Envisioning the global energy transition there is a credibility gap. Expert modeling says that trillions of dollars in investment are needed every year. $ 4 trillion per annum globally and $ 1 trillion for the Emerging Market and Low-income world ex-China is a substantial but feasible share of global GDP. But why, given the track record to date, would low-income and developing countries believe that funding and support will be forthcoming?
Brilliantly researched and written. Having lived in SA and worked with ESKOM and Koeberg specifically throughout the 80‘s through the early 2000‘s, I have experienced firsthand the incredible work done by the very well educated and experienced personnel within ESKOM and their commitment to lead a world-class utility. Sad days to see what has happened since. Maybe there is still hope for a turnaround - see https://m.youtube.com/watch?v=be4vChJ3E1s
Adam, you have done your homework well! Having worked with both ESKOM and NERSA as an external advising basis during the 2000-2007 period you have brought back of flood of those memories with your piece. I hope you had the opportunity to meet with professor Anton Eberhard who has been working in power sector reform for the past 30 years or longer during your visit to UCT.
In my experience, ESKOM had the technical skill and personnel to make change happen. What they and the unions and government lacked was the ability and desire to change as you clearly articulated. ESKOM at its core was and is culturally and monopolist. Monopolists block entry and change for fear of loss of status or their jobs! The same is true with the unions. The fear of loss meant they’d hold on to coal for as long as humanly possible because of perceived job losses and social dislocation and encouraged by the unions, and because ESKOM lacked any imagination on operating any other kind of generating technology.
Add into it, my perception that if they allowed new generation to interconnect they would now have to think about the transmission system as a truly meshed network with power flows that went against their entire experience.
As somebody who has worked in power systems for more than 25 years, the ESKOM system operates radially like a hub and spoke network with the hub in the NE centered on the Mpumalanga coal fields and radiating out to from there with the longest lines reaching the western cape where Koeberg was located. When Koeberg went down, it was difficult to support power transfers due to long lines, lack of voltage support, and in reality was single point mode of failure if any of the transmission line tripped or were taken out of service.
Your mention of Zuma’s boondoggle on 9 GW of nuclear had its start in Eskom’s fixation with pebble bed nuclear technology that 25 years later still has not seen the light of day, and insistence on my 7 years of discussions was that it was just around the corner. We see the same today with modular reactor technology in the US. But given the fixation with “6 packs” or 6 600 MW unit coal plants and pebble bed nuclear, the imagination and innovation simply left the collective mind.
And while South Africa did not have meaningful access to natural gas, for years there was the possibility of gas E&P of the Atlantic coast off Angola and Namibia or Mozambique on the Indian Ocean side. Clearly nothing came of that and this the huge boom in technical improvements in efficiency and cost savings seen in gas turbine technology that started 20 years ago have passed the country by.
Finally, and maybe something for further exploration, is the outsize role that ESKOM played in the Southern Africa Power Pool (SAPP). You mention the imports from Namibia and Zimbabwe only in passing. At one time this was one of the more sophisticated power pooling arrangements in the world. Now it has become moribund. ESKOM had the coal, other countries had the hydro. There was once cooperation in operations and planning. And there were big dreams, that while nice on paper, would never be realized but this also stymied thinking beyond what was in front of ESKOM. They already had access to Cahora Bassa in Mozambique, though the colonial past surrounding it is not pleasant, and dreamed of tapping hydro potential in Angola (all they have gotten was good Cuban food, music and culture instead). Such projects are overly grandiose and avoid the hard work of manage power system planning, operation and control and doing what is feasible and needed in the short to medium term.
All this being said, South Africa and ESKOM need fresh, innovative thinking, toss out the old ideas, and begin thinking in the near term with no regrets as the point of departure for a strategy to get out of this mess. But the necessary condition is to change the political and corporate culture of ESKOM and the unions and get them to see their fear of loss will only beget further loss.
This article shines a light on the reality that ambitious programs to address environmental problems, such as the IRA here in the US, can be blunted into a rubber sword as funds are siphoned off into politically and financially well positioned sectors. Applying the lessons outlined here, I can’t help but wonder what will be the ultimate impact of the much touted IRA here in the US. It is targeted toward so many sectors: infrastructure, healthcare, environment, etc. How much of that money will actually be transformative in addressing climate change and how much will go into lining the pockets of corporate and financial elites--is an open question. Corruption doesn’t care about borders. Checks and balances have become unchecked and unbalanced.
I have recently read the book When McKinsey comes to town, an expose of the activities of McKinsey consulting in various areas. There is a chapter there on its activities in South Africa and their electricity grid. You have probably read this book, but I am curious as to how McKinsey as a consultant to ESKOM and the department of Energy affected this crisis.
