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Eskom reports that it is currently expecting to operate temporary stacks on the three Kusile units – which have been inoperable since October 23 when the Unit 1 flue duct failed in a way that also compromised the Unit 2 and 3 flue ducts – for about a year while permanent remediation works are carried out.

The temporary stacks will bypass the flue-gas desulphurisation (FGD) system and Eskom is, therefore, preparing to seek an exemption from the Department of Forestry, Fisheries and the Environment (DFFE) in order to allow it to operate the units without using the air-pollution control system.

The DFFE tells Engineering News that no formal exemption request has yet been received from the State-owned utility which, for its part, says the request will be submitted once the project scope and project details are finalised.

The DFFE also gave no indication as to how long it would take to consider the application, saying only that the “processes to be undertaken to consider the exemption request will be informed by the nature of the request from Eskom when the department is ultimately approached”.

Eskom has already started making the case for moving ahead with the construction of the temporary stacks that bypass the FDG on the basis that the project will shave about a year off the time it would otherwise take to return the units to service and would, thus, help it in reducing the intensity of loadshedding.

The three units are able to produce 2 160 MW of electricity and their unavailability is currently adding about two stages of loadshedding every time Eskom implements rotational cuts. Loadshedding affected 208 days in 2022 and has been implemented every day since the start of 2023, at times at Stage 6.

“The current plan is to bypass the FGD until the permanent remediation of the units 1, 2 and 3 flues is completed.

“[We are] currently anticipating running the temporary flues for a duration of approximately one year before the final solution will be ready,” Eskom said in response to emailed questions from Engineering News.

Should it secure the exemption, the first temporary stack construction will take about ten months from environmental authorisation, with stacks 2 and 3 becoming available at one-month intervals thereafter.

The temporary stacks will be designed, constructed and commissioned by Concor and preparatory work by Concor is reportedly already in progress.

Eskom says it is unable to provide a cost estimate for the temporary stacks, stating that the exact costing will be confirmed only once the detailed designs are available.

The utility’s current “rough” cost estimate for the permanent remediation solution, which will be implemented in parallel to the temporary stacks, is R240-million and will be funded as an operational rather than a capital cost.

Therefore, Eskom insists that the estimated total cost to complete Kusile remains R233.4-billion; a figure that is said to include interest during construction.

Besides returning units 1, 2 and 3 to service, Eskom is currently estimating that Unit 5, the commissioning of which was delayed by a gas-heater fire also in October, will be synchronised to the grid in July or August and that Unit 6 will be completed by May 2024.

Currently only Unit 4 is operational at Kusile, where there have also been serious boiler design problems and where Eskom has been struggling to operate the FDG units, which are unique to its coal fleet in South Africa.

The boiler design problems have been attributed to “creative tendering”, while the Kusile project has been shown, including during evidence presented at the Zondo Commission, to have been seriously affected by corruption.

The Unit 1 flue duct failure has been attributed partly to the boiler design, which is 16 m too short and has resulted in high exhaust gas temperatures and air velocities, as well as a high buildup of slurry material.

This, together with inadequate monitoring of the flue, caused the bend on the Unit 1 flue to collapse because ...

President Cyril Ramaphosa has acknowledged that tariffs that reflect the cost of producing electricity are necessary for Eskom’s financial sustainability, as well as for the utility to service its debt and to undertake the critical maintenance needed to end loadshedding.

Writing in his weekly newsletter he also affirmed the independence of the National Energy Regulator of South Africa (Nersa) in setting such tariffs using a prescribed process, which includes public consultation, as well as the “importance of following the due legal process in setting tariffs”.

Without backing away entirely from his assertion that consumers should be shielded from the effects of the 18.65% hike approved for implementation on April 1, the President acknowledged, too, that “we should be wary of short-term solutions that we will regret in years to come”.

Nevertheless, Ramaphosa still called on stakeholders to work on a solution that strikes a balance that ensures that “Eskom has the resources it needs to resolve the electricity crisis while protecting South Africans from the effects of higher prices”.

