In July this year, when Eskom chief executive Andr\u00e9 de Ruyter wanted to show the president and his cabinet how bad things were, he took them to Tutuka power station near Standerton.<\/p>\n\n\n\n
Built in 1985, Tutuka is one of the newer and bigger power stations in Eskom\u2019s fleet. With a capacity of 3.5GW, it can theoretically provide enough electricity for Cape Town.<\/p>\n\n\n\n
But Tutuka is also a wreck. As of July, it was running less than 30% of the time, crime syndicates have stripped it of spares and fuel, and in contravention of its operating licence it continues to billow out pollutants over surrounding communities.<\/p>\n\n\n\n
\u201c[T]he President has been to power plants in Japan, he’s been to power plants in China, so he knows what a good plant looks like,\u201d De Rutyer told us when we interviewed him in July. \u201cAnd I think when he saw what Tutuka looked like, he understood that the Potemkin village that had be portrayed to him \u2013 a very pleasing picture was presented, you know, \u2018Sure, we can get to an EAF 75%\u2019 \u2013 but when he saw what the true state of the plant was, then I think he said \u2018okay, now we need some drastic interventions\u2019.\u201d<\/p>\n\n\n\n
EAF, or energy availability factor, is a measure of the time that a power plant is available to generate electricity. Planned maintenance (PCFL) eats into that time, as do unplanned breakdowns (UCLF).<\/p>\n\n\n
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In the 1990s, Eskom executives had set a target of \u201c90:7:3\u201d, which meant that powerplants should be available 90% of the time, with 7% allocated for maintenance and 3% for breakdowns. In 2013, that was replaced with the more modest 80:10:10 strategy. Now, we are now lucky if we achieve 60% energy availability factor (EAF).<\/p>\n\n\n\n
As part of his plan to turn around the economy, Ramaphosa wants Eskom\u2019s power stations to achieve an EAF of 70%. In July, Tutuka had an EAF of 29%.<\/p>\n\n\n\n
That puts Tutuka on par with solar and wind, which are generally able to generate power between 25% (solar) and 36% (wind) of the time. But while Eskom can predict with a high degree of certainty whether there will be sun in the Northern Cape tomorrow and wind in the Eastern Cape, Tutuka\u2019s breakdowns are far less certain.<\/p>\n\n\n\n
Days after Ramaphosa\u2019s trip to Tutuka in July, he announced a new emergency energy plan to \u201copen the floodgates to private investment”, in De Ruyter\u2019s words. The plan is to add at least 15GW of new power generation capacity to the grid, mostly from solar and wind, as soon as possible.<\/p>\n\n\n\n
But the plan also includes a second objective: \u201cImprove the performance of Eskom\u2019s existing power stations\u201d.The problem is that this has been the plan for years, and despite pouring billions into maintenance at stations like Tutuka, Eskom has been unable to reverse the coal fleet\u2019s stubborn decline.<\/p>\n\n\n\n
Blame it on coal<\/strong><\/p>\n\n\n\n With an EAF of 29% in July, Tutuka may be the worst performer in Eskom\u2019s fleet, but it is not an anomaly. As of July 2022, the coal fleet \u2013 touted as Eskom\u2019s reliable backbone \u2013 only achieved a year-to-date EAF of 55%.<\/span><\/p>\n\n\n\n The other chronic underperformers in 2022 include Hendrina (37%), Kusile (40%), Duvha (41%), Arnot (42%), Kendal (52%), Kriel (53%), Grootvlei (55%), Komati (60%), Camden (60%), Majuba (60%) and Matla (60%).<\/p>\n\n\n Most of these are part of Eskom\u2019s \u201cBig 10\u201d \u2013 colossal powerplants that were built during the 1970s and 1980s. And while the older ones are reaching their 50-year retirement date, others are supposed to run until 2040.<\/p>\n\n\n\n The breakdown of these powerplants has had a devastating impact on the country\u2019s energy supply. In just the past five years, the potential electricity output from the Big 10 has dropped by 33%.<\/p>\n\n\n\n This impact should have been cushioned by the arrival of the Medupi and Kusile plants, the so-called \u201cNew Build\u201d. But design flaws mean that the twin 4.8GW power plants will never reach that capacity and, once completed, will be about a decade overdue.<\/p>\n\n\n\n While Eskom often points to other factors \u2013 striking employees, a shortage of diesel \u2013 the reality is that we would not have loadshedding if the coal fleet was performing as Eskom told us it would. The question is why?