To describe a perfect storm requires the type of overview that Tooze offers, but there is more to add.
1. The erosion of institutional memory and skills began with the adoption of the Employment Equity Act of 1997 when Eskom management glass-ceilinged those who were of the wrong shade. What was needed was intensive engineering and technical training of the lateral entrants, but that did not happen.
2. Erosion is an important concept. Once the coal value chain was opened, as it had to be, quality control had to be maintained, but was not. So coal of incorrect composition was fed into the furnaces with consequent erosion of the feed mechanisms and shortened maintenance cycles. Once ignored, failure had to follow.
3. As a component of the public sector, Eskom remuneration tracked upwards as the unions bargained their way to the wage stratosphere. I refer to this a 'corporatism of a special type.' The average SA wage in PPP$ is the same as the UK. (Unemployment is catastrophic - the two are linked). If the wage bill balloons, funding for maintenance goes down ...
4. Tooze quotes Lawrence on the cost of electricity paid by bulk users. There is a fundamental error in his comparison. Yes, a bulk user must pay a lower rate; BUT ... the bulk user also bears the cost of taking the 44kV feed-in and stepping this down to the required voltage, and paying for and maintaining the transformer and switchgear to do this. Apples and apples please. Add in the huge aluminium products industry, and I suspect that there is a net benefit (environmental externalities excluded).
5. Who pays for the opening of the coal value chain? Not the truckers; not the junior miners. This must also be factored in.
6. The Kusile/Majuba corruption pre-dates the Zuma era, and began with the ANC Chancellor House-Hitachi deal of 2006. Hitachi was forced to settle USD 19 millions with the US SEC under the FCPA charges.
7. The McRae story is interesting. The push to electrify informal settlements began days after the 1990 De Klerk speech when Eskom received the go-ahead to electrify the peri-urban sprawl. In so doing apartheid spatial separation was neatly strengthened. To paraphrase Lenin's famous dictum: Electricity plus apartheid is still apartheid.
Beautiful, factually correct and eloquently written article, Adam. Being one the first african women in SA to build solar plants on an EPC level - I concur and must say i am really impressed with the detail and writing style in which you illustrate in a layman style, yet data driven approach the complexities of the energy crisis in SA. Looking forward to reading more from you, Adam!
Brilliantly researched and written. Having lived in SA and worked with ESKOM and Koeberg specifically throughout the 80‘s through the early 2000‘s, I have experienced firsthand the incredible work done by the very well educated and experienced personnel within ESKOM and their commitment to lead a world-class utility. Sad days to see what has happened since. Maybe there is still hope for a turnaround - see https://m.youtube.com/watch?v=be4vChJ3E1s
Adam, you have done your homework well! Having worked with both ESKOM and NERSA as an external advising basis during the 2000-2007 period you have brought back of flood of those memories with your piece. I hope you had the opportunity to meet with professor Anton Eberhard who has been working in power sector reform for the past 30 years or longer during your visit to UCT.
In my experience, ESKOM had the technical skill and personnel to make change happen. What they and the unions and government lacked was the ability and desire to change as you clearly articulated. ESKOM at its core was and is culturally and monopolist. Monopolists block entry and change for fear of loss of status or their jobs! The same is true with the unions. The fear of loss meant they’d hold on to coal for as long as humanly possible because of perceived job losses and social dislocation and encouraged by the unions, and because ESKOM lacked any imagination on operating any other kind of generating technology.
Add into it, my perception that if they allowed new generation to interconnect they would now have to think about the transmission system as a truly meshed network with power flows that went against their entire experience.
As somebody who has worked in power systems for more than 25 years, the ESKOM system operates radially like a hub and spoke network with the hub in the NE centered on the Mpumalanga coal fields and radiating out to from there with the longest lines reaching the western cape where Koeberg was located. When Koeberg went down, it was difficult to support power transfers due to long lines, lack of voltage support, and in reality was single point mode of failure if any of the transmission line tripped or were taken out of service.
Your mention of Zuma’s boondoggle on 9 GW of nuclear had its start in Eskom’s fixation with pebble bed nuclear technology that 25 years later still has not seen the light of day, and insistence on my 7 years of discussions was that it was just around the corner. We see the same today with modular reactor technology in the US. But given the fixation with “6 packs” or 6 600 MW unit coal plants and pebble bed nuclear, the imagination and innovation simply left the collective mind.
And while South Africa did not have meaningful access to natural gas, for years there was the possibility of gas E&P of the Atlantic coast off Angola and Namibia or Mozambique on the Indian Ocean side. Clearly nothing came of that and this the huge boom in technical improvements in efficiency and cost savings seen in gas turbine technology that started 20 years ago have passed the country by.
