Publications
Partners
Following on from his brilliant analysis, which showed why President Jacob Zuma is wrong about who to blame for the mess at Eskom, Elias Phaahla from the Helen Suzman Foundation looks at the progress of Medupi power station in the Limpopo Province. Progress on a project that had a set target of four years but currently sits at seven and is only expected to be completed in 2019 – but unlikely. And with delays come increased costs, which mean taxpayers will be forking out more for what can only be termed ‘incompetence’ – latest estimates show costs have almost doubled estimates to R154bn. And with Eskom and government seeing Medupi as the project to turn power fortunes around, the future may be filled with blackouts and disappointment. – Stuart Lowman
By Elias Phaahla*
The construction of Medupi power station was first commissioned in 2007 to remedy Eskom’s electricity capacity, which had started exhibiting signs of failure to meet demand. It is the fourth dry-cooled, baseload station built in 20 years by Eskom after the Kendal, Majuba and Matimba power stations.
Eskom ranked the Waterberg Coalfields and the Lephalele area in the vicinity of the existing Matimba Power station as the most favourable option for the establishment of a new coal-fired power station. These included, amongst others, land availability in close proximity to the primary coal source and, competitive coal process [1].
The project will comprise 6 coal-fired generating units and each one will generate gross nominal capacity of 800MW (megawatts) of electricity. Collectively all the six units of Medupi should be able to produce 4 800MW of power upon completion in 2019. Once completed, the power station will be the fourth largest coal plant in the southern hemisphere and it will also be the biggest dry-cooled power station in the world. In January 2015, Eskom’s then CEO, Thediso Matona, stated that to be able to supply electricity constantly, the utility must be able to generate infrastructure to add at least 3 600MW of capacity to its 42 000MW [2].
Therefore Medupi has been designed to fill a major energy hole. Upon completion it has the potential to bring big relief to industry.
What adds to the uniqueness of the Medupi project is the fact that it is being built backwards – traditionally Eskom has always started building Unit 1 and ended with Unit 6. This new approach is the result of the rock conglomeration on the southern side, which is excavated and reused as the engineering fill on the northern side.
Medupi timeline
This section provides a timeline to milestones achieved in Medupi since the project was given the go-ahead in 2007.
• May 2007: Medupi terracing work done
• 14 August 2007: The official sod-turning ceremony is held at the construction site
• 18 July 2008: First structural concrete poured on site
• 21 November 2008: First three air-cooled condenser columns completed
• August 2009: Unit 6 boiler lift shaft completed
• 09 February 2010: First structural steel erection on Unit 6 boiler
• 12 August 2010: First chimney completed at a height of 220m
• 23 June 2010: Unit 6 generator stator in position
• 07 February 2011: Unit 6 turbine table handed over
• 08 September 2011: The 10 000 ton coal silo complete
• 21 November 2011: Auxiliary boiler complete
• 10 February 2012: Direct-current supplies energised
• 27 November 2012: The project commenced the first 24-hour performance testing to run at maximum capacity for the delivery of coal to Medupi from Grootegeluk mine
• September 2013: The Unit 4 generator motor was threaded into the stator
• September 2013: The wet run of the submerged scraper conveyer was successfully completed. This system removes the ash from the bottom of the boiler, another essential step in getting the boiler ready for first fire
• January 2014: The boiler separators which were initially installed for Unit 6 have successfully been cut out. The new replacement separators will now be installed. The purpose of the separators is to separate the steam and steam water droplets
• February 2014: Following close co-operation between Team Medupi and the contractors all boiler issues have been resolved, which allowed for the installation of the Boiler Frame for Unit 1 commence
• 10 February 2014: Back energising of Unit 6 generator and Unit Transformers via the distributed control system
• 17 October 2014: The first oil fire of Unit 6 was ignited and smoke emerged from the chimney. This marked the first step towards synchronisation. Synchronisation means the process whereby the generator in Unit is electrically connected to the national grid.
• 02 March 2015: Eskom produces first power and it is synchronised into the national grid
Snail-paced progress
“It is the bones underneath and in the vicinity. Some of the graves were destroyed there. The belief systems of some people will tell you that this Medupi dream of yours will never happen. It will be another 10 years”. – CRL Rights Commission, 2015 [3]
The completion of Medupi is taking longer than anticipated. At the time of its commission Eskom estimated the total duration of the project to take no longer than 4 years. Over 7 years later, the project is nowhere near completion and up to so far it has only been able to complete one unit with 794MW capacity [4].
While the news of this milestone was received as a welcome relief to the current electricity crisis, it is worth noting that it only represents one sixth of the total amount of electricity that Medupi intends to generate upon completion. It represents only 1.8% of Eskom’s current capacity of 49 000MW.
The deadline for power from the Medupi power station has been postponed three times since 2013.
— SAfm news (@SAfmnews) July 27, 2015
Escalating costs
When the project was first given the go ahead, it was estimated by then Eskom CEO Jacob Maroga that the project would cost R69bn. The latest estimates show that costs have risen massively to R154bn.
Apart from construction costs, there is also the increasing cost of coal contracts that have already kicked in. Exxaro, one of the contractors in Medupi disclosed that this amounted to R1.6bn in 2013 [5]. According to Eskom’s integrated report for the six months ending September 2014, debt securities and borrowings totalled R265bn, up from R182.5bn in March 2012.
Conclusions
South Africa might have to get used to power shortages until Eskom can generate enough electricity to meet demand. At the moment this shortage is hurting industry and Medupi power station was intended to turn the fortunes in Eskom. However, completion is nowhere in sight. This is despite a major milestone achieved by Medupi in March this year, which saw the synchronisation of one of its units into the national grid. Sadly the insignificant capacity produced in this one unit has not helped to alleviate the current power challenges confronting Eskom.
This is grave indeed, as Eskom’s failings have come at a very heavy cost to the economy. The situation, since it is refusing to abate, means that South Africa may have to make do with the little reserves currently available at its disposal. It would be sensible to assume that more rationing may be on the cards, as a result of this situation.
The disheartening reality about the Medupi debacle is that it comes at a heavy cost to the tax payer. This is where it gets challenging too as resources intended to speed up construction have yet to yield fruit.
Double the time of construction means double the cost of the project and more. Medupi can certainly attest to this. This means that while 2019 has been set as the revised completion date, industry might simply have to brace for the possibility of yet another disappointment.
*Elias Phaahla, Researcher at the Helen Suzman Foundation. He can be contacted at elias@hsf.org.za. The article first appeared on the Helen Suzman Foundation website.
* For more in-depth business news, visit biznews.com or simply sign up for the daily newsletter.
