By Jessie Taylor
Wide-ranging and urgent power reforms announced by President Cyril Ramaphosa have the potential to transform the electricity sector.
The News Energy Plan aims to encourage the development of renewable energy sources and encourage private investment in the sector.
The plan was announced amid what President Ramaphosa termed an “energy crisis”, with the country experiencing severe load shedding.
“After more than a decade without a reliable electricity supply, South Africans are justifiably frustrated and angry. They are fed up. We have therefore developed a set of actions to respond to the crisis,” said President Ramaphosa.
“The crisis that we are facing requires that we should take bold, courageous and decisive action to close the electricity gap. This is a call for all South Africans to be part of the solution; to contribute in whatever way they can to ending energy scarcity in South Africa.”
The interventions are aimed at improving the performance Eskom’s existing fleet of power stations, accelerating the procurement of new generation capacity, increasing increase private investment in generation capacity, enabling businesses and households to invest in rooftop solar, and fundamentally transforming the electricity sector and positioning it for future sustainability.
Among the challenges facing the energy sector is generation capacity. Only around 60% of the capacity is available at any given time due to maintenance and unplanned outages. This, along with other factors, has led to an electricity shortage of up to 6 000 MW.
“The shortage of electricity is a huge constraint on economic growth and job creation. It deters investment and reduces our economy’s competitiveness,” said President Ramaphosa.
Among the changes proposed by the New Energy Plan are:
- Promoting private electricity generation
The government has started to allow parties other than Eskom to generate electricity and has raised the licensing threshold for new embedded generation projects from 1MW to 100MW. This removed the licensing requirement for generation projects up to 100MW that are connected to the grid, and this will allow these generators to sell electricity to one or more customers.
- Bolstering Eskom’s capacity
The plan includes a renewed push to improve power plant reliability. President Ramaphosa said that over the next year, Eskom will increase the budget allocated for critical maintenance to increase the reliability of its generation capacity.
- “We are cutting red tape that has made it difficult for Eskom to buy maintenance spares and equipment within the required period to effect repairs,” he added.
The power utility will also focus on recruiting skilled personnel, including former senior Eskom plant managers and engineers from the private sector, to address the shortage of skilled personnel and engineers.
- Purchasing of electricity
As part of addressing the shortage of electricity, Eskom will now also purchase additional energy from existing private generators such as mines, paper mills, and shopping centres, among others. In addition, Eskom will now import power from our neighbouring countries in Southern Africa, such as Botswana and Zambia, have more electricity capacity than they require
- A focus on renewable energy
One of the first steps taken to address the electricity shortfall was to revive the renewable energy procurement programme in 2018. Since then, over 2 000MW of solar and wind power has been connected to the grid through Bid Window 4 of the programme. A further 2,600MW of capacity has been procured through Bid Window 5, which will begin to add capacity from early 2024. In addition, the amount of new generation capacity procured through Bid Window 6 for wind and solar power will be doubled from 2 600MW to 5 200MW.
Eskom will also be constructing its first solar and battery storage projects at Komati, Majuba, Lethabo and several other power stations. These will result in over 500MW being added to the system.
- Reducing licensing requirements
The government will be removing the licensing threshold for embedded generation. This will enable private investment in electricity generation to rise to higher levels. While these generators will not require licences, all new generation projects will still have to register with the regulator and comply with the technical requirements.
- Increased investment in solar
There is significant potential for households and businesses to install rooftop solar and connect this power to the grid, said President Ramaphosa. To incentivise greater uptake of rooftop solar, Eskom will develop a feed-in tariff that will allow those with solar panels in their homes or businesses to sell surplus power to Eskom.
“These interventions will allow us to do what is necessary to accelerate new generation capacity while protecting the rights of all South Africans and upholding the rule of law. We do not need a state of emergency or national disaster to implement common-sense regulations that should help in resolving our energy crisis,” said President Ramaphosa.
“Our ultimate objective is to achieve long-term energy security so that we never have to experience an electricity shortage again. We aim to do this by stabilising Eskom and improving plant performance, establishing a competitive electricity market, opening the way for private investment in new generation capacity and increasing our investment in renewables.”
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