Finally, and maybe something for further exploration, is the outsize role that ESKOM played in the Southern Africa Power Pool (SAPP). You mention the imports from Namibia and Zimbabwe only in passing. At one time this was one of the more sophisticated power pooling arrangements in the world. Now it has become moribund. ESKOM had the coal, other countries had the hydro. There was once cooperation in operations and planning. And there were big dreams, that while nice on paper, would never be realized but this also stymied thinking beyond what was in front of ESKOM. They already had access to Cahora Bassa in Mozambique, though the colonial past surrounding it is not pleasant, and dreamed of tapping hydro potential in Angola (all they have gotten was good Cuban food, music and culture instead). Such projects are overly grandiose and avoid the hard work of manage power system planning, operation and control and doing what is feasible and needed in the short to medium term.
All this being said, South Africa and ESKOM need fresh, innovative thinking, toss out the old ideas, and begin thinking in the near term with no regrets as the point of departure for a strategy to get out of this mess. But the necessary condition is to change the political and corporate culture of ESKOM and the unions and get them to see their fear of loss will only beget further loss.
Thanks Mr Tooze. Truly appreciate your work. Especially the wide range of topics. Keep them coming
Have a great rest of the weekend
This article shines a light on the reality that ambitious programs to address environmental problems, such as the IRA here in the US, can be blunted into a rubber sword as funds are siphoned off into politically and financially well positioned sectors. Applying the lessons outlined here, I can’t help but wonder what will be the ultimate impact of the much touted IRA here in the US. It is targeted toward so many sectors: infrastructure, healthcare, environment, etc. How much of that money will actually be transformative in addressing climate change and how much will go into lining the pockets of corporate and financial elites--is an open question. Corruption doesn’t care about borders. Checks and balances have become unchecked and unbalanced.
Thanks for a very useful briefing. State capacity, as impressively illustrated here, is the critical topic as we work to overcome the centrifugal forces of decline in world societies and economies. This is a thoughtful essay on the topic: https://www.niskanencenter.org/state-capacity-what-is-it-how-we-lost-it-and-how-to-get-it-back/
I have recently read the book When McKinsey comes to town, an expose of the activities of McKinsey consulting in various areas. There is a chapter there on its activities in South Africa and their electricity grid. You have probably read this book, but I am curious as to how McKinsey as a consultant to ESKOM and the department of Energy affected this crisis.
Given that you knew very little about South Africa, why do you think you were flown out at great expense to pontificate about its problems?
To describe a perfect storm requires the type of overview that Tooze offers, but there is more to add.
1. The erosion of institutional memory and skills began with the adoption of the Employment Equity Act of 1997 when Eskom management glass-ceilinged those who were of the wrong shade. What was needed was intensive engineering and technical training of the lateral entrants, but that did not happen.
2. Erosion is an important concept. Once the coal value chain was opened, as it had to be, quality control had to be maintained, but was not. So coal of incorrect composition was fed into the furnaces with consequent erosion of the feed mechanisms and shortened maintenance cycles. Once ignored, failure had to follow.
3. As a component of the public sector, Eskom remuneration tracked upwards as the unions bargained their way to the wage stratosphere. I refer to this a 'corporatism of a special type.' The average SA wage in PPP$ is the same as the UK. (Unemployment is catastrophic - the two are linked). If the wage bill balloons, funding for maintenance goes down ...
4. Tooze quotes Lawrence on the cost of electricity paid by bulk users. There is a fundamental error in his comparison. Yes, a bulk user must pay a lower rate; BUT ... the bulk user also bears the cost of taking the 44kV feed-in and stepping this down to the required voltage, and paying for and maintaining the transformer and switchgear to do this. Apples and apples please. Add in the huge aluminium products industry, and I suspect that there is a net benefit (environmental externalities excluded).
5. Who pays for the opening of the coal value chain? Not the truckers; not the junior miners. This must also be factored in.
6. The Kusile/Majuba corruption pre-dates the Zuma era, and began with the ANC Chancellor House-Hitachi deal of 2006. Hitachi was forced to settle USD 19 millions with the US SEC under the FCPA charges.
7. The McRae story is interesting. The push to electrify informal settlements began days after the 1990 De Klerk speech when Eskom received the go-ahead to electrify the peri-urban sprawl. In so doing apartheid spatial separation was neatly strengthened. To paraphrase Lenin's famous dictum: Electricity plus apartheid is still apartheid.
Beautiful, factually correct and eloquently written article, Adam. Being one the first african women in SA to build solar plants on an EPC level - I concur and must say i am really impressed with the detail and writing style in which you illustrate in a layman style, yet data driven approach the complexities of the energy crisis in SA. Looking forward to reading more from you, Adam!