“There is no simple answer to this problem,” he conceded.

“That is why all stakeholders, including government, Eskom, business, labour and communities, need to work together to achieve a very difficult balance.

“At all times, we must be guided by the needs and interests of South Africans, especially the poor, both now and into the future.”

After the President made a call on the Eskom board to consider delaying the implementation of the Nersa-approved hike, he highlighted that the regulator was the only authority able to determine electricity prices and that a decision could only be changed if it were to be reviewed in a Court of law.

“Once a decision has been made, Nersa lacks any power to re-examine its decision. Charging any price other than that determined by Nersa is not legally possible,” the utility explained.

Several applications have been made to have Nersa’s decision set aside, including one by the Democratic Alliance, which describes the January 12 decision as “irrational, unreasonable and retrogressive”.

When the matter was raised with outgoing Eskom CEO André de Ruyter during a recent Standing Committee on Public Accounts meeting, he said given that the matter was the subject of litigation he would not comment “save to say that there are essentially two sources of enabling Eskom to recover its costs: either from those who consume electricity or from the taxpayer by way of transfers from the National Treasury”.

For his part, Ramaphosa highlighted government’s policy of providing poor households with free basic electricity.

“The free basic electricity allowance, if implemented properly by municipalities, should shield the poorest households from the effect of the tariff increase. We remain absolutely committed to this policy,” he wrote.

A Public Affairs Research Institute publication showed that, in 2019, the national budget provided funding for a total of 9.8-million households to receive free basic services, including the 50kWh a month of electricity. However, only two-million households were actually getting the free basic electricity from their municipality.

"There are about 2.5-million households that are not connected to the electricity grid, and so they cannot get the free basic allowance. But even if we take account of this, it still means that there are 5.4-million poor households in South Africa that should be getting free electricity, but are not," the report stated.

With around 44% of Toyota’s total production from its Durban plant exported to Europe, Toyota South Africa Motors (TSAM) is set to face a tough challenge as that market increasingly moves to hybrids and battery electric vehicles (BEVs), warns TSAM president and CEO Andrew Kirby.

“The transition in Europe [to electrified vehicles] is going to be quick, and if we want to retain those exports, we will have to adapt to manufacturing either a low- or zero-emission Hilux.

“This is a pressure point for us. It will have an enormous impact on us, the supply chain, and the economy, if we lose that market.”

Europe is set to ban internal combustion engines by 2035, with increasingly strict emissions standards to be rolled out in the run-up to this deadline.

Kirby notes that TSAM has, “as of today”, no production solution yet.

“We are working with the entities responsible for Hilux design in Japan and Thailand, and we are also looking at what we can do from a production point of view.

“From a business point of view, this is certainly one of the most critical challenges we face as a company.”

Toyota in Japan will this year, most likely, decide where it will produce its forthcoming new-generation Hilux.

Any support TSAM will receive from the South African government in its production evolution to new-energy vehicles (NEVs) – fuel-cell vehicles, hybrids, plug-in hybrids (PHEVs) and BEVs – remains unclear.

Kirby says the Department of Trade, Industry and Competition has indicated that there will be an announcement in February’s budget speech on the long-delayed support policy on the advancement of NEVs in South Africa.

He adds that TSAM is gearing up to sell as many NEVs locally as possible, despite the energy crisis and the limited number of charging stations – 276 at the moment.

TSAM is committed to increasing its NEV sales to at least 20% of its sales mix by 2025.

“We don’t have all the answers yet, and we don’t have all the supply yet,” says Kirby.

“[As noted], one of the challenges we have as a sector is that we don’t yet have a committed direction or support programme from national government.

“And, as we don’t have a well-defined programme to support the manufacturing and sales of NEVs, we are not [seen] as a priority market for these scarce battery vehicles.”

TSAM currently holds a 76% share of South Africa’s small NEV market, says TSAM sales and marketing senior VP Leon Theron.

This is largely boosted by sales of the Corolla Cross hybrid, produced in Durban.