<\/p>\n\n\n\n Part 1: The perfect storm<\/strong><\/p>\n\n\n\n In December last year, amaBhungane spoke to three maintenance and generation experts from Eskom to understand how things had gone so wrong. Each pointed to different issues, but all agreed that the seeds of our current crisis were planted twenty years ago \u2013 ironically around the time that Eskom was voted global power company of the year.<\/p>\n\n\n\n \u201cIt’s a very much a misconception that we were brilliant then. We looked good then, but the writing was already starting then,\u201d Brad Ross-Jones, chief physicist in Eskom\u2019s generation division, told us. \u201cDecisions made then [explain] where we are now.\u201d<\/p>\n\n\n\n In the early 2000s, Eskom started warning government that it needed to build new powerplants. \u201cEskom kept on going back to government to say \u2018Listen, it’s getting late. Our modelling is telling us by 2007, we will see [electricity] demand challenges,\u2019\u201d Logan Reddy, who is in charge of plant long-term planning, told us.<\/p>\n\n\n\n In 2003, government finally gave the go-ahead for Eskom to build Medupi and Kusile: at 4.8GW each, these were two of the largest coal-fired powerplants ever built.<\/p>\n\n\n\n \u201c[T]here was a view to say that was already too late,\u201d Reddy told us. [M]aybe Eskom will look back and say \u2018If we did that decision-making under less duress, there would have been some positive outcomes\u2019.\u201d<\/p>\n\n\n\n Paula Goatley, who now leads Eskom\u2019s Reliability Maintenance Recovery programme, was the power station manager at Majuba at the time. When government gave Eskom the go-ahead \u201cthere was … quite a mass exodus … having to be drawn from our current power station fleet to go into the New Build fleet, which somewhat caught us on the back foot… That was when we really started stretching people in the fleet.\u201d<\/p>\n\n\n\n Even as skilled people were leaving, the fleet of older powerplants in operation was growing as retired stations were being \u201cde-mothballed\u201d to address the growing energy crisis.<\/p>\n\n\n\n \u201c[T]hat wasn’t the common trend … we were definitely using very, very old plant with limited experience internationally to compare to,\u201d Reddy explained.<\/p>\n\n\n\n With funding constraints and the loss of skills, \u201cit really becomes that perfect storm,\u201d he said.<\/p>\n\n\n\n As predicted, in 2008 the first wave of loadshedding arrived.<\/p>\n\n\n\n A zero-sum game<\/strong><\/p>\n\n\n\n \u201cWhen we get to 2010 that became another pivotal period in the storyline. Because by then we realised the New Build was going to be late, we needed to make other plans to start compensating for the lack of capacity,\u201d Reddy explained.<\/p>\n\n\n\n Weary of a repeat of the 2008 loadshedding, government pushed Eskom to adopt a new policy ahead of the 2010 World Cup: Keep the lights on at all costs.<\/p>\n\n\n\n The energy availability factor (EAF) of a power plant is a zero-sum game. Breakdowns eat into the EAF but so do outages to carry out planned maintenance. When Eskom adopted the strategy of \u201ckeeping the lights on\u201d, planned maintenance on the coal fleet was inevitably sacrificed.<\/p>\n\n\n\n \u201c[W]e had already been starting to make compromises and not doing maintenance the way we were used to doing it,\u201d Reddy told us. \u201c[B]ack in the day you never had to run a unit for extended periods with a boiler tube leak … you shut it down [with] very little consequential damage … Post \u2018keeping the lights on\u2019 or once we adopted that, that all changed.\u201d<\/p>\n\n\n\n With time, \u201ckeeping the lights on\u201d changed to \u201cstop loadshedding\u201d.<\/p>\n\n\n\n Today, Reddy said, \u201cwe\u2019re constantly running [4 \u2013 6GW] of corrective maintenance that needs a unit to shut down but you just keep on running until it\u2019s convenient. The whole time you are causing damage. It\u2019s against all technical principles, it\u2019s against good engineering … We consciously said \u2018We will put the plant health \u2013 we will put the plant reliability \u2013 as a lower priority… And we’ve just over time eroded that even further and had to dig deeper and deeper and deeper.\u201d<\/p>\n\n\n\n Optimism bias<\/strong><\/p>\n\n\n\n With the benefit of hindsight, it seems obvious that Eskom would run out of runway.<\/p>\n\n\n\n Cutting maintenance on the coal fleet to keep the lights on is a bit like running an energy Ponzi scheme. In the short-term, the EAF figures look good, but Eskom is effectively taking away valuable maintenance time to keep the numbers up. It is unsustainable.