Eskom will need to triple the capacity of its grid within the next decade, at a cost of over R100 billion, to allow new-generation projects to come online and bring load-shedding to an end.
Renewable energy projects in South Africa cannot connect to the grid because of Eskom’s lack of grid capacity and chronic underinvestment.
A study from the Council for Scientific and Industrial Research found there are serious constraints on the transmission grid.
These constraints prevent many renewable energy projects from feeding into the grid because of capacity constraints in the northern part of the country.
This means renewable energy cannot reach its full potential in South Africa to provide the needed capacity to eliminate load-shedding.
Eskom has been struggling to get adequate funding for grid expansion for years, and building transmission lines to renewable projects far outside major metropolitan areas is extremely difficult as they must cross private and public land.
General manager for Scatec in Sub-Saharan Africa Jan Fourie explained that a lack of grid capacity is delaying the company’s projects.
Three of the company’s projects at Grootfontein in the Western Cape reached financial close at the end of June.
However, construction can only start in the first quarter of next year, with the projects only being completed and providing electricity to the grid in 2025.
This is mostly due to delays in getting grid connection approval from Eskom. The delay is not financial, planning, or construction but rather a lack of grid capacity.
“The grid is becoming the bottleneck, especially in high-resource areas with wind and solar resources,” Fourie said.
Fourie believes that Eskom cannot expand the grid by itself due to its financial constraints and track record with large infrastructure projects.
A potential solution
That is why the government has decided to create a company entirely separate from Eskom to manage the country’s electricity grid.
The creation of a company separate from Eskom will give the new company a fresh balance sheet, unburdened by Eskom’s R400 billion debt, to invest in upgrading and expanding the grid.
Energy analyst Chris Yelland told Business Day TV that establishing and operationalising a National Transmission Company of South Africa (NTCSA) is “absolutely critical for long-term energy security”.
An independent grid company will allow for competition in the generation sector from multiple players within the private sector and Eskom.
However, Yelland said establishing the NTCSA is taking too long and moving far too slowly.
The company was granted a licence to operate by the National Energy Regulator of South Africa (Nersa), but it still requires an additional two licences to become fully operational.
Eskom wanted Nersa to grant all three licences simultaneously. However, Nersa only granted one while the other two applications are still being processed.
This will significantly delay the establishment of the NTCSA and hinder the country’s ability to end load-shedding and be energy secure over the long term.