Even Elon Musk cannot save Eskom — but private power will save South Africa

Not even Tesla owner Elon Musk could bring South Africa’s troubled power utility back from the brink and fix load-shedding.

That is according to Michael Jordaan, founder of venture capital fund Montegray Capital and former FNB CEO.

Jordaan was recently interviewed on PSG’s Think Big series and asked for his opinion on solving Eskom’s problems.

Jordaan said he felt that there was no adequate sense of crisis within the government, and that he would never put up his hand for the job of Eskom CEO.

“You have to be crazy to do that job,” Jordaan said, explaining that the only way someone could be successful in the role is if they were able to choose the best team and had the support of their shareholders.

“You can put Elon Musk in there, and you won’t succeed,” he stated.

Following his interview, Jordaan seemed to jokingly appeal to Musk on Twitter to “prove him wrong”.

Many South Africans have begged the billionaire businessman on Twitter to use his energy company, Tesla, to bail the country out of its power crisis.

While the suggestions have appeared to be primarily in jest, they are often laced with a hint of genuine hope.

Elon Musk, Tesla and Twitter CEO. Photographer: Justin Chin/Bloomberg

Tesla has enjoyed great success in employing its electric vehicle battery storage technology to develop power systems for other applications.

That includes energy storage like Tesla Powerwall for homes and businesses and Megapack for utility-scale energy storage, both of which are for sale in South Africa.

It also sells solar roofing and solar panels.

The use of battery storage could be beneficial when it comes to making the most of South Africa’s renewable power capacity.

Plenty of solar and wind power produced by private generators during the day is wasted, as it is generated during periods of low demand.

Eskom’s data portal shows that the maximum renewable output of wind and solar in South Africa exceeded 5,000MW in 2022.

But the utility’s evening peak demand statistics show renewables’ contribution peaking at less than 2,000MW under favourable conditions during that time.

Being able to dispatch some of the excess electricity generated during the day during peak demand periods could contribute to reducing the need for load-shedding.

For example, each of Tesla’s Megapack batteries can store 3.9MWh of capacity and around half the output, costing around $2.5 million (R43.22 million) per unit when shipped to California, including installation.

The price per battery comes down as the order volume increases.

The Tesla website only allows for orders of up to 1,000 units. This number of Megapacks would be able to store over 3,854MWh of energy.

Their built-in inverters can output around half that figure — a peak of 1,927MW — about the same as Koeberg at full capacity.

In this configuration, the system could prevent roughly two stages of load-shedding for two hours when fully charged.

A smaller inverter system also allows for cutting roughly one stage of load-shedding over four hours.

The costs vary between about $1.7 billion (R29 billion) and $1.86 billion (R32 billion), not accounting for shipping.

Cost calculation for 1,000 Tesla Megapacks delivered to California

For reference, Eskom’s newest coal power stations — Medupi and Kusile — have a combined nameplate capacity of 9,600MW, roughly five times that of a 1,000 Megapacks.

However, technical problems and corruption have led to cost overruns that pushed their prices to well over R300 billion, while capacity is also far below the maximum envisioned.

Despite the 1,000 Megapacks only being able to produce a fifth of the maximum potential capacity of these plants for a limited number of hours, they would cost roughly a tenth on a per-MW basis.

Eskom has started constructing its own battery energy storage system (BESS), which will provide 1,440MWh of capacity and a peak output of 343MW once finished in December 2024 — assuming Eskom completes the build on time.

Home solar power will already help reduce load-shedding in 2023

Speaking about more immediate solutions, Jordaan said that the load-shedding crisis presented a big challenge and an opportunity for entrepreneurs.

Jordaan said solar power could be rapidly deployed with sustainability in mind, as it was already cheaper than Eskom electricity during the daytime.

“The primary motivation is not even ‘green’ but cost efficiency and business continuity,” Jordaan said.

Jordaan also said that solar power in the private sector — but outside the IPP programme used by Eskom — was already equivalent to one stage of load-shedding in 2022.

He added he was comfortable predicting that this capacity would save South Africa from “multiple” stages of load-shedding in 2023.

Jordaan said businesses should not hold on to the hope that government would fix the energy crisis.

“It is critical for businesses to avoid political finger-pointing and rather focus on seeking private-sector solutions wherever possible.”

He added the opportunity was particularly realistic for large users that could resell electricity.

That is because banks and other financiers are prepared to provide upfront project capex at interest rates that allow recouping the investment by charging lower electricity prices than the Eskom rate.

As a result, Jordaan said he expected enough demand to shift off the grid to improve supply to those consumers that cannot afford solar.

He believes the result will be an improved power scenario in six months without relying on government-driven interventions.

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