Theron says TSAM will this year add a Lexus PHEV to the local sales portfolio, with another Lexus PHEV and BEV to undergo tests for possible local introduction.

The brand-new Crown hybrid will also be added to the mix.

A Mirai hydrogen fuel-cell vehicle is already in the country for the purpose of a new-energy project in partnership with Sasol.

The Mirai has already been refuelled locally by Sasol.

Engineering News editor Terence Creamer talks about President Cyril Ramaphosa's request to Eskom to postpone the implementation of an 18.65% electricity tariff hike that is due to take effect on April 1; the legal action various political parties and civil society organisations are pursuing to halt the implementation of the tariff increase; Eskom's views on the implementation of the increase; and the implications should the increase not be implemented on April 1.

Toyota South Africa Motors’ (TSAM's) Prospecton production complex in Durban will move to 100% renewable energy by 2028, in an investment that will cost north of R800-million, says president and CEO Andrew Kirby.

TSAM will have to carry the cost of the investment, and not its Japanese parent company.

Around 10 MW of solar power has already been installed at the plant, with the aim to increase that to 31 MW.

To achieve its 100% renewable energy goal, TSAM will also have to roll out low carbon equipment and improve its waste management.

Speaking at the vehicle manufacturer’s State of the Motor Industry event held in Johannesburg on Thursday, Kirby said the Hino truck plant within the production complex was already “self-sufficient” and running on 100% renewable energy.

The group’s Atlas warehouse in Gauteng was set to emulate the Hino plant by 2025, with the Sandton head office to get there “much sooner”.

The bigger goal was for TSAM to become completely carbon neutral by 2035.

“This is an enormous challenge, and we don’t have all the answers yet, but we are dedicated to achieving this,” noted Kirby.

He added that the 2028 renewable energy target was a “big investment”, and a “big commitment”.

“We are doing this for a number of reasons.”

One reason was to cut the company’s carbon footprint, which was necessary if TSAM wanted to continue to be part of a global supply chain growing increasingly eco-friendly.

Another reason was to mitigate the current loadshedding crisis caused by State-owned energy producer Eskom being unable to supply the country with sufficient electricity.

Kirby said TSAM had been working closely with the eThekhwini municipality to put agreed mechanisms in place to reduce the Prospecton complex’s overall energy consumption when necessary.

This had enabled the plant to continue its production day without interruption.

However, component suppliers to TSAM had not been that lucky – especially suppliers with high energy demands that could not be met by alternative energy sources, such as furnaces.

In these cases, TSAM and the suppliers had been in contact with the relevant municipalities to convince them to sequence their loadshedding periods not too closely together, so that the power outages did not interrupt the production cycle.

“For a furnace, for example, it takes two hours to get back up to speed, and then, two hours later, we have loadshedding again,” explained Kirby.

“We are working closely with everyone.

“To be honest, it’s a moving target.

“We have come very close to having to curtail our production because of loadshedding, and we think it’s going to get worse,” said Kirby.

“It’s a big concern for us and we are managing it moment by moment.”

In what could be her last address as City of Johannesburg (CoJ) mayor, since she faces a vote of no confidence, Mpho Phalatse has announced City Power’s ‘Sustainable Energy Strategy’, which it has published with the aim of attracting funding, to help reduce the severity of loadshedding in the city.

She says the city has been on a path towards reducing its reliance on Eskom in earnest since May last year, following the Joburg Energy Indaba.

City Power has since put out requests for proposals for short-term power purchase agreements to secure energy from independent power producers (IPPs) for up to 36 months.

The first round of tenders went out in November last year, with the closing date being February 10.

Additionally, City Power is undergoing an approval process for Ministerial determination to procure power on a longer-term basis from IPPs. City Power seeks to secure additional capacity from diversified energy sources, including solar, gas, battery storage, waste-to-energy and gas-to-power projects.

Phalatse says the CoJ is ultimately working towards procuring an additional 500 MW of electricity, which could offset up to five stages of loadshedding.

