Africa’s first major coal-fired power unit to implement flue gas desulfurization (FGD) has been completed nearly a year earlier than expected.
South Africa’s state-owned utility Eskom brought Kusile 1, an 800-MW unit, online on August 30—much earlier than its scheduled in-service date of July 2018. The unit is the first of six to start commercial operations at the massive 4.8-GW Kusile power station (Figure 3), which is under construction in South Africa’s coal-rich Mpumalanga province.
The project is one of two giant projects with supercritical boilers that Eskom embarked upon in 2007 as a power shortage stemming from decades of inadequate planning and mismanagement crippled its economy (for more, see “Whistling in the Dark: Inside South Africa’s Power Crisis,” in POWER’s November 2008 issue). However, only two units at the second plant, the 4.8-GW Medupi Power Station in Lephalale, Limpopo—a project that lacks an FGD system but is otherwise similar to Kusile—have come online so far, and a third unit was recently synchronized to the grid. While Eskom is counting on putting both plants online by 2022, the projects have been stricken by an assortment of hurdles—including poor planning, labor strikes, and funding woes—that resulted in protracted delays and ballooning costs.
The first unit at Medupi (Unit 6) came online in 2015, though an early 2013 date had been targeted. Unit 5 started commercial operations this April, just months before Kusile 1 was completed. A February-published report assessing the delays, which was carried out by global law firm Dentons (and commissioned by Eskom, though the utility only released a redacted version to deal with media conjecture), says that in its haste to get the projects built to alleviate power shortages and its own revenue troubles, Eskom failed to undertake or properly execute a number of pre-construction activities, neglecting even to ensure it had the skillset needed to build the plants.
“No proper feasibility study was conducted to ensure that all technical, commercial and environmental hurdles were identified and mitigated,” the report says. It adds: “Some of the issues arising during the construction phase should have been identified during the feasibility stage and dealt with prior to construction.” Meanwhile, the engineering design before contract bidding also was not “adequately done, which led to an under estimation of the project costs and inappropriate designs being utilized,” it says.
Generally, it otherwise points to poor upfront planning, faulty project integration management, and questionable quality control. The report also concludes that Eskom erred by undertaking both projects on a multi-contract basis as opposed to structuring them on a minimum number of large contracts. “This decision coupled with the shortage of the appropriate skills in Eskom to manage such a large complex project contribute greatly to the new build projects being over budget and behind schedule,” it says.
According to Eskom Interim Group Chief Executive Johnny Dladla, the lessons learned at Medupi were integrated into construction of Kusile. “This achievement shows that we have learned lessons from the past and from other New Build projects, hence we managed to achieve this milestone ahead of revised schedule,” he said in a statement to POWER.
Owing to a set of longstanding issues, it remains to be seen whether Eskom will be able to sustain this new pace of construction—or even keep the plants designed with 50-year lifetimes operational.
Of significant concern is Eskom’s financial health. As the utility rushed to vastly expand capacity in the aftermath of the mid-2000s power crunch, it tied up significant debt capital, leaving little to support activities to bulk up revenue. Meanwhile, repeated petitions to the nation’s energy regulator to increase electricity prices have been denied until recently. Nonetheless, Eskom has said increases are inadequate, and the utility still struggles to cover its operating costs.
In the meantime, Eskom has been dealing with debilitating shortages of coal. In 2013, a surge in coal prices stemming from a global shortage forced Eskom to boost use of its diesel-consuming open cycle gas turbines to manage peak demand. Energy costs continued to cut into the utility’s revenues so deeply, it barely saw operating profits in 2015. Getting enough coal to power its coal plants—which comprise 90% of its total fleet—will continue to be one of “the most serious problems” facing Eskom and electricity security in South Africa, the utility acknowledged.
—Sonal Patel is a POWER associate editor