South Africa

Electricity Minister’s plan is nothing new

Kgosientsho Ramokgopa

Electricity Minister Dr Kgosientsho Ramokgopa recently presented his plan to end load-shedding to the National Executive Committee (NEC).

However, his suggested interventions are not new and have been part of Eskom’s plans to end the energy crisis for years.

Ramokgopa’s plan revolves around several interventions he wants to implement within the next 18 months.

These interventions aim to improve South Africa’s coal-fired power stations’ energy availability factor (EAF) and create about 12,000 MW of electricity capacity.

The following are immediate interventions to be implemented within the next six months.

1. Reduce Eskom infrastructure sabotage

The NEC reportedly identified an uptick in sabotage, which has led to increased load-shedding.

This intervention will be achieved by protecting “key installations”.

2. Purchase diesel for the country’s Open Cycle Gas Turbines (OCGTs).

This intervention will cost around R30 billion, which Ramokgopa said will come from two avenues: Increased revenue from the electricity tariff hike and fiscal relief from National Treasury.

The 18% tariff increase implemented in April will increase Eskom’s revenue and allow the utility to set aside R8 billion to procure diesel.

The other R22 billion will come from the Finance Minister’s fiscal relief.

Eskom has been burning diesel to limit load-shedding since 2008.

3. Improve the efficiency (EAF) of underperforming power stations.

This will be done with the assistance of specialists, particularly experts from the private sector.

Medupi and Kusile Power Stations are the priorities for this intervention.

4. Reduce maintenance work on power stations.

This will be done during peak demand, like in the winter.

5. Other interventions

Ramokgopa said he wants to prioritise adding renewable power to the grid and added that Energy Minister Gwede Mantashe was finalising power purchase agreements.

However, the electricity minister has previously said he would prefer to extend the life of the country’s coal-fired power stations and slow down the pace at which South Africa transitions to renewable energy.

The minister also said that, with past acquisitions, the country made the mistake of choosing preferred bidders in areas with no grid capacity to transmit electricity, which would have to be corrected.

He said that Eskom is also negotiating with Mozambique to get 1,200MW of additional capacity.

These interventions will not stop load-shedding but should reduce the intensity of power cuts and help sustain the economy, said Ramokgopa.

The Energy Action Plan

Andre de Ruyter
Andre de Ruyter

Ramokgopa’s plan closely resembles the Energy Action Plan announced by President Cyril Ramaphosa in July 2022.

This plan identifies five key areas of intervention aimed at addressing the energy crisis in the short term and moving the country towards energy security in the long term.

Former Eskom CEO Andre de Ruyter summarised these interventions in an affidavit as part of a legal battle with 19 applicants who aimed to declare load-shedding unconstitutional.

He said Eskom welcomed the President’s announcement of the plan and is “in full support of the measures it proposes”.

1. Fix Eskom and improve the availability of the existing supply

This intervention advocates for reliability maintenance to prevent a further decline in EAF. Like the electricity minister’s plan, it also prioritises Medupi and Kusile.

The plan also addresses reducing sabotage, fraud and theft at Eskom through a “coordinated effort by law enforcement”.

2. Enable and accelerate private investment in generation capacity

This intervention involves, in short:

  • Removing the licensing threshold for new generation projects to allow private investment
  • Accelerating new generation projects
  • Easing the legal and regulatory obstacles and facilitating investment in new generation capacity
  • Reducing the regulatory requirements for renewable energy projects

This intervention has been addressed in the 2023 Budget Speech, where Finance Minister Enoch Godongwana attached a condition to Eskom’s R254 billion debt bailout.

This condition specified that Eskom might not invest any capital expenditure in new generation capacity for the next three years.

However, another condition states that Eskom, the National Treasury, and the Department of Public Enterprises have agreed to design a mechanism for building new transmission infrastructure.

This infrastructure will allow for extensive private sector participation in developing the transmission network.

3. Accelerate procurement of new capacity from renewables, gas and battery storage.

De Ruyter said this intervention recognises that a massive implementation of renewable energy offers “the best chance of ending load-shedding as quickly as possible”.

To implement this intervention, Eskom must add new generation capacity to the grid by purchasing surplus capacity from independent power producers and importing from neighbouring countries.

This intervention also encourages Eskom to use the Just Energy Transition Partnership’s climate funding by repurposing shut-down coal-fired power stations.

It also mentions procurement through the Battery Energy Storage Systems and Renewable Energy Procurement programmes and revising the Integrated Resource Plan 2019.

4. Facilitate businesses and households investing in rooftop solar

This intervention has already been completed in part. This year’s budget speech announced an incentive for households and businesses to purchase rooftop solar panels.

However, the other part of this intervention involves enabling consumers who have installed rooftop solar to sell their surplus power to Eskom.

Currently, some municipalities in South Africa offer feed-in tariff schemes. However, regulations are inconsistent across the country, and many do not offer worthwhile incentives for consumers to invest in solar panels.

5. Transforming the electricity sector to achieve long-term energy security.

This intervention relates to the country’s plans to unbundle Eskom into three separate divisions – generation, transmission and distribution.

This unbundling has been in the works for around four years but has only recently begun. However, Ramokgopa has stated that it is not currently a priority.

This intervention also involves decentralising South Africa’s power supply by establishing a competitive electricity market and diversifying the country’s energy sources.

Nothing new

Hugo Pienaar, chief economist at the Bureau for Economic Research at Stellenbosch University, said the interventions suggested by Ramokgopa are not new and have been happening for years.

“There is a plan. However, I get frustrated when things the electricity minister says are positioned as anything new,” he said.

He added that very little could be done in the short term to address the country’s electricity shortfall and improve load-shedding.

Hugo Pienaar
Hugo Pienaar

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