Struggling power utility Eskom has put renewable energy projects at the core of bringing additional capacity to plug South Africa’s electricity shortfall.
Last week, the embattled state-owned company (SOC) said it is focusing on implementing all projects in order to meet the required 53GW of new additional energy for the period up to 2032, which will ensure energy security.
According to the power utility, the new additional capacity needed will come particularly from renewable energy sources and takes into account the current energy deficit of between 4 000 and 6 000MW.
This, as South Africa continues to suffer repeated power blackouts, with Eskom struggling to keep the lights on.
Amid the power crisis, last week finance minister Enoch Godongwana, presenting the 2022 Medium-Term Budget Policy Statement, said government is looking to embark on an Eskom debt relief programme that will see it take over a portion of the SOC’s R400 billion debt.
Crucial funding
Eskom transmission managing director Segomoco Scheppers describes the next five years as “very critical” for energy supply security.
“If the TDP [Transmission Development Plan] 2022 requirements to deliver an adequate transmission network capacity by 2027 are to be met, a significant investment of R72.2 billion will be required to expand and strengthen the transmission grid over the next five years.
“Of this amount, R50.8 billion is required for new capacity expansion projects to meet the reliability requirements, connection of new generation capacity and loads, as well as to acquire servitudes. A further R21.4 billion is required to refurbish the existing asset base and procurement of production equipment,” he says.
In a statement, Eskom explains that the R72 billion will be used to build at least 2 890km of extra high voltage lines and 60 transformers by the 2027 financial year.
“Accommodating this increased generation capacity means that a reliable and adequate transmission system is required to integrate and dispatch this new capacity to the load centres across the country.
“Given uncertainty in the longer term and noting the Integrated Resources Plan as a policy document is currently being updated, Eskom is placing a strong focus on the implementation of projects over the next five years.
“This requires that some challenges beyond Eskom’s full control, such as the lead time to obtain servitudes, among other relevant authorisations, as well as the resource capacity in the country, be urgently addressed,” the power utility says.
Energy liberalisation
Meanwhile, renewable energy industry body, the South African Wind Energy Association (SAWEA), says having exceeded the 150th day of load-shedding this year, South Africa’s economy continues to feel the strain of the energy availability factor, which is not able to reach the required levels.
SAWEA says it acknowledges that while the problem is simple, developing solutions for the energy crisis is complex and requires the right expertise for planning.
At the heart of the plan, the association is advocating for “energy liberalisation” underpinned by a number of mechanisms.
Specifically, demand side management, where new generation capacity, for own use, must be considered as a mechanism to reduce demand and increase supply, says SAWEA in a statement.
“We believe that whilst the Electricity Regulation Act amendment Bill is the right policy intervention to support a liberalised energy market in South Africa, the removal of the licence requirement for own use projects will not have the desired outcomes if not implemented efficiently and effectively,” explains Niveshen Govender, CEO of SAWEA.
“Policy alone is not enough; we must manage and improve the bureaucracy of the process required to build new generation capacity and renewable energy capacity specifically.”
The association believes there needs to be more and better coordination between stakeholders and that political will and regulatory frameworks should be forthcoming.
The industry is calling for a clear, transparent and documented process to guide a number of blockages to delivering new generation.
“Our industry needs grid connection application, and wheeling conditions need to be standardised and finalised nationwide; as well as permitting requirements and processes that are accessible and practical,” says Govender.
Acknowledging that energy solutions will largely be funded privately, typical investor conditions should be encouraged to create investor confidence, says the association.
It notes that private power purchase agreements is new territory for South African independent power producers and at this point still represents a fairly high risk for the producers, with contention around risk allocation between parties.
“Once we have the first few projects over the line, the industry will be able to iron out a number of the issues at play, but as it stands, the industry needs to unpack a number of requirements for the private off-take market to achieve bankability,” concludes Govender.
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