Africa-Press – South-Africa. Eskom is operating on the edge, with demand consistently outstripping supply and load-shedding only being averted by load reduction, increased imports, and the running of open-cycle gas turbines (OCGTs).
This is despite the immense progress the utility has made over the past year in addressing some of its challenges, resulting in a much improved energy availability factor (EAF).
The utility has been helped out by a decline in excess demand due to private companies and households pumping money into alternative energy sources.
This was revealed by Nedbank’s Corporate and Investment Banking division in its latest Energy Prospects report, which said that the continued excess demand over supply remains a pressing concern.
The report, compiled alongside African Energy, showed that Eskom’s performance has improved greatly and private use of alternative energy sources has soared.
This combination has resulted in the country avoiding load-shedding for prolonged periods of time, with no load-shedding for two consecutive quarters in 2024.
Eskom’s role in this cannot be understated. The utility’s planned capacity loss factor, a proxy for maintenance, increased throughout 2023 and 2024.
This factor peaked in December 2024 at 17.6%, the highest level seen since December 2020. This indicates greater levels of maintenance and, thus, enhanced reliability and operational performance.
Increased maintenance was a major contributing factor to the utility’s improved EAF throughout 2024, when it jumped to over 60% for the first time since 2022.
This remains well below the targets laid out for Eskom by various ministers and Integrated Resource Plans (IRP).
These targets had Eskom improving its EAF to above 70% in 2024. Last year, the utility’s average EAF was still below 60% at 59.6%.
However, the private sector’s increased investment in alternative energy sources helped reduce demand to a point where load-shedding could be avoided.
Nedbank said that it expects this to be a permanent decline in demand, with some private households and companies never going back to using Eskom’s electricity.
Small-scale embedded registrations skyrocketed by 474% over the past two years, while rooftop solar installations soared by 138%.
The graphs below show Eskom’s improved performance and the private sector’s increased investment in alternative energy sources.
It is not enough
Unfortunately, Eskom’s generation facilities remain highly vulnerable to disruptions and not enough new generation projects have come online to bring load-shedding to a complete end.
Nedbank’s analysis shows that Eskom’s performance would have to improve miraculously to bring load-shedding to a permanent end, while investment in renewables would have to continue growing.
While both of these trends may hold, they are not improving fast enough to bring load-shedding to a complete end.
Eskom’s performance is still hampered by a lack of historical investment in maintenance and an ageing coal fleet, which costs more to maintain, and plants break down frequently.
This is coupled with the fact that the utility will have to decommission some of its coal-fired power stations in the coming decade as they reach the end of their design life.
Some of the plants have had their operational lives extended, buying the country time to invest in new generation sources.
On the other hand, while private investment in renewable energy is soaring, there is a lack of grid capacity to connect it to the grid, meaning much of the projects may never contribute electrons to the grid.
There is also simply not enough investment yet to replace the lost capacity from decommissioning some of Eskom’s coal plants.
As a result, South Africa still has a supply-demand imbalance that is expected to persist over the coming decade and potentially worsen if conditions do not improve.
Nedbank explained that excess demand is currently compensated by load reductions, increased imports, and the use of open-cycle gas turbines.
However, this is unsustainable as these methods have knock-on effects in terms of economic output, quality of life, and are very expensive sources of electricity.
The graphs below show the gap between supply and demand in South Africa, with demand being higher than the 2019 to 2021 average when Eskom’s performance was significantly better.
They also show the sustained decline in excess demand driven by private appetite for alternative energy sources.
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