IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v14y2022i16p9987-d886625.html
   My bibliography  Save this article

Probing the Financial Sustainability of Eskom’s Open Cycle Gas Turbines (OCGTs) Utilisation (2018–2021)

Author

Listed:
  • Wandisile Pram

    (Department of Geography, Environmental Management and Energy Studies, University of Johannesburg, Auckland Park Campus, Johannesburg 2006, South Africa)

  • Njabulo Kambule

    (Department of Geography, Environmental Management and Energy Studies, University of Johannesburg, Auckland Park Campus, Johannesburg 2006, South Africa)

  • Omoseni Adepoju

    (Department of Management and Accounting, Faculty of Management and Social Sciences, Lead City University Ibadan, Ibadan 200255, Nigeria)

Abstract

Contributing to achieving sustainability in South Africa’s energy sector, this study probes financial sustainability and its relationship to the environmental sustainability of Eskom. This is because, over the past three financial years (FY2018–2019 to FY2020–2021) of Eskom’s generating plants’ performance, the energy availability factor (EAF) has taken a deep dive, reaching an extremely low generation availability year-end performance of 64.2%, translating to approximately an average of 29,800 MW available generation capacity out of a nominal generation capacity of 46,466 MW in FY2020–2021. Therefore, the study employed a quantitative research methodology, where the relevant financial records were analysed, and the necessary energy calculations made using descriptive analysis in Microsoft Excel. The findings show that the volumes (GWh) produced by the OCGTs during this period far exceed the regulatory approved volumes, thus attracting substantial costs, amounting to ZAR 25.9 bn instead of ZAR 8.9 bn, that could have been spent on the OCGTs if the level of efficiency achieved in FY2016–2017 and FY2017–2018 was maintained. The analysis also revealed that the OCGTs’ long-term financial and environmental sustainability could be achieved through switching from diesel to natural gas, thus resulting in lower fuel costs and lower emissions. Further, potential savings of approximately ZAR 27 bn (excluding capital expenditure) at a 10% load factor can be realised over a ten-year period when the natural gas price is sitting at ZAR 85/GJ (minimum). Finally, in order to attain financial and environmental sustainability, it is recommended that both Eskom’s and the independent power producers’ (IPPs) OCGTs must switch fuel from diesel to natural gas and be run at a 10% load factor, allowing the OCGTs to be run as mid-merit generators.

Suggested Citation

  • Wandisile Pram & Njabulo Kambule & Omoseni Adepoju, 2022. "Probing the Financial Sustainability of Eskom’s Open Cycle Gas Turbines (OCGTs) Utilisation (2018–2021)," Sustainability, MDPI, vol. 14(16), pages 1-16, August.
  • Handle: RePEc:gam:jsusta:v:14:y:2022:i:16:p:9987-:d:886625
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/14/16/9987/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/2071-1050/14/16/9987/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Fernández, Mauricio & Muñoz, Francisco D. & Moreno, Rodrigo, 2020. "Analysis of imperfect competition in natural gas supply contracts for electric power generation: A closed-loop approach," Energy Economics, Elsevier, vol. 87(C).
    2. Gregory, Julian, 2020. "Governance, scale, scope: A review of six South African electricity generation infrastructure megaprojects," Utilities Policy, Elsevier, vol. 66(C).
    3. Kim, Eun-Hwan & Park, Yong-Gi & Roh, Jae Hyung, 2019. "Competitiveness of open-cycle gas turbine and its potential in the future Korean electricity market with high renewable energy mix," Energy Policy, Elsevier, vol. 129(C), pages 1056-1069.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Seong Won Moon & Tong Seop Kim, 2020. "Advanced Gas Turbine Control Logic Using Black Box Models for Enhancing Operational Flexibility and Stability," Energies, MDPI, vol. 13(21), pages 1-23, October.
    2. Muñoz, Francisco D. & Suazo-Martínez, Carlos & Pereira, Eduardo & Moreno, Rodrigo, 2021. "Electricity market design for low-carbon and flexible systems: Room for improvement in Chile," Energy Policy, Elsevier, vol. 148(PB).
    3. Mohd Alsaleh & Azeem Oluwaseyi Zubair & Abdul Samad Abdul‐Rahim, 2020. "The impact of global competitiveness on the growth of bioenergy industry in EU‐28 region," Sustainable Development, John Wiley & Sons, Ltd., vol. 28(5), pages 1304-1316, September.
    4. Józsa, Viktor & Malý, Milan & Füzesi, Dániel & Rácz, Erika & Kardos, Réka Anna & Jedelský, Jan, 2023. "Schlieren analysis of non-MILD distributed combustion in a mixture temperature-controlled burner," Energy, Elsevier, vol. 273(C).
    5. Antonio Andreoni & Kenneth Creamer & Mariana Mazzucato & Grové Steyn, 2022. "How can South Africa advance a new energy paradigm? A mission-oriented approach to megaprojects [‘The Political Economy of Industrial Policy’]," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 38(2), pages 237-259.
    6. Insu Do & Siyoung Lee & Gab-Su Seo & Sungsoo Kim, 2023. "An Analysis of the Effects of Renewable Energy Intermittency on the 2030 Korean Electricity Market," Energies, MDPI, vol. 16(10), pages 1-19, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:14:y:2022:i:16:p:9987-:d:886625. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.