Eskom told lawmakers on Wednesday that a fire in the gas air heater of Kusile Unit 5, which occurred during a commissioning exercise on September 17, represented a major “setback” and could delay the 800 MW unit’s entry into commercial operation by up to a year.

Under the revised scheduled for the much-delayed Kusile build programme, Unit 5 was expected to enter into commercial operation in December 2023.

Addressing a Standing Committee on Public Accounts meeting, COO Jan Oberholzer said the cause of the fire had not yet been determined by the contractor, Mitsubishi Hitachi Power Systems, which he referred to as MHI, but that sabotage was not currently suspected.

He noted that a similar incident had occurred during the commissioning of Kusile Unit 2, which had delayed the introduction of the unit by 12 months, and that a similar delay was, thus, being assumed preliminarily for Unit 5.

Eskom expected to receive details outlining MHI’s new commissioning plan for the unit by Sunday, October 23, but Oberholzer confirmed that the fire represented a major setback, particularly in a context where the utility urgently required additional generation capacity to reduce the risk of loadshedding.

“Unfortunately I have to be open that unit number five will not be placed into commercial operation by December 2023,” he said, signalling that initial indications were that the unit might achieve that milestone only in December 2024.

“Again, I need to emphasise that this was during the commissioning of that specific component and we don't believe that there was any foul play.”

The commercial implications were still being calculated, but it was estimated that it would add some R150-million a month to Kusile’s interest during construction (IDC).

Work on Unit 6, meanwhile, was continuing and it remained on schedule for commercial operation by the middle of 2024, with efforts under way to bring that date forward to May 2024.

MEDUPI UNIT 4

At Medupi meanwhile, where all six units were in commercial operation prior to a catastrophic hydrogen explosion at Unit 4 in 2021, Eskom was planning to return Unit 4 to service only in September 2024.

This, together with extended maintenance at the Koeberg nuclear station – which had been further prolonged because the replacement of the three steam generators at Unit 2 had to be postponed earlier this year owing to Eskom’s failure to complete the required containment facility on time – would increase the risk of power cuts.

The energy-short grid would be without at least one unit of Koeberg for a period of about a year and a half, which would increase the intensity of loadshedding by one stage every time it was implemented.

Nevertheless, Oberholzer expressed confidence that Koeberg would secure its life-extension licence before the current licence expired in mid-2024.

Oberholzer again confirmed that the Koeberg life-extension capital expenditure was far higher than the R20-billion announced in 2010, but said he could not yet provide the new value.

Lawmakers were also provided an update on the cost and cost to completion of both Medupi and Kusile, which were set to cost R145-billion and R161.4-billion to complete respectively, before IDC.

The remaining cost to complete Kusile was stated as being R14-billion, while the figure for Medupi was pegged at R18.95-billion.

The Medupi figure excluded the cost of installing flue gas desulphurisation (FGD), which could involve an additional R35- to R40-billion and remained a condition of a World Bank loan that had been raised to help fund the project.

CEO André de Ruyter reported that the FGD technology installed at Kusile was a single point of failure and that trips associated with the plant were a key reason for Kusile’s poor energy availability factor (EAF) currently.

Eskom was pursuing an operations and maintenance contract with General Electric, which supplied the FGD to Kusile, in an effort to improve the plant’s performance.

The utility, which has never before oper...

South Africa’s Just Energy Transition Partnership (JET-P) investment plan, which will seek to unlock $8.5-billion in concessional funding for decarbonisation projects as well as for coal worker and community support programmes, is currently in the Cabinet process ahead of its anticipated launched during the COP27 climate negotiations to be held in Sharm El Sheikh, Egypt next month.

Addressing a Standard Bank climate conference on Tuesday, Forestry, Fisheries and the Environment Minister Barbara Creecy also reported that the JET-P investment plan, once launched, would be released for public comment.

“We are obviously urging that you would look at it, that you would understand it, that you would see how it lays out a vision for the way in which we would want to support the transition in these three sectors [of electricity, electric vehicles and green hydrogen].

