupi, and the refurbishment of Koeberg for a 20-year life-extension.

He said he was confident that Units 1, 2 and 3 at Kusile, which had to be taken offline after ducting to their common smokestack collapsed in October 2022, would be back online by the end of 2023, following the construction of three temporary smokestacks and new temporary ducting that would bypass their flue gas desulphurisation plants.

Although the Units 1, 2 and 3 would then not comply with South Africa’s minimum emissions standards, an exemption from these regulations has been obtained from the Department of Forestry, Fisheries and the Environment (DFFE). This would restore 2100 MW to the grid, equivalent to two stages of loadshedding.

Unit 5 at Kusile, taken offline after a fire in 2022, would be back in full commercial operation by the end of April 2024, he said.

Oberholzer further confirmed the target date to bring the last unit at Kusile – Unit 6 – to commercial service by the end of 2024 might slip to early 2025, but that Unit 4 at Medupi, which was taken offline after a massive hydrogen explosion in August 2021, was on track to return to service in September 2024.

Oberholzer said he was also confident that Unit 1 at Koeberg, currently offline for the replacement of three steam generators would be returned to service by early August 2023.

“That will be the first unit to have its three steam generators replaced. The three old steam generators have been disconnected, cut out and are in interim storage. Now we need to install the three new steam generators on Unit 1. While we are doing this, we are also doing extensive maintenance.”

Oberholzer said Koeberg’s second nuclear reactor, Unit 2, would be taken offline in October 2023, for between 200 and 210 days for the replacement of its three steam generators.

Koeberg has been in operation since 1984 and generates nearly 2000 MW of power. The plan is to prepare it for another 20 years of service by July 2024 when its current operating license expires, but the refurbishment and life-extension process has been hindered by delays, and time is running out.

However, Eskom has since applied to the National Nuclear Regulator (NNR) for two operating licences for Koeberg – one for Unit 1, which would expire in July 2024, and the other for Unit 2, which would expire a year later – because Unit 2 was originally commissioned a year after Unit 1. Oberholzer says he is confident the NNR will agree to this, which will give an additional year for completion and licencing of Unit 2.

Eskom spent about R22-billion on diesel fuel for its open-cycle gas turbines (OCGTs) in the Western Cape in FY 2022/23. But for the current FY 2023/24 ending 31 March 2024, Oberholzer estimates that Eskom would need to spend between R30-billion and R40-billion on diesel. It is expected that this may reduce load shedding by up to two stages of loadshedding at times.

Much of the money for this should be available within Eskom following substantial debt relief from Treasury, he said.

Authors: Mariam Isa and Chris Yelland from EE Business Intelligence

This article was orginally published by EE Business Intelligence and republished with permsission.

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