1) RSA’s been caught in a peculiar energy propaganda war for some time. Given
the corruption at Eskom, the largest utility on the African continent, the stakes are high. A surfeit of technological and political interests - at a foreign & local level – are jostling for “power”.
the corruption at Eskom, the largest utility on the African continent, the stakes are high. A surfeit of technological and political interests - at a foreign & local level – are jostling for “power”.
2) This has manifested itself as a winner-takes-all contest between renewable energy (primarily wind & solar PV) and nuclear energy (spurred by Russian geopolitical interests).
Two big Qs have emerged.
1/ Nuclear or RE?
2/ Should Eskom be unbundled?
Quick answer: neither & NO!
Two big Qs have emerged.
1/ Nuclear or RE?
2/ Should Eskom be unbundled?
Quick answer: neither & NO!
3) Nuclear?
The 🇷🇺 9.6GW deal (Zuma's pension plan) is just crazy, but with @CyrilRamaphosa at the helm, it’s thankfully not worth talking about any more.
The 🇷🇺 9.6GW deal (Zuma's pension plan) is just crazy, but with @CyrilRamaphosa at the helm, it’s thankfully not worth talking about any more.
4) RE?
SA's flagship program, REIPPP is 🚮. Its grave flaws are overlooked simply b/c "it's green" or b/c of private interests.
Eskom needs economic dispatch ("cheapest runs first"). No faves/subsidies.
REIPPP's wind & solar plants still aren't cheaper than Eskom's worst plants
SA's flagship program, REIPPP is 🚮. Its grave flaws are overlooked simply b/c "it's green" or b/c of private interests.
Eskom needs economic dispatch ("cheapest runs first"). No faves/subsidies.
REIPPP's wind & solar plants still aren't cheaper than Eskom's worst plants
5) There’s no urgent need for new supply.
-Reserve margin is already at 30%
-Sales are declining
-Eskom won't need to decommission plants till the mid-2020s
If it isn't cheaper than an existing plant OR if there's no evidence of new demand, don't rush to add more capacity.
-Reserve margin is already at 30%
-Sales are declining
-Eskom won't need to decommission plants till the mid-2020s
If it isn't cheaper than an existing plant OR if there's no evidence of new demand, don't rush to add more capacity.
6) Unbundling?
What's the root cause of Eskom's rapid decline since 2008?
Market structure changes or State corruption 🤔
I'm pro-free-markets, but unbundling isn't a sine qua non for lower rates or reliable supply. Eskom has excelled as a vert-integrated monopoly for decades.
What's the root cause of Eskom's rapid decline since 2008?
Market structure changes or State corruption 🤔
I'm pro-free-markets, but unbundling isn't a sine qua non for lower rates or reliable supply. Eskom has excelled as a vert-integrated monopoly for decades.
7) Many of the academics leading the call for liberalization are broken records. Same ideological tune, even at the utility's peak 😴
Eskom's been a Top 10 global utility for most of its life. Its avg tariff has always been lower than the world avg. If it ain't broke, don't...
Eskom's been a Top 10 global utility for most of its life. Its avg tariff has always been lower than the world avg. If it ain't broke, don't...
8) In short-med term, Eskom can be stabilized w/out any unravelling.
Treasury will need to extend financial support. Costs will also need to be cut with a chainsaw, not a scalpel.
But the most NB thing is articulation of new policy aims & appointment of an indep, technical exco
Treasury will need to extend financial support. Costs will also need to be cut with a chainsaw, not a scalpel.
But the most NB thing is articulation of new policy aims & appointment of an indep, technical exco
9) Price/competitiveness must be new central policy goal & decarbonisation a BOUNDARY condition.
The whole of Africa emits less CO2 than California, & Eskom supplies a developing region.
But forget that. Look at emissions! Lower than forecast(s), waaaay lower than Paris targets
The whole of Africa emits less CO2 than California, & Eskom supplies a developing region.