<\/p>\n\n\n\n According to Goatley, \u201cyou will get your typical technocrats, your engineers,\u201d who insist that certain maintenance is non-negotiable \u2013 \u201cthey will be your naysayers, they will be prophets of doom\u201d.<\/p>\n\n\n\n \u201c[Y]ou would do a risk analysis on each project and say, \u2018we’ve only got X Rand and X space \u2013 we can’t afford to do A and B, do we do A or B, which one is better?\u2019\u201d Ross-Jones added.<\/p>\n\n\n\n In 2013, for instance, the generation division told Eskom\u2019s leadership it needed to push planned maintenance to at least 18% in order to reverse the declining EAF. It was told it could have 10%, provided it also reduce unplanned breakdowns to 10%.<\/p>\n\n\n\n This would become the 80:10:10 strategy, replacing the now unrealistic 90:7:3.<\/p>\n\n\n\n \u201cI think the sentiment was, \u2018this is all we can get, so let’s do our best with this and make it work.\u2019 … I think there was a belief that \u2018we\u2019re going to make this work because we have to make it work \u2013 we have no choice for the company or for the country,\u2019\u201d Ross-Jones told us. \u201cI certainly didn\u2019t expect it to get as bad as it did, I have to be honest.\u201d<\/p>\n\n\n\n In psychology this is call optimism bias, the unfounded belief that we, personally, are more likely to experience positive outcomes and avoid negative ones.<\/p>\n\n\n\n \u201c[W]ith the best of intentions, that\u2019s what we tried to do,\u201d Ross-Jones said of the 80:10:10 strategy. \u201cAnd we did it by grouping the stations into three groups and giving the good performing stations everything that they needed \u2013 well, as much as we could \u2013 the little ones, a little bit less and the worst performing ones basically saying we could only give you what you can save in terms of reducing the [unplanned breakdowns].<\/p>\n\n\n\n \u201c[B]ut I don’t believe we fully implemented that, we just didn’t have the money or the space to even do that.\u201d<\/p>\n\n\n\n Firefighting<\/strong><\/p>\n\n\n\n The decline of Eskom\u2019s coal fleet had been slow at first, but by 2015 the house was on fire.<\/p>\n\n\n\n In July, consultants from Dentons, who were appointed to diagnose the cause of renewed loadshedding, described the Eskom generation fleet as \u201caged\u201d, \u201crun exceptionally hard\u201d and \u201cunder-maintained\u201d.<\/p>\n\n\n\n \u201cHistorically low\u201d maintenance levels \u201ccoupled with the [\u2018keeping the lights on\u2019] strategy\u201d had caused a \u201csharp increase\u201d in breakdowns. The more \u201cproactive maintenance\u201d got delayed, the more \u201ccorrective maintenance\u201d was required.<\/p>\n\n\n\n By 2015, there was a 44% backlog of planned outages across the fleet, according to Dentons. Eskom was now in \u201cfirefighting mode\u201d, Mike Rossouw, the former chair of the Energy Intensive Users Group, told Eskom\u2019s board back in March 2015.<\/p>\n\n\n\n Rossouw had been brought in figure out how Eskom could reverse the decline of its coal fleet. It was possible, his report concluded, if Eskom reverted back to a strict maintenance schedule.<\/p>\n\n\n\n Smoke and mirrors<\/strong><\/p>\n\n\n\n In 2015, Eskom\u2019s new chief executive, Brian Molefe, had come in with a promise to end loadshedding. To achieve the turnaround he envisaged, Molefe and his CFO Anoj Singh turned to renowned global consulting firm McKinsey.<\/p>\n\n\n\n The point of the \u2018top consultants\u2019 programme \u2013 McKinsey\u2019s ludicrous at-risk contract \u2013 was primarily to help Eskom grow its revenue. The team of consultants would take a cut of any new revenue it brought in.<\/p>\n\n\n\n Read amaBhungane and Daily Maverick\u2019s investigative series: The McKinsey Dossier, Part 1: how McKinsey and Trillian ripped R1.6bn from Eskom<\/a><\/em><\/p>\n<\/blockquote>\n\n\n\n It is now well established that the contract was a farce, and that McKinsey and its local partner, Trillian, were paid R1.6-billion for theoretical savings that would largely never materialise.<\/p>\n\n\n\n A huge part of that fee \u2013 R206-million \u2013 was for improving the EAF at Majuba power station, the largest and newest of the Big 10 coal plants in Mpumalanga. The idea being that if Majuba could produce more power, Eskom could sell more power.<\/p>\n\n\n\n When McKinsey and Trillian arrived in February 2016, Majuba had an EAF of 63%. When the consultants left in June, the EAF was at 66%. But due to some creative baselining and forward projections, the consultants would claim they had delivered a 31% improvement.