Last Updated on Monday, 15 July, 2024 at 6:56 pm by Andre Camilleri
Shortcomings in planning and investment, ‘to varying degrees’, contributed to the prolonged power outages experienced in some localities during the summer of 2023, the National Audit Office has concluded.
Auditor General Charles Deguara has presented the review on Enemalta’s Planning and Investment in the Local Distribution Network to the Speaker of the House of Representatives, Anġlu Farrugia. This review covered a ten-year period, namely between 2014 to 2023.
The report noted that meteorological statistics confirmed that the situation which manifested itself last summer during a protracted period of elevated temperature was the highest within the 2014-2023 period (the scoped period), but also noted that capital expenditure invested in the high voltage network during that period experienced a downward trend.
The NAO found that deficiencies in Enemalta’s planning and capital investment in the high voltage distribution network during the scoped period, “negatively impacted its operational performance.”
The audit sought to determine the extent to which Enemalta’s planning and investment in the local electricity distribution network were conducive to a robust system that can meet the current as well as future demand for electricity in Malta, the NAO said. “Seeing that the power outages experienced in the summer of 2023 were primarily due to faults in the national high voltage (HV) distribution network, this report also includes an analysis of this HV network’s performance between 2014 and 2023.”
Last summer, the country experienced a series of serious power cuts, which left some without power for days on end.
Audit findings show that the 2023 reported outages were due to widespread faults throughout the network rather than emanating from a single point of failure, the NAO said. “With Enemalta (being Malta’s electricity Distribution System Operator – DSO) citing sustained peak temperatures and an increase in peak demands as the main reasons behind these faults, the NAO mapped out the progression of these two cited factors, as well as other indicators such as actual demands and GDP per capita, to identify related trends across the scoped ten-year period. While meteorological statistics confirm that the situation that manifested itself last summer during a unique protracted period of elevated temperature was the highest within the scoped period, as was indeed the case across various other European countries, this exercise showed that all the analysed factors have been on an upward trajectory throughout the period under review.”
“On the other hand, statistics show that capital expenditure invested in the high voltage network during the scoped period experienced a downward trend. This contrasts with the above-mentioned indicators, as well as with the fact that investments in the low-voltage network and the installation of new electricity meters were on the increase.”
The local electricity distribution network is categorised into three main components, that is; the high, medium and the low voltage systems. The higher voltage cables are mainly used to transport electricity from the local generation plants and the import from the interconnector, with the voltage level decreasing as the network approaches the final consumer, the NAO explains in its report.
The report shows that Capital expenditure in the high voltage distribution network was €14,550,671 in 2014, but in 2023 it was just €5,736,684. The report also shows that Capital expenditure in the Low Voltage distribution network in 2014 was €4,808,216 while in 2023 was €10,925,070. “In addition, information forwarded by the DSO shows that the number of active meters has also been on a relatively constant upward trajectory, starting at 291,426 in 2014 and reaching 377,311 in 2023.”
In its report, the NAO wrote: “In view of the above, together with the factors discussed, namely increases in average and peak temperatures, as well as the registered increases in peak and actual demand (brought about by an increasing GDP per capita), the NAO questions the decrease in capital investment in the high voltage distribution system, particularly as this is the area in which the faults of summer 2023 occurred,” the full report reads.
The NAO highlights that this review showed that, even through a high-level analysis, “it is apparent that deficiencies in Enemalta’s planning and capital investment in the high voltage distribution network during the scoped period, negatively impacted its operational performance. While meteorological statistics confirm that the situation which manifested itself last summer during a protracted period of elevated temperature was the highest within the scoped period, NAO concludes that shortcomings in the planning and investment noted in this report, to varying degrees, contributed to the prolonged power outages experienced in some localities.”
In its concluding remarks, the NAO said that while this audit did not delve deeply on the technical merits of Enemalta’s plans and actual projects carried out, the summer 2023 occurrences clearly signify that Enemalta’s related expenditure throughout the scoped period was not well targeted, “and/or not efficiently utilised and/or too low, particularly in view of the ever-increasing demands for electricity. Even if the System Average Interruption Frequency Index and the System Average Interruption Duration Index show an average decline in the frequency and duration of power supply interruptions, the NAO feels that, as would be the case in any other industry, shortcomings in the planning function and investment shortfalls detract from the value for money of the services provided. Apart from the apparent inconvenience to consumers, the negative effect on value for money is also attested to by the payment of compensation to clients by the DSO for prolonged outages or damages caused, as well as by the economic impact emanating from risks associated with security of supply.”