The short-term objectives of the ‘Sustainable Energy Strategy’ has an estimated cost requirement of R401-million, to avert up to Stage 3 loadshedding, since Stage 2 and 3 loadshedding is likely to continue for at least the next 18 months.

Particularly, Phalatse says, for R20-million, the city can recommission its two existing open-cycle gas turbine stations, which could produce 74 MW of power; however, this will require the city to procure and burn diesel.

The CoJ already has 1.2-million litres of diesel on hand for these sites.

Further, at R85-milion, City Power can use ripple relay systems to remotely regulate high-energy use products such as geysers, swimming pool motors and the like, which could save 80 MW, but only when absolutely necessary, Phalatse points out.

For the city to produce and distribute smart meters and a communication system to enable City Power to limit the amount of power distributed to homes, it will need R203-million.

Phalatse explains that, instead of completely turning off the power, the city can supply homes with enough energy to power essential needs. This could save an additional 322 MW, when needed and not on a whim, and with the necessary communication to customers.

For City Power to better monitor, control and optimise its transmission system, it requires R120-million.

“Unfortunately, the CoJ does not have R401-million lying around that can be easily shifted to this strategy. We are, therefore, exploring the establishment of an infrastructure fund and we will be approaching development finance institutions, the private sector and provincial and national governments to fund this project, where we will leverage our status as the economic hub of the country,” Phalatse states.

City Power CEO Tshifularo Mashava confirms that, if the entity were to get the money immediately, it would take up to six months to get this mitigation plan active, given that much of the infrastructure is already in place.

Phalatse notes that, despite the threat of her possibly being removed from office again, the ‘Sustainable Energy Strategy’ is not about politics, but a legacy project to ensure Johannesburg can continue to operate, and more sustainably at that.

She says the city has been losing customers and revenue owing to customers going semi- or completely off-grid.

Between July 1, 2021, and June 30, 2022, City Power experienced losses of 386 GWh, resulting in a net revenue loss of about R284-million. The entity has also incurred costs of about R155-million, owing to overtime as a result of loadshedding, and R35-million in insurance costs. This translates to a total loss of R474-million in the period under review.

Moreover, City Power also incurs losses owing to vandalism and theft, having spent R200-million on 390 mini substations between July 1, 2021, and November 11,...

The Independent Power Producer (IPP) Office has confirmed it will soon launch a bid window round for 513 MW of battery storage capacity and hopes to procure another 1 200 MW later this year.

IPP Office head Bernard Magoro confirmed during a webinar hosted by Creamer Media and titled 'South Africa’s Energy Outlook for 2023', that the country could see a total 1 700 MW of battery storage procured in 2023.

He also assured that the IPP Office was preparing to release Bid Window 7 of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), which followed on what was an oversubscribed Bid Window 6 at 9.6 GW with offers from 56 wind and solar bids.

However, government ultimately selected only five solar plants with a combined capacity of 860 MW in the auction, and no wind projects, despite 4.1 GW of bids having been submitted and despite government originally planning to allocate up to 1 GW of solar and 3.2 GW of wind power in the auction.

The IPP Office also plans on releasing a 3 000 MW gas-focused bid window and is working closely with Transnet to position the ports to be abke to deliver the gas to the country.

During the webinar, Standard Bank renewable energy, power and infrastructure head Rentia van Tonder warned, however, that the REIPPPP needed a “rethink” as soon as possible and referred particularly to its format, refrencing Bid Window 6, and how procurement was undertaken.

She referred to certain sites requiring different procurement processes to fully unlock the dormant potential in those areas.

Integrated poultry producer Astral Foods has advised that its poultry division has experienced severe operational disruptions through the first quarter of its 2023 financial year, mainly as a result of loadshedding, leading to abnormal additional costs and substantial production cutbacks.

The company says it has to cut back on at least 12-million broiler placements for the six months ending March 31, and is reasonably certain that its earnings per share (EPS) will decrease by about 90%, or by 142c, compared with the EPS of R14.56 posted for the six months ended March 31, 2022.