“And what we're very sincerely hoping is that [the plan] would create appetite from the private sector and would begin to mobilise the significant quantities of financing that we're going to need over the next ten years,” Creecy said.

She again stressed that, while the $8.5-billion being offered by the JET-P partners of France, Germany, the US, the UK and the European Union would translate to about R150-billion, it nevertheless fell well short of the more than R1-trillion South Africa required over the period to transition to an energy system aligned with the decarbonisation pledge it made at COP26 in Glasgow, Scotland in 2021.

Creecy underlined the economic risks of not moving fast enough to decarbonise, highlighting that both Italian and Indian buyers of South African forest fibre used in garment manufacturing had cautioned her as the minister responsible for forestry that they would seek alternative sources of supply unless South Africa halved the carbon content of its forest fibre by 2030.

While some of the country’s main trading partners were planning to impose carbon border adjustment measures from 2026, Creecy warned that, even absent such restrictions, South Africa’s top exports by value would become vulnerable to changes in global demand as countries decarbonised.

That said, she stressed that the country’s recently adopted Just Transition Framework insisted on the transition being implemented in such a way as to ensure that it not only enhanced energy security but also assisted the country in dealing with economic inclusion, job creation and poverty alleviation.

“The climate transition has to assist us with our overall challenges as a developing country.”

TRANSITION ‘INEVITABLE’ BUT NOT A ‘BINARY DEBATE’

Speaking on the same platform, Eskom CEO André de Ruyter described the energy transition as inevitable, saying “you just cannot hold back this wave with your bare hands, it is going to happen”.

Nevertheless, he contested the proposition that the transition was a “binary debate” between coal and renewables.

“Eskom, and hence South Africa, will be a very substantial consumer of coal for a very long period of time to come.

“So the notion that somehow we will succumb to pressure from the ‘Global North’ to sterilise all of our natural resources to satisfy pressure from international lenders is simply not substantiated by the facts.”

Instead, as South Africa’s old coal fleet reached retirement age it was uneconomical to extend their lives in a context where renewables provided the lowest-cost new electricity and could be built faster than any of the alternatives.

There was also appetite, De Ruyter noted, from investors to make “risk-based investments” in renewable energy, without government guarantees, pointing by way of example to the recently announced Eskom land-lease deal in Mpumalanga for a possible 2 000 MW of new capacity.

He then challenged South African bankers to “start taking more risk” and wean themselves off their “addiction to National Treasury guarantees”.

“Now I know that it's tied up with a single-buyer model, [but] as soon as we open up the market,...

JSE-listed group Sasol and ArcelorMittal South Africa (AMSA) have announced a joint development agreement to advance studies into two potential green-economy projects, including the potential production of green hydrogen in Saldanha Bay, which could be used to produce green steel.

The two companies will also pursue a Vaal carbon capture and utilisation (CCU) study, whereby renewable electricity and green hydrogen could be used to convert captured carbon from AMSA’s Vanderbijlpark steel plant into sustainable fuels and chemicals.

AMSA believes the initiatives have the potential to position AMSA as Africa’s first green flat-steel producer.

At its Saldanha Works, which is currently mothballed, green hydrogen could be employed to produce direct reduced iron (DRI) through the mill’s Midrex facility. The Vaal CCU study, meanwhile, will explore capturing 1.5-million tonnes a year of unavoidable industrial carbon dioxide captured from the Vanderbijlpark Works and transporting it to Sasol’s Sasolburg and Ekandustria operating facilities where, together with green hydrogen, it could eventually replace natural gas as a feedstock to produce sustainable chemicals.

Sasol also announced that it has signed a memorandum of understanding with Freeport Saldanha Industrial Development Zone to develop a globally competitive green hydrogen hub and ecosystem within Saldanha Bay.

“These potential projects are an important kick-start to our decarbonisation journey and create an exciting opportunity to contribute to the South African government’s aspirations to transition to a green economy,” AMSA CEO Kobus Verster said in a statement.