But forget that. Look at emissions! Lower than forecast(s), waaaay lower than Paris targets
10) Eskom needs to limit its IPP portfolio. It's grown from 0 to a R20 billion outflow in under five years.
Scrap REIPPP bid windows 3.5 and 4. Renegotiate BW 1-3. When price or demand allows, Eskom can build new RE plants itself. IPPs aren't needed.
Scrap REIPPP bid windows 3.5 and 4. Renegotiate BW 1-3. When price or demand allows, Eskom can build new RE plants itself. IPPs aren't needed.
11) Scrap new decarbonization taxes.
Since 2009, Eskom's been forced to pay a R8 Bil/yr environmental levy. Govt's adding a R120/tCO2 nationwide carbon tax. DEA's adding CO2 budgets.
This burden is simply passed through to customers! But NB-ly, it's ineffective and unnecessary.
Since 2009, Eskom's been forced to pay a R8 Bil/yr environmental levy. Govt's adding a R120/tCO2 nationwide carbon tax. DEA's adding CO2 budgets.
This burden is simply passed through to customers! But NB-ly, it's ineffective and unnecessary.
12) Review ALL coal supply agreements with a fine-toothed comb.
Eskom buys less coal than it did in 2010, but somehow Primary Energy expenditure has *doubled* in real terms since then.
In 2012, Eskom purchased coal for R182.90/ton on avg.
In 2017, after Anoj Singh? R424/ton!
Eskom buys less coal than it did in 2010, but somehow Primary Energy expenditure has *doubled* in real terms since then.
In 2012, Eskom purchased coal for R182.90/ton on avg.
In 2017, after Anoj Singh? R424/ton!
Eskom's coal inventory levels are also *much* higher than necessary.
It only needs to hold a month's worth of stock in reserve. However it now holds 71 days worth and this is only increasing atm.
Stop. Buying. Coal!
It only needs to hold a month's worth of stock in reserve. However it now holds 71 days worth and this is only increasing atm.
Stop. Buying. Coal!
13) Eskom needs to lay off a lot of people and freeze salaries.
Its wage bill has increased 85% in real terms over the last decade. It's gone from 32,674 employees (2007/8) to 47,658 employees (2017/18), with zero growth in power sales.
Avg wage in 2017 is R58050 per month! 😳
Its wage bill has increased 85% in real terms over the last decade. It's gone from 32,674 employees (2007/8) to 47,658 employees (2017/18), with zero growth in power sales.
Avg wage in 2017 is R58050 per month! 😳
14) Eskom needs to aggressively collect municipal arrears.
Munic debt's increased 7-fold in 5 years. R3.4 Bil lost in 2017! Eskom must demand prepayment & then fulfill munic maintenance.
Munics are being looted and need urgent restructure. Eskom & @DWS_RSA are owed R10 Bil each
Munic debt's increased 7-fold in 5 years. R3.4 Bil lost in 2017! Eskom must demand prepayment & then fulfill munic maintenance.
Munics are being looted and need urgent restructure. Eskom & @DWS_RSA are owed R10 Bil each
15) Eskom needs to mothball what it can.
Recent research suggests that as much as R12,5 Bil can be saved by decommissioning plants that are surplus to requirements. That's Grootvlei, Hendrina & Komati (~1.5K jobs).
It must mothball as much of its CAPEX program as it possible!
Recent research suggests that as much as R12,5 Bil can be saved by decommissioning plants that are surplus to requirements. That's Grootvlei, Hendrina & Komati (~1.5K jobs).
It must mothball as much of its CAPEX program as it possible!
All-in-all, a solid team can chop R30-35 Billion in costs over the next year.
It won't be easy, people will lose jobs, but the incumbent leaders must decide: pain of discipline or pain of collapse?
It's bigger than Eskom now. SA is in serious trouble if this company conks out.
It won't be easy, people will lose jobs, but the incumbent leaders must decide: pain of discipline or pain of collapse?
It's bigger than Eskom now. SA is in serious trouble if this company conks out.