<\/p>\n\n\n\n In part, this was achieved by bringing in a team of engineers from Dubai and India who recommended technical changes to the way the plant operated, and consultants to target \u201cemployees\u2019 mindset and behaviour\u201d. But in part, the boost in the EAF at Majuba also came from the one thing Eskom had been advised to avoid: reducing planned maintenance.<\/p>\n\n\n\n In the short-term, cutting the planned outage on unit 6 at Majuba would save money, and without the downtime needed for planned maintenance, the EAF of the plant looked better on paper. McKinsey would claim a fee for both.<\/p>\n\n\n\n Despite agreeing to pay back the fees it earned, McKinsey still maintains that the work it did at Majuba was valuable: \u201cI am … personally very sad that we could not continue the work and [support] Eskom in significantly increasing the viability factor for the entire fleet,\u201d senior partner Alexander Weiss told the State Capture Commission in December 2020. \u201c[W]e were interrupted there.\u201d<\/p>\n\n\n\n We requested interviews with both Weiss and McKinsey\u2019s local office, but neither responded to our emails.<\/p>\n\n\n\n Eskom\u2019s own experts are sceptical about the value consultants like McKinsey can add: \u201cMcKinsey have come in on occasions and given advice and on paper one would find it difficult to fault. However, the reality of it is that a lot of it is very theoretical, not very practical,\u201d Goatley, the former Majuba power station manager, told us. \u201c[I]n my personal opinion … McKinsey … have never offered us a sustainable solution… we haven’t seen the payback materialise … I certainly believe if we had reaped the benefits of that they’d still be around.\u201d <\/strong><\/p>\n\n\n\n The tweeting engineer<\/strong><\/p>\n\n\n\n Ironically, the generation fleet had been improving without McKinsey\u2019s help. By July 2016, the EAF of the entire fleet had recovered to 75%.<\/p>\n\n\n\n The reasons for this are complex and stray into allegations of manipulation. In part, the EAF had likely improved in 2016 because Eskom had increased maintenance, culminating with a \u201cmaintenance festival\u201d in December 2015.<\/p>\n\n\n\n But the turnaround had also been driven by the new head of generation, Matshela Koko.<\/p>\n\n\n\n Under Koko, power station managers were subjected to a \u201cred card\u201d system. If a unit of a power station tripped or experienced a partial load loss, they would receive a written warning or a yellow card. If they accumulated 10 yellow cards, they would face suspension without pay or dismissal.<\/p>\n\n\n\n Between January 2016, when the red card system was implemented, and May 2017, when Koko was suspended, the EAF of the fleet improved from 71% to 78% while breakdowns dropped from 12% to 7%.<\/p>\n\n\n\n \u201cI really do believe Matshela Koko [is] a brilliant engineer,\u201d said Goatley, who came up through Eskom\u2019s training programme at the same time as Koko. \u201cUnfortunately, when he got to a leadership position … he ruled by fear … Stroke of a pen … red card, yellow card… you don\u2019t perform, you are suspended, three consecutive suspensions and you’re gone.\u201d<\/p>\n\n\n\n Goatley said that while this made him an effective \u201cchange agent\u201d and caused a spike in the EAF figures, it was not sustainable.<\/p>\n\n\n\n \u201c[H]e got rid of some people that were pivotal to this organisation, either directly or indirectly as many good leaders were not prepared to have their livelihood threatened on an impulse… One needs to question the ethics and sustainability of such an autocracy and also the collateral damage that was done owing to his management decisions.\u201d<\/p>\n\n\n\n Koko has previous said he was inspired by the leadership of Bruce Crooks, Eskom\u2019s head of generation who set the infamous \u201c90:7:3\u201d target in the 1990s (90% EAF, 7% planned maintenance, 3% unplanned breakdowns).<\/p>\n\n\n\n \u201cAt the time the actual numbers were [80:14:6]. The power station managers then were dumbfounded. This seemed like mission impossible, but Bruce Crooks was unreasonable. Every time they complained about the targets, he upped them a little more and those who could not tag along were forced to leave the organisation,\u201d Koko wrote in an opinion piece in 2018.<\/p>\n\n\n\n At Koko\u2019s instruction, planned maintenance \u2013 which had risen to 13% in 2015 \u2013 was cut back to 10% in 2017 in line with the 80:10:10 strategy.