Eskom will not be saved by US grant money

The $1.3 million (R23.43 million) grant given to Eskom by the United States Trade and Development Agency will not change the utility’s performance but might help with load-shedding. 

This is according to energy expert Chris Yelland who told Newzroom Afrika that the donation to Eskom will not shift the generation dial. 

“In the context of Eskom’s R400 billion debt, it is relatively small and will not change anything,” Yelland said. 

However, the grant money is not intended to rectify Eskom’s finances or improve its operational performance. 

Instead, the money was granted to Eskom to fund academic studies into new technologies and practices to make its grid more efficient and accessible to additional generation capacity. 

According to Yelland, the money is sorely needed, as “South Africa is facing problems with grid access and requires many studies to rectify this”.

Many Independent Power Producer projects have been delayed or unable to get financing as they cannot connect to Eskom’s grid due to a lack of capacity. 

This is a big hurdle to bringing load-shedding to an end and will only worsen as more projects are built. 

South Africa’s grid is designed to carry electricity from large, central power stations in the country’s northeast to other parts. 

Renewable energy generation is decentralised, with generation facilities located almost anywhere. 

The areas, such as the Western Cape, Eastern Cape, and Northern Cape, which have rich renewable resources, do not have the grid capacity to distribute electricity to the rest of the country. 

The grid in these areas can only carry limited load, which is insufficient for large-scale projects.

Companies building 1,850MW worth of electricity generation may lose the right to connect to the national grid at the end of July due to an inability to reach financial close as investors are unsure whether these projects will connect to the grid.

That is why Eskom will gratefully accept the money, as it needs to fundamentally redesign its grid to facilitate the transition to renewables and end load-shedding. 

Furthermore, the money comes in the form of a grant, meaning that the utility does not have to pay any of it back. It is effectively a charitable donation. 

Eskom also has no obligations or requirements to procure goods or services from US companies. 

Yelland said the government and Eskom “should not look a gift horse in the mouth”. South Africa should take the money and use it in the best way possible, hoping to receive more in the future.