The NAO acknowledged and reported on the significant challenges experienced by Enemalta “which invariably hamper the execution of planned projects and works (even if these would have been budgeted for). This Office is also aware that substantial funds have been channelled towards the repair and upgrading of parts of the electricity distribution network. In part, this reaction is due to the increasing demand and to cater for the expected increase in frequency and intensity of higher temperatures as a result of climate change. Within this context, the NAO augurs that Enemalta strengthens its planning function by taking into consideration demographics, climatic trends and associated risks, as well as the lifetime of all assets making up the distribution network, to ensure a more reliable supply of electricity to its consumers,” the NAO said in its concluding remarks.
In its press statement, the NAO alsos aid that Enemalta’s actual annual expenditure on the high voltage network during the scoped period “was significantly lower than the annual allocated capital budgets. For fairness’ sake, however, it is acknowledged that Enemalta experienced significant operational challenges, hampering its ability to execute planned projects and works, even if these would have been budgeted for. These issues included contractor availability and the sourcing of materials (such as high-voltage cables).””
It said that network development plans did not fulfill all the benchmarked criteria set by NAO, most of which emanate from pertinent legislation and Enemalta’s own network code. “In addition, this office observed that reinforcement proposals prepared by the DSO’s technical staff are based on what the entity can realistically carry out. This review further highlighted that Enemalta was not in line with its legal obligation to publish such network development plans and submit them to the Regulator for Energy and Water Services, with the latter refraining from imposing associated penalties,” the statement by the National Audit Office read.
As attested by the prolonged outages experienced in 2023, Enemalta’s historic investments in the HV network “were not entirely sufficient to mitigate the prevailing socio-economic and climatic circumstances,” the NAO said. “While this office notes that prior to the summer 2023 occurrences, the local distribution network experienced a relatively stable period, the NAO positively notes that the significant capital investment in the electricity distribution network after the summer 2023 occurrences indicates that the government acknowledges the strategic importance of addressing the risks of prolonged outages in its infrastructure.”
The full report also included Enemalta’s comments on the NAO’s concluding remarks.
Enemalta said that the conclusions that “the summer 2023 occurrences clearly signify that Enemalta’s related expenditure throughout the scoped period was not well targeted, and/or not efficiently utilised and/or too low, particularly in view of the ever-increasing demands for electricity” and the reference to “concerning indicators on the level of priority that Enemalta invests in the cohesive planning of the national distribution network” should be considered to be opinions emanating from a high-level analysis. Enemalta said that investment planning in the distribution network “has always included both the HV and low voltage network as this provides the highest chances for robustness and reliability, and this is why it has invested in both of these networks. In addition, future investment planning is typically based on future projections that are made at a point in time, such that planning for 2023 would be undertaken a number of years beforehand without the benefit of hindsight as to what actually would occur in 2023 in terms of extreme temperatures. Enemalta further affirms that most of the works planned since 2014 have been undertaken and completed, even if in some cases completion did not occur within the year of the original allocation of respective budget (and which might lead one to erroneously conclude that the budget allocation was not spent). Discrepancies between planned and actual expenditure are not uncommon in infrastructure projects, in view of the multitude of dependencies impacting the flow of work.”
Enemalta said that it could not be prepared for such an unforeseen rise in temperatures in 2023 “that has been recognised worldwide as unprecedented. In the final analysis, the outages across Malta in July 2023 resulted from the failure of 83 joints from a total of over 14,000. This means that, in spite of the excessive heatwave, less than 0.6% of the network joints failed. Indeed, the percentage of faults occurring in 2023 was below 0.05% of the whole HV network. Enemalta highlights that it relies on the peak demand projections modelled by the Energy and Water Agency through the assistance of international experts and using industry projection techniques. Under demand projections made in 2019, the high growth scenario for the worst climatic year had projected a peak demand of 663MW to occur not before 2029. The unprecedented heatwave of 2023 anticipated all this, and what was forecasted to happen in 2029 in fact happened in 2023.”
The full report can be viewed on the website of the National Audit Office.