“Just as importantly, by maximising the utilisation of our installed assets, we will also be stimulating economic growth in our host communities,” he added, noting that the projects could drive the re-industrialisation of both the Saldanha and the Vaal regions.

Sasol energy business executive VP Priscillah Mabelane expressed enthusiasm for the prefeasibility and feasibility studies, which she said could unlock South Africa’s potential to be a global green hydrogen and derivatives producer.

“These studies are anchored by the local need for green hydrogen and sustainable products, cementing Sasol as the leading contributor to the development of Southern Africa’s green hydrogen economy,” Mabelane said.

Both industrial groups have stated goals of achieving net-zero carbon emissions by 2050.

The Automotive Industry Development Centre Eastern Cape (AIDC-EC) has entered into partnerships with the Automotive Component Manufacturing Association of India (ACMA) and the Japan International Co-operation Agency (JICA).

In terms of the agreements JICA and ACMA will assist the AIDC-EC to roll out technical training programmes to automotive component suppliers in the Eastern Cape.

The Eastern Cape automotive sector is responsible for 38% of South Africa’s total vehicle production and 50% of the country’s auto exports.

AIDC Eastern Cape CEO Thabo Shenxane says that one of the goals of the partnerships is to embed a culture of Kaizen into the supply chain.

Kaizen is a global management method that drives quality and productivity improvement (QPI).

“Kaizen will bring measurable competitive improvement outcomes that will capacitate suppliers to access new markets, attain international benchmarks and develop new opportunities,” explains Shenxane.

“The development of Tier 2 to Tier 4 suppliers will make a major impact on South African Automotive Masterplan 2035 objectives, which targets an increase of 20% of locally produced components in vehicles made in the country.”

Empirical results from JICA on Kaizen programmes at eight Tier 1 South African manufacturers between 2016 and 2019 showed that productivity more than doubled; on-time delivery improved from 73% to 95%; overtime work dropped on average from 13.8 hours a week to 4.6 hours a week; and lead times, on average, improved by 40%.

“The results clearly justify scaling up of Kaizen in the automotive manufacturing sector,” says Shenxane.

“And, like JICA, we believe that South Africa can compete with India and Thailand’s automotive component industries – but we must have a vision and plan for this.”

As a key activity of the partnership, the AIDC-EC and JICA are introducing a QPI Kaizen programme to Tier 2 and 3 automotive suppliers across the country’s major auto manufacturing hubs.

“We have started the process to work with 120 Tier 2 and 3 component suppliers over the next three years,” notes Shenxane.

Additional training will also be implemented in terms of the AIDC-EC’s partnership with ACMA, aimed at addressing knowledge gaps and low competence through continuous skills transfer.

ACMA

In terms of the AIDC-EC’s partnership with ACMA, highly structured cross-functional skills development and training programmes; blended physical training; cross-countries knowledge exchange; simulation techniques; and shopfloor project implementation will be included in training programmes for the Eastern Cape supply chain, says Shenxane.

“It has been noted that suppliers of all sizes have realised the effectiveness of blended learning approaches, where employees have the opportunity of engaging in both hands-on and virtual-based learning.

“This provides unique opportunities for training, and will enhance networking and automotive-related activity between India, Japan and South Africa.”

Toyota Wessels Institute for Manufacturing Studies director Dr Justin Barnes underlines the importance of nurturing the manufacturing sector in South Africa.

According to Barnes, manufacturing value added per capita barely grew in the 30 years between 1990 and 2019.

Manufacturing contributed 12% of South Africa’s economy in 2019, 17% in 2000 and 21% in 1990.

Moreover, Barnes says South Africa’s manufacturing sector employed more people in 1969 than it does today.

“If we had kept manufacturing at 1990 levels we would have employed over a million people more.

“The sector is shedding jobs and becoming more capital intensive at a time of an employment crisis. To achieve a high-income society, the driving force is manufacturing productivity and good jobs, whereas the economy is now welfare dependent.”