The abnormal costs relate to a backlog in the broiler slaughter programme, which has resulted in older and heavier birds consuming higher levels of feed. Additionally, excessive processing costs are being incurred, as additional shifts are being implemented to try and address the substantial backlog in the group’s integrated broiler supply chain.

“The larger bird size and continued loadshedding disruptions have compromised the group’s poultry product offering. As such, a substantial poultry selling price increase would be required to recover the high feed input costs and the impact of loadshedding.

“However, Astral has been unable to implement the selling price increase required and, as a result, continues to rather subsidise the increased cost of production to its customer base and the consumer,” CEO Chris Schutte states.

He adds that, based on prevailing market and operational conditions, the cost to produce chicken exceeds the selling price by at least R2/kg. Accordingly, the poultry division is expected to incur significant losses for the first half of the financial year.

The poultry division’s feed input costs make up about 70% of the cost of producing a live broiler.

On the other hand, Schutte explains that the feed division has successfully managed to limit the impact of loadshedding by using available spare capacity among its various feed mills, however, this has come at an additional cost.

Future capital expenditure (capex) for this division has been committed to negate further risk. The higher internal feed volumes will positively impact the feed division’s financial performance for the six months ending March 31.

Owing to prolonged loadshedding, as well as the general decay of municipal infrastructure, Astral has had to embark on numerous capital projects, including installing diesel generators and additional water storage at its facilities, while putting other capex projects on hold while the adverse market conditions persist.

The projected cost of loadshedding for the group for the first half of the 2023 financial year will be about R400-million.

With chicken becoming ever more expensive to produce in South Africa, it sets back the industry, which is already experiencing trying times with record high input costs for both feed and energy sources.

“The shameless demise of a number of State-owned entities that are responsible for supplying essential services and maintaining general infrastructure, is impacting business sentiment and reinvestment decisions for growth, which directly threatens food security into the future,” Schutte laments.

He points out, however, that the group’s balance sheet remains healthy, with good levels of liquidity in place, following a superb performance in the financial year ended September 30, 2022.

“For the first time in South Africa, food security is now under threat owing to the agriculture sector’s reliance on basic infrastructure and services, which are failing. Moreover, the increasing cost of the food basket, which includes poultry as a staple protein, will place the consumer under extreme stress owing to financial hardship.

“If prevailing market and operational conditions owing to loadshedding continue, it could lead to Astral resizing its business in the short term, resulting in job losses throughout the supply chain,” Schutte concludes.

Eskom CFO Calib Cassim told lawmakers on Tuesday that the State-owned utility had spent R18-billion on diesel for its current financial year-to-date, which began in April last year, and that it would probably need to spend another R4-billion until the end of March, raising the overall diesel spend for the year to R22-billion.

The utility was continuing to operate its diesel-fuelled open-cycle gas turbines (OCGTs) despite having announced in November that it was no longer in a financial position to do so.

That said, outgoing CEO André de Ruyter told the Standing Committee on Public Accounts that, had it not been for its financial constraints, Eskom would have burnt more diesel to offset the coal fleet’s poor performance and limit loadshedding stages.

However, chairperson Mpho Makwana revealed that an agreement had been reached with the National Energy Crisis Committee on January 23 regarding a diesel funding model, the details of which were being finalised.

“While this diesel funding model is being put in place, we are funding the diesel from internal savings and reallocations from other priorities,” De Ruyter told the committee members.

“So, our CFO has had to do some very nifty footwork in order to release the cash from other sources to enable us to buy as much diesel as we can responsibly procure. [But] of course there's a limit . . . and, therefore, we have had to conserve our reserves to responsible levels.”

He also provided insight into some of the initiatives that Eskom had proposed to government to assist it in buying diesel as cost-effectively as possible.

One of these included an application to the Department of Mineral Resources and Energy for a wholesale licence to enable it to purchase diesel at the level of the Basic Fuel Price, which could have yielded billions in savings.

The application had been rejected, however, while the South African Revenue Service had, to date, rebuffed its attempts to secure tax rebates to which Eskom felt it was entitled.

