South Africa’s Eskom Sees Lower Power-Cut Risk as Demand Rises

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(Bloomberg) — South Africa’s state power utility said the increased reliability of its electricity network will reduce the risk of outages this winter, when demand is expected to increase.

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Eskom Holdings SOC Ltd. has made “a continuous improvement from where we started off,” Chief Executive Officer Dan Marokane said in an interview on Monday. “That trend essentially is one of a reduction in unplanned losses, which allows us to be able to supply or meet the demand as required over the significant period.”

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Eskom resumed rolling blackouts known as loadshedding earlier this year after a 10-month hiatus that resulted from improved maintenance of its plants. Breakdowns have returned as a change of seasons in the southern hemisphere brings colder weather and fewer daylight hours that increase electricity consumption.

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“We now know 96% of the time we’re able to meet demand and we also know that we had some glitches, some disruptions particularly between January and April this year,” Marokane said.

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Still, the utility is doing better than previous years as it brings significant units online. “We’ll have that full capacity as we travel through the winter,” he said.

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Power cuts resulting from Eskom’s failure to meet demand cost South Africa’s economy 481 billion rand ($26.2 billion) last year, an 83% drop from 2023, according to the Council for Scientific & Industrial Research. Stabilizing the system is essential to ramping up economic growth.

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As Eskom started to improve the reliability of generation units, Marokane drafted plans to add a renewables business in a bid to grow the company again. The utility has appointed an executive to head the clean energy unit, the company said in a Jan. 17 statement.

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The expansion adds to existing plans to split the century-old business — which uses coal to generate more than 80% of the nation’s electricity — into separate units.

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Eskom faces a number of obstacles on its path to becoming profitable again, including a 449 billion-rand upgrade of the transmission grid. It installed 74 kilometers (46 miles) of transmission lines in the financial year to 2024, failing to meet a target of 166 kilometers. The unit known as the National Transmission Co. South Africa plans to install 5,044 kilometers in the next five years and almost double that from 2030 to 2034.

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Other steps, such as the separation of the distribution business, are complicated by an estimated 99 billion rand in arrears owed to Eskom by municipalities. 

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Eskom has a plan that will help municipality collection rates, while they’re able to set up infrastructure to serve their customers better, Marokane said. “We believe that this will give us an opportunity to have a long term and sustainable solution around municipality funding overall being resolved.”

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