<\/p>\n\n\n\n \u201c[W]e came to the conclusion that the supply chain of Eskom and the country cannot support [13%],\u201d he told us, adding that in his view maintenance of \u201cmore than 10% is not sustainable\u201d to Eskom\u2019s bottom line.<\/p>\n\n\n\n Koko remains defiant about his time at Eskom. \u201cThere’s no democracy in running a fleet of 50 000MW,\u201d he told us last week. \u201cI will not accept a power station manager \u2013 who is trained, who is competent, who knows what to do \u2013 tripping a unit.\u201d<\/p>\n\n\n\n To put that into perspective, 45 out of Eskom\u2019s 90 units tripped in a single week this month. Asked whether he thought his management style had contributed to an exodus of skilled people, Koko said: \u201cWhen I was in charge, some left but we still had the best operational improvements since 2001.\u201d<\/p>\n\n\n\n He added: \u201cWe lost people whose powerplants were not performing.\u201d<\/p>\n\n\n\n The problem, according to Goatley, was that power station managers would keep units running, even as risks or small faults emerged.<\/p>\n\n\n\n \u201c[Y]ou put the fear of God into people, they’re keeping the unit on load despite safety, despite everything they’ve learned,\u201d she said. \u201c[B]eing a power station manager myself … there has to be a certain element of fear… But that’s not sustainable, it’s not sustainable to only run by fear. You have to invest in your people, you have to give them credibility … and unfortunately in my opinion … Matshela Koko didn’t do that.\u201d<\/p>\n\n\n\n \u201cAt certain power stations the numbers, in our view, don’t quite add up,\u201d De Ruyter told us. \u201c[T]here’s a suggestion there that plants were run harder, that different classifications were used to avoid the dreaded red card that Mr. Koko deployed.\u201d<\/p>\n\n\n\n Eskom\u2019s audit and forensic division reportedly produced a memo outlining various theories of how this manipulation may have occurred. But Eskom leadership has consistently refused to provide a concrete answer in public.<\/p>\n\n\n\n \u201cSo, the Tweeting Engineer reckons that he fixed Eskom, but if you fix something, then surely it should be sustainable?\u201d De Ruyter said. \u201cAnd if you look at the precipitous decline in EAF after Mr. Koko left … then you’ve got to ask the question: if things were done so well and so properly, how come when he left the wheels came off?\u201d<\/p>\n\n\n\n The surgeon\u2019s blade<\/strong><\/p>\n\n\n\n Although the EAF had improved in 2016 and 2017, Eskom had other problems. With a bloated wage bill and major cost-overruns at Medupi and Kusile, it needed to cut its budget.<\/p>\n\n\n\n In 2009, the energy regulator introduced the first multi-year price determination (MYPD) to force Eskom to justify the tariffs it charged to consumers. \u201c[E]ffectively from the first MYPD we never got the tariffs that we told the country or told the regulator that we needed,\u201d Reddy told us.<\/p>\n\n\n\n After McKinsey was shown the door in 2016, consultants from PwC had stepped in. The PwC \u2018capital scrubbing\u2019 project, which began in February 2017, was more mercenary in its aim: to cut R65-billion from the capex budget.<\/p>\n\n\n\n \u201c[T]hat was … against a baseline of an extremely … lean capital programme anyway,\u201d Reddy said. \u201c[W]e were already on the backfoot … based on the tariffs that were given to us. And then we were asked to scrub over and above that.\u201d<\/p>\n\n\n\n Nothing was sacred: R7.5-billion for the long-promised fabric filter plant at Tutuka to bring emissions within legal limits, R3-billion to expand the grid for renewables, R1.4-billion to build a new ash dam at Kriel \u2013 PwC recommended that each project be scaled back or cut entirely.<\/p>\n\n\n\n In one example from May 2017, PwC told Eskom: \u201cThe switchgear [at Tutuka] has a non-compliant arc flash rating, which indicates that the equipment is unsafe to use due to risk [of] arc flashing which can cause harm to personnel.\u201d<\/p>\n\n\n\n To replace the switchgear would cost R1-billion. Instead, PwC recommended that Tutuka\u2019s staff implement an \u201c11-point safety plan\u201d when operating the old, unsafe switchgear. For identifying this R1-billion saving, PwC would be entitled to claim a R75-million success fee.<\/p>\n\n\n\n![\"\"](\"https:\/\/amabhungane.org\/wp-content\/uploads\/2022\/10\/GRAPHIC-2_worst-offenders_co-pubs_updated.png\")
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