Cassim said expenditure on diesel to operate its OCGTs at Ankerlig and Gourikwa had already exceeded the budget for the year by more than R10-billion and he indicated that there were also likely to be further shortfalls in 2023/24 and 2024/25.

Eskom had applied to the National Energy Regulator of South Africa (Nersa) for revenue to operate its OCGT plants at a load factor of 12% for the coming two financial years, which would have translated to allowable revenue of about R17-billion a year for diesel alone.

In approving the recent hikes of 18.65% for 2023/24 and 12.74% for 2024/25, Nersa said Eskom should operate the plants at a load factor of 6%, which would translate to a diesel budget of about R8.5-billion for the coming two financial years.

Cassim said the diesel budget shortfall would, thus, probably be about R16-billion over the coming two financial years, depending on actual oil prices, final diesel volumes and coal-fleet performance.

De Ruyter refused to be drawn on the debate as to whether Eskom should forgo the tariff increase in light of cost-of-living pressures; one that had intensified in light of various legal actions against the hikes and President Cyril Ramaphosa’s call for the board to find ways to limit the increases.

“I won’t comment on cost-reflective tariffs – that being a particularly sensitive and litigious topic at this point in time – save to say that there are essentially two sources of enabling Eskom to recover its costs: either from those who consume electricity or from the taxpayer by way of transfers from the National Treasury.

“And this is a choice that those who take these decisions need to make,” he said.

International renewables group Enel Green Power has been selected by Air Liquide and Sasol to build 220 MW of wind capacity to supply Sasol’s Secunda complex, in Mpumalanga, where Sasol produces synthetic fuels and chemicals and Air Liquide operates the biggest oxygen production site in the world – both companies have made commitments to be carbon neutral by 2050.

The renewable electricity from the wind projects is scheduled to be operational in 2025.

The long-term power purchase agreements (PPAs), which are still subject to regulatory and financial approvals, are the first to be signed following a tender process launched jointly by the two companies in April 2021.

The joint request for proposals (RFP) for 900 MW is the largest corporate renewables procurement in South Africa to date and forms part of Sasol’s plan to procure 1 200 MW of renewable electricity from independent power producers by 2030.

Sasol has a 500 MW allocation within the 900 MW and Air Liquide 400 MW.

The two companies report that they are negotiating with the remaining preferred bidders identified through the RFP to procure the balance of the renewable energy within the coming months.

In a joint statement, the companies said the renewable energy arising from the procurement process will contribute significantly to the 2031 target of reducing the carbon dioxide (CO2) emissions associated with the oxygen production by between 30% to 40%.

Sasol is under growing pressure to reduce its carbon emissions, particularly at Secunda, which is among the largest single-site emitters of the greenhouse gas globally.

In 2021, the JSE-listed group revised its initial target of reducing emissions by only 10% by 2030 to 30%. The new target has been set against a 2017 baseline of 63.9-million carbon dioxide equivalent (CO2e) tons and implies a reduction to 44.7-million CO2e tons by 2030.

Sasol’s Energy Business executive VP Priscillah Mabelane said the procurement “demonstrates the real progress Sasol is making towards its decarbonisation” and will also play a key role in creating alternative sources of energy to address South Africa’s current energy capacity constraints.

South Africans are enduring an intense period of electricity loadshedding, with more than 200 days of disruption in 2022 and with rotational power cuts having been implemented on every day since the start of 2023.

Plans developed by Eskom and the National Energy Crisis Committee indicate that loadshedding will need to be implemented for at least another two years as the utility struggles to stabilise its coal fleet and while new supply and demand mechanisms are introduced.

Air Liquide Group VP and executive committee member Ronnie Chalmers said that by signing the long-term PPAs with Enel Green, Air Liquide and Sasol were actively supporting the development of renewables in South Africa, which would support both the electrical power system and the fight against global warming.

Air Liquide, which acquired Sasol’s 16 oxygen production units in Secunda in 2021, operates 17 air separation units for Sasol, with a total oxygen capacity of 47 000 t/d.