Barnes notes that the local auto industry has performed better than the manufacturing sector at large, increasing vehicle production from 376 000 units in 1995, to 632 000 in 2019, but adds that the “dark cloud” is t...

Volvo Trucks South Africa (SA) has started assembly of Euro 5 specification trucks at its plant in Durban, KwaZulu-Natal.

Euro-5 truck variants have been available in South Africa since 2012, but are now for the first time assembled locally.

“More customers have ambitions to improve their environmental footprint, which is driving the uptake of Euro-5 models locally,” says Volvo Trucks SA sustainability manager Eric Parry.

“In general, the Euro-5 engines have a lower fuel consumption than an equivalent Euro-3 unit, which means that even though total costs are roughly the same because of the need for AdBlue diesel exhaust fluid in the vehicle, the carbon dioxide emissions are reduced with the lowering of fuel consumption.

“There is also the significant reduction in poisonous gases from the exhaust, which in turn improves the environment around the vehicle,” notes Parry.

Euro-5 assembly at the Durban plant adds to the current production line-up at the facility.

Volvo Trucks SA has kicked off Euro-5 assembly with FH truck-tractors, the company’s long-haul icon, as this is the most requested Euro-5 model with local customers.

More models and configurations will be added over time according to fleet owners’ demands.

“The need for local assembly also arose to reduce the import duty that is applied to full imports,” says Parry.

“This allows Volvo Trucks the opportunity to offer the cleaner technology in a more competitive way.”

Euro-5 assembly required some layout changes at the plant to accommodate AdBlue filling, as well as for storage.

Additional floor layout adjustments were also made to allow for new procedures like the assembly of AdBlue tanks and special exhaust systems.

“Operators have also received advanced training to assemble the new features connected to the Euro-5 specifications,” explains plant director Aubrey Rambau.

“Specialised training was also provided for road testers and product auditors to ensure the highest standards are maintained.”

Solar Energy

Volvo Trucks SA has installed a new solar power system to generate renewable energy for its Durban plant.

A total of 440 solar panels and two solar inverters generate 243 kW of power, which meets around 60% of the plant’s energy requirements.

“At Volvo, environmental care is fundamental to how we do business, and this project is another step in our energy efficiency journey,” says Rambau.

Volvo trucks are assembled in 13 countries across the globe.

The Department of Water and Sanitation (DWS) is temporarily increasing Rand Water’s bulk water allocation as an emergency measure to address water shortages in South Africa’s economic hub.

Rand Water abstracts 4 400 megalitres of water and has already exceeded this allocation by over 1 600 megalitres since the start of the spring season to meet the rising use and demand across the Gauteng metropolitans, district and local municipalities.

Owing to this, Rand Water last week imposed a water supply reduction of 30% to safeguard the integrity of the system and to ensure continued water supply, further applying the flow control management of its reservoirs to stabilise and avoid the emptying of the reservoirs and a complete system crash.

“We note the increase in water use and restrictions imposed by Rand Water in response to deteriorating water levels in their reservoirs, therefore we will increase temporarily the allocation for abstraction of bulk water to Rand Water’s system in order to meet the demand,” says Water and Sanitation Minister Senzo Mchunu.

This had followed an emergency meeting on Monday where the DWS engaged with Rand Water, representatives of the three metropolitans, and district and local municipalities affected by Rand Water’s water restrictions.

“This should bring relief to some metropolitans, namely Johannesburg, Tshwane and Mogale City district municipality, however the measure is for a period of 9 months while we seek more permanent solutions to water use and management,” he points out.

However, municipalities need to come up with measures to deal with those wasting water, including imposing penalties and addressing the challenge of water leaks on municipal reticulation systems.

“As a country we are experiencing the scarcity of water, yet we allow for up to 40% of our water to be lost to leaks. This undermines our efforts to address water challenges.”

A Water Room committee, comprising DWS, Rand Water and all Gauteng municipalities as well as the business sector, will be set up to provide holistic coordination, provision and management of the water system in the province.

