Eskom will be replaced by the private sector in the coming years, with the utility being left behind by the rapid uptake of alternative energy sources by private capital.
This is feedback from former Eskom CEO Andre de Ruyter, who told the Business Day Spotlight podcast that since lifting the cap on private generation capacity, investors have ploughed money into renewable energy projects.
De Ruyter estimated that there are 66,000 MW of renewable projects in the pipeline being developed by the private sector.
This is roughly 25% larger than Eskom’s entire installed capacity. “That is enormous. That is a gob-smacking number.” De Ruyter said.
“In the absence of engagement with these political issues, with these complicated and challenging conundrums related to the energy transition and load-shedding, the private sector will do its own thing and effectively privatise the electricity industry.”
“That is what seems to be happening now, and Eskom is going to be left behind in that process,” De Ruyter said.
He explained that if you extrapolate from current trends, Eskom will be left with a customer base of “people who cannot afford electricity and therefore will not pay for it”.
Many of Eskom’s biggest paying customers will be the first to go off-grid and reduce their reliance on the ailing utility as they can.
De Ruyter warned that if this continues and is undirected by a Just Energy Transition framework that creates safety nets and attractive investments in local communities, it will be difficult to offset job losses in the country’s coal heartlands.
“We should have already decisively pivoted to that green future and taken policy opportunities as a utility, a country, and an economy”, he said.
De Ruyter explained that private capital will invest where there is the least resistance and good returns – not in the interest of coal lobbies or businesses.
The former Eskom CEO’s claims are supported by data collected by RMB chief economist Isaah Mhlanga.
Despite the difficulty in calculating the impact of load-shedding, Mhlanga is sure that the effect will be reduced over time and be negligible by 2025 as the private sector ramps up energy production.
Following the deregulation of electricity generation, households and private corporations have aggressively embraced rooftop solar.
South Africa is experiencing a boom in solar installations, with over 4,400 MW of rooftop solar installed outside of the government-procured solar. This is expected to increase by 420% in the coming years.
This surge in investment is further bolstered by a promising pipeline of corporate solar projects, suggesting enhanced resilience against load-shedding.
From the beginning of 2023 to the end of 2025, RMB estimates that the private sector will add over 6,000 MW to the grid. From 2025 to 2030, it will add a further 19,300 MW.
This will help to offset Eskom’s declining supply of energy and thus will most likely reduce to a maximum of stage 3 by mid-2025.
Mhlanga said that most corporates can operate close to full capacity during stage 3 load-shedding, significantly reducing the economic impact.