[Opinion] Cash fears in energy crisis

Durban - South Africans might not be able to engage in financial transactions, access their money or use an ATM if Eskom continues to fumble in the dark.

Experts say prolonged power outages at the higher stages of load shedding or a total grid collapse will affect banks and other financial institutions and could lead to possible data breaches.

Digital expert Professor Colin (Surendra) Thakur warned yesterday that financial systems might slow down or come to a complete halt.

Regulations demand that many financial institutions store client data in the country where they live.

“South Africa would have several data centres that are geographically bound to comply with the South African fiduciary and international fiduciary requirements. Given that these data centres are in South Africa, they would naturally be exposed to inherent danger of a grid collapse. Obviously they go to great lengths to ensure that they have continuity of service through inverters, back-up generators and so on, but these can only last up to a particular point. There will be a point where a typical stage 8 or stage 10 power failure will result in the termination of the availability of this data.”

His sentiments were echoed by Centre for Risk Analysis policy analyst Chris Hattingh, who said that while a total grid collapse was improbable, it was not impossible. He said the effects of load shedding had already been devastating.

“The burdens of a total grid collapse could be borne for a short time by more affluent citizens. But for the majority it would mean weeks, if not longer, without electricity in their homes, ATMs and petrol stations that are non-operational, food and medicine shortages, and the permanent closure of many small businesses in the formal and informal sectors.”

Hattingh said the continued electricity crisis did not bode well for investment.

“Globally, credit and investment are becoming tighter. The energy crisis serves to send a signal to the world that capital may enjoy better returns if it heads elsewhere.”

The South African Banking Risk Information Centre yesterday said: “All banks have their own load shedding mitigation plans based on their risk assessments and frameworks to respond to the impact of load shedding on the business of banking. As these plans are unique as well as operational in nature, Sabric is not able to comment.”

Business Unity South Africa energy and environment manager Happy Khambule said a total grid collapse could have a significant impact on businesses and it was essential for them to have back-up plans in place to minimise this. He said this could include back-up generators, emergency lighting, and data back-up systems.

Eskom yesterday announced that Bheki Nxumalo had been appointed as group executive for generation with immediate effect. The power utility said his career in the energy sector spanned more than 20 years and he was “an all-round business leader comfortable in governance, people and technical aspects of the role”.

Nxumalo previously held management and executive positions, was the power station manager at two of Eskom’s power stations and the general manager at Kusile Power Station.

He took on the new role as the power utility this week ramped up load shedding to stage 6 after a much welcome respite from constant daytime load shedding over the Easter weekend.

However, as the spectre of stage 9 looms, threatening more jobs, food security, business losses and adding to the country’s collective trauma, President Cyril Ramaphosa on Thursday sought to allay investor fears by saying the energy sector remained the government’s foremost priority.

“The lack of reliability in electricity supply weakens business and consumer confidence, taints international perceptions about our country and affects investment sentiment and decisions,” he said at the 5th South Africa Investment Conference in Sandton.

Ramaphosa said the immediate focus was on improving the performance of existing coal fired power stations as they continued to provide the base load of the country’s energy. He said Electricity Minister Kgosientso Ramokgopa was overseeing the implementation of the Energy Action Plan announced last July.

However, DA spokesperson for mineral resources and energy, Kevin Mileham, this week criticised Ramokgopa for his “misplaced confidence” in suggesting that the lifespan of the coal fired power stations be extended.

“What Ramokgopa and the ANC government fail to understand is that, and this has been the primary cause of the 16-year-old load shedding crisis, regardless of how hard Eskom runs its coal-fired power stations, they will never be able to meet South Africa’s current energy demand,” said Mileham.

Last year South Africans endured 150 days of load shedding; this year Eskom has already predicted power cuts every week up until 2024. Energy experts have warned that the country is edging closer to a total grid collapse and all it would take is a cold snap to push it over the edge.

Professor Hartmut Winkler, from the Department of Physics at the University of Johannesburg, says an increase in electricity consumption during winter was expected and that the stages of load shedding would go up toward June and July.

“The reason for the comparatively good electricity supply over the Easter weekend is simply that so many businesses and factories were closed. Electricity demand is always lower on weekends and during holidays.”

Winkler said the latest electricity shortages were due to breakdowns in the country’s coal power plants.

“When you have a fleet of old cars, you may be lucky and enjoy some days when the cars all manage to function somehow,” he said. “Then there will be other days when several cars break down at the same time. It is the same with the coal plants”.

Winkler added that there was no short term solution in solving Eskom’s woes. “Too many of the coal plants are out of service for lengthy periods due to major technical problems, and where repairs are feasible these are often expected to take as much as a year (for example, the three Kusile units put out of action by the collapsed flue duct).”

“Eskom itself predicts a high likelihood of load shedding for every week in the coming 12 months. The gas plants (some of which also require diesel) are only intended to be used for short periods during critical emergencies.”

“Running these for lengthier periods not only adds to the costs resulting from above-budget diesel purchases, but also puts these plants at increased risk of breakdown.”

“Diesel will only run short towards the end of the year, so Eskom will probably decide to again run the gas plants more intensely this winter, but that will only improve the situation by about 2 stages of load shedding.”

Winkler said the solution was to build new electricity generating capacity on a large scale. “Only solar and wind farms can be built relatively fast (about 2 years). New coal or nuclear plants would take 10 years or longer (Kusile has been under construction for 15 years, and is still not finished),” he said.

“On average, load shedding has been getting worse by about 2 stages each year. Last year we had some days at stage 6, so this year I expect we will on occasion be going down to stage 8 (when power is there for 50% of the time).”

Former Eskom employee and energy expert Ted Blom said many of the current issues could have been avoided if Eskom had stuck to its plan, made more than a decade ago to build at least 20 new coal mines.

“They are buying from every Tom, Dick and Harry and that is why they are ending up with rocks and stones and sand in the coal and that's where the problems with the breakdowns start. They are putting the wrong fuel in and that’s creating havoc in the boilers, the boilers break and that's causing havoc with the load shedding.”

Blom said even if those plans were resuscitated it would take at least five to 10 years to negotiate a construction contract with a company and then five more years to build a new coal mine, so that was not a quick fix solution.

He said the current situation at Eskom did not bode well for the coming months.

“The future is darker than before Van Riebeeck,” he said, adding that if the government was sincere about fixing the crisis, they would have appointed a senior person with at least 15 years’ experience in the industry as Minister of Electricity and not someone without energy qualifications or experience. “Predictably everyone is bending his ear with their comments and suggestions and he is making sweeping and erroneous statements about power stations. It’s a pure political appointment,” said Blom.

Energy expert Lungile Mashele expects the winter period to be bleak.

“Naturally, we can expect load shedding every day, it’s the severity that is in question,” said Mashele. She expects the winter period to fluctuate between stage 4 and stage 6 load shedding if all goes “according to plan”.

Mashele urged Eskom to hold an urgent system briefing on their plans for winter. “They need to give updates on the maintenance carried out and fleet availability. They need to provide an update on how far they are with the public participation process on Kusile.”

“If none of these issues are resolved before the cold snap hits then higher stages of load shedding are almost certain.”

Article originally appeared here.