Water use has increased over the past few weeks owing to a continued heatwave and delayed summer rains in the inland provinces, which has resulted in potable water being used for watering gardens and car wash enterprises, which typically would have been taken care of by rains, as well as water losses owing to leaks in the reticulation part of the system.

“There continues to be overuse in the province which puts a strain on the system that led to Rand Water having to inform their customers of the need to restrict. This does not imply that there is a crisis of water availability but is rather a means to manage the system through reduction and therefore bringing balance to the system,” Mchunu concludes.

The Master Builders Association (MBA) North has issued a practice note for its members aimed at helping them fight back against what it calls unethical contractual practices that have become prevalent in the industry.

MBA North executive director Mohau Mphomela says the association has noted with concern that a growing number of its members are finding themselves in trouble owing to unethical contractual practices forced on them by some professionals and employers.

“When you start to see contractors and subcontractors who have been in business for decades having to go into business rescue, then it’s clear there is something wrong,” he says.

“We convened a meeting with some of our leading members – contractors and subcontractors – to hear from them what challenges they were facing when it comes to contracts. The practice note is the fruit of that meeting.”

The note provides guidance about best practice when it comes to contracting for both contractors and subcontractors.

Brad Boertje, a construction risk management consultant and alternative dispute resolution practitioner for the MBA North, says that standard industry contracts, such as Joint Building Contracts Committee (JBCC) contracts, are the gold standard and should be followed to the letter.

These standard contracts should ideally not be amended, but, if amendments are made, they need to be agreed to by both parties and not one-directionally imposed by the developer or principal agent.

It is also vital that contractors and subcontractors take the time to populate the contract with all the relevant data. If a dispute arises later, an incomplete contract could prejudice the contractor, says Boertje.

The contract should be the full and complete record of all parties’ obligations to each other, he adds.

Contractors should not accede to requests to take on out-of-scope work on the promise that they will be “looked after” at a later stage – only to find that the client will not honour that payment.

The JBCC contracts are necessary because the Common Law does not cater for issues specific to the construction industry, says Boertje.

Another challenge is the issuing of incorrect payment certificates, or the non-issue of payment certificates.

Boertje cautions that “negative” payment certificates have become common, but they often do not reflect an accurate certification of the works.

“Contractors often find themselves having to litigate to get their money, which greatly impacts their cash flow.”

Construction or performance guarantees are yet another area where contractors are experiencing issues.

Boertje points out that contractors have the right to choose the kind of security they wish to offer.

He advises that construction guarantees are preferred to retentions. In the latter case, if the main contractor runs into business difficulties, the subcontractor may find that his or her retention is at major risk of being released.

“Because business conditions are so tough, contractors and subcontractors often find themselves being forced to condone unethical contractual practices, and then find themselves in trouble,” notes Mphomela.

“Yet they find it hard to fight back for fear of being precluded from future tenders.

“As an association, the time has come to say enough is enough. We must present a united front to demand adherence to ethical practices – to the benefit of all stakeholders.”

Four independent power producers have been named as successful bidders for the lease of grid-ready Mpumalanga land, which is being made available by Eskom as part of efforts to accelerate the development of wind, solar and storage projects in the province – investments that should, in time, help lower the risk of loadshedding and provide new employment and business opportunities in the region as coal plants are decommissioned.

The entities identified as having secured the 25- to 30-year property leases for parcels covering a total of 6 184 ha of land near the Majuba and Tutuka coal stations are HDF Energy South Africa, Red Rocket, Sola Group and Mainstream Renewable Power Developments South Africa.

The bidders, which were selected following a competitive process initiated in April, are now expected to finalise comprehensive feasibility studies to determine which technologies, and at what scale, they will build on the sites.

In addition, they will need to secure private offtakers for the electricity, which will not be bought by Eskom and will, thus, attract no National Treasury guarantee, as is currently the case for the utility-scale projects procured under the government-run Renewable Energy Independent Power Producer Procurement Programme.

