The possibility of load shedding this winter is larger than the 'Day Zero' crisis in Cape Town

by , 25 May 2018
The possibility of load shedding this winter is larger than the 'Day Zero' crisis in Cape Town
In an interview with Fin24 energy expert Ted Blom said that the possibility of load shedding this winter is larger than the Day Zero water crisis in Cape Town…

Eskom responded by saying that its “Recovery plan to avoid load shedding working well.”
 
Acting CEO Phakamani Hadebe briefed the media saying, “Only six out of 15 power stations are experiencing coal shortages.”
       
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How Eskom is trying to avert disaster
 
According to Eskom, the company is diverting coal supply from stations with big enough coal stockpiles to the ones with empty stockpiles…
 
At the same time, it's trying to sign new contracts, as it needs between three million and five million tons of additional coal delivered to its power stations each month…
 
Add to this, two of Eskom’s largest coal supply contracts will come to an end in the next 24 months. It is trying to renegotiate these – but if it isn’t successful, it could lead to an even greater disaster.
 
And, while the state owned power supplier is negotiating new contracts, the long-term problems still won’t be solved.
 
Andre van Heerden, senior manager of integrated planning at Eskom, said that Eskom made a call for tenders to supply 100Mt over the long-term as well as coal supply that would secure the primary energy requirements of its new power station build, Kusile, for its 60-year life of operation.
 
So basically, a supply agreement for a hundred billion rand power plant that needs to last for 60 years, hasn’t even been secured?
 
What’s worse, Van Heerden said: “We won’t see a lot of coal flowing from the 100Mt tenders in the next 12 months as that is aimed at the longer term, but it gives the market a view as to Eskom’s needs”
 
Eskom denies AND lies…
 
Whilst Eskom executives continue assuring us everything is under control and no load shedding will take place, things are worsening.
 
The company has suspended three power station managers in relation to the current coal supply shortage.
 
The managers at Kendal, Matla and Hendrina power stations have been placed on suspension, while chief procurement officer Jay Pillay has been served with a precautionary notice.
 
Eskom's Khulu Phasiwe says: “At this stage we’re unable to go into deeper details about the reason for their suspension. Suffice to say that it’s linked to the coal shortages in those particular stations.”
 
Clearly, if Eskom’s firing employees because of the shortage the problem seems to be more real than the company lets on!
    
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Saving the situation will cost us dearly
 
Eskom is again running open cycle gas turbines to supplement our power supply and has indicated that it might ask NERSA to recover fees for the amount it goes over budget if it has to continue running gas turbines to keep our lights on…
  
In the meantime, I also foresee that Eskom will pay premium price's for coal, and continue to pay premiums for the near future.
 
Add in the weaker rand in the last month or so, and the rand price of coal is soaring (on the back of the dollar price ALSO soaring).


As you can see, the coal price in dollar terms has soared from $71/ton in May 2017, to its current $90.
 
Since March 2018, thanks to the weaker rand, the rand price of coal is up around 10% as well.
 
Simply put – Eskom is in trouble.
 
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The possibility of load shedding this winter is larger than the 'Day Zero' crisis in Cape Town
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