Instead, the private generators will sign bilateral power purchase agreements (PPAs) with private offtakers, and the projects should, thus, pose little or no financial risk to taxpayers or Eskom.

The final technology mix and size of the projects is yet to be determined, but Eskom CEO André de Ruyter stressed that the leases include a “use-it-or-lose-it” clause so as to ensure that the utility retains some control should projects fail to meet certain developmental milestones over the coming months.

Speaking at a signing ceremony, De Ruyter expressed confidence that the inaugural leasing of Eskom land would result in the development of wind and solar projects with a combined capacity of at least 2 000 MW over the coming 24 to 36 months, as well as the development of some battery storage capacity.

The electricity would also be wheeled across the Eskom grid, generating revenue for the cash-strapped utility from existing assets in the province.

It was also confirmed that Eskom would be issuing new tenders for other land parcels every quarter and that up to 30 000 ha could eventually be made available.

The next phase, to be initiated in the coming months, will focus on properties around the Kendal and Kusile power stations in Mpumalanga, as well as the retired Ingagane power station in Newcastle, KwaZulu-Natal.

Efforts would be made, with the assistance of Operation Vulindlela, to ensure that various land-use and environmental authorisations were secured on an expedited basis that projects could proceed as soon as possible.

“By making Eskom land available close to the power stations, where there is sufficient grid capacity, we have taken an innovative step to find the quickest way possible and within our scope of influence to boost the country’s generation capacity,” De Ruyter said.

Engineering News Editor Terence Creamer talks about the public hearings that were due to be held this week by the National Energy Regulator of South Africa (Nersa), but which had to be rescheduled owing to a poor response; what Nersa will do next; and the overall trend of waning interest in Nersa hearings.

The National Energy Regulator of South Africa (Nersa) has announced new dates for public hearings regarding its concurrence with three Ministerial determinations opening the way for the procurement of 18 771 MW of new electricity capacity, having initially cancelled hearings scheduled for this week, owing to a lack of response.

In a notice issued on October 13, Nersa announced that the time for public comment regarding its concurrence with the determinations had been extended and invited stakeholders to attend rescheduled virtual hearings on October 20 and 21, between 13:00 and 17:00 on both days.

Members of the public and stakeholders wishing to attend or present their views were requested to notify Nersa by October 19.

The fact that no stakeholders had approached the regulator to make input on the determinations came as a surprise, given that some questions had been raised recently about a determination for 3 000 MW of gas-to-power.

Initially, Nersa said that the 3 000 MW was based on an allocation for gas/diesel generation outlined in Table 5 of the Integrated Resource Plan of 2019, or IRP2019.

It later circulated an erratum on September 12 clarifying that the 3 000 MW arose from an Eskom application to deviate from the IRP2019 for a combined cycle gas power plant at Richards Bay, in KwaZulu-Natal.

It was anticipated that this deviation request would attract stakeholder comment, particularly given that some environmental groups had approached the Gauteng High Court recently to have the environmental authorisation for the project reviewed and set aside.

In a judgment delivered on October 6, Judge Anthony Miller dismissed an application for the granting of the environmental authorisation to be reviewed and set aside.

However, he ordered that a copy of the authorisation and the conditions attached, which had been published in English, be translated into isiZulu and published in at least two newspapers that circulated widely in the Richards Bay area of KwaZulu-Natal.

The other two determinations delivered to Nersa in August by Mineral Resources and Energy Minister Gwede Mantashe are for 14 771 MW of wind and solar photovoltaic (PV) generation allocated for in the IRP2019, but not yet catered for in an existing Ministerial determination for wind and solar PV, and 1 000 MW of ‘Other Distributed Generation, Co-Gen, Biomass, Landfill’ capacity for 2023 and 2024 also outlined in Table 5 of the IRP2019.

In confirming the extension for comment, Nersa cautioned that should it not receive any requests to present at the advertised public hearing by the closing date of this notice, it “retains the right not to hold the scheduled hearing”.