Stabilising Eskom and improving plant performance, establishing a competitive electricity market, opening the way for private investment in new generation capacity and increasing South Africa’s investment in renewables.
These were among a raft of interventions that President Cyril Ramaphosa announced on Monday evening to tackle the energy crisis confronting the country.
He said he had, in the past 10 days, held extensive discussions with Eskom executives, power station managers and former personnel, as well as labour federations, Business Unity South Africa, the Black Business Council, community representatives and several experts in the energy sector.
“This morning, I also met political party leaders. These meetings have helped to shape our response and ensure that all sections of South African society are involved in solving this problem, as this is a national crisis,” Ramaphosa said in a national address broadcast live on television.
The set of additional actions he announced are aimed at improving the performance of Eskom’s existing fleet of power stations, accelerating the procurement of new generation capacity and increasing private investment in generation capacity. They are also designed to enable businesses and households to invest in rooftop solar and fundamentally transform the electricity sector and position it for future sustainability.
“During the past three weeks, severe load-shedding has disrupted all of our lives and caused immense damage to our economy,” Ramaphosa said. “The daily power cuts we have been experiencing have inconvenienced millions of households and have presented huge challenges for businesses.
After more than a decade without a reliable electricity supply the president said “South Africans are justifiably frustrated and angry and I understand that, they are fed up”.
He said the electricity crisis required that “we should take bold, courageous and decisive action” to close the supply gap.
Ramaphosa said while the measures taken so far to stabilise electricity generation had brought relief from the current load-shedding, the system remained vulnerable and unreliable.
“The shortage of electricity is a huge constraint on economic growth and job creation. It deters investment and reduces our economy’s competitiveness,” he said.
The government was implementing additional measures to achieve long-term energy security and end rolling blackouts for good, he added.
“First, we are fixing Eskom and improving the performance of our existing fleet of power stations. Over time, the maintenance programme of Eskom’s electricity-generation fleet has declined,” he said.
Over the next 12 months, Eskom would increase the budget allocated for critical maintenance to boost 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,” Ramaphosa said.
To address the shortage of skilled personnel and engineers, the utility is recruiting skilled personnel, including former senior Eskom plant managers and engineers from the private sector.
“Over the next three months, Eskom will take additional actions to add new generation capacity to the grid on an urgent basis. As an immediate measure, surplus capacity will be bought from existing independent power producers,” said the president.
Eskom would purchase additional energy from existing private generators such as mines, paper mills, shopping centres and other entities which have surplus power.
A number of southern Africancountries, such as Botswana and Zambia, have more electricity capacity than they require, and Eskom will import from them through the Southern African Power Pool arrangement. The utility would also use interim power solutions, such as mobile generators, to supplement current generation capacity for a limited period and implement a programme that encourages efficient energy use by consumers to reduce demand at peak times.
Ramaphosa said Eskom’s debt, which stands at close to R400-billion, continued to be a huge burden on its ability to address its many challenges. The national treasury was working to finalise a sustainable solution to the debt and finance minister Enoch Godongwana would outline how to deal with this “in an effective manner” in his medium-term budget policy statement in October.
“We will use climate funding provided through the Just Energy Transition partnership to invest in the grid and repurpose power stations that have reached the end of their lives,” he said.
Eskom will construct its first solar and battery storage projects at Komati, Majuba, Lethabo and several other power stations, which should add over 500MW to the system.
The South African Police Service has set up a special law enforcement team to help Eskom confront crime and corruption. “A number of people have been arrested in recent days and several others are already being prosecuted for corruption and fraud involving Eskom contracts,” Ramaphosa said.
With improvements in the regulatory environment and mobilisation of society, Eskom would be well positioned to carry out its maintenance and investment programmes. These steps, he said, “will allow us to limit load-shedding to lower stages and reduce the risk of such severe load-shedding in future”.
“To end load-shedding, however, we need to urgently add much, much more capacity to the grid. Our second priority is therefore to accelerate the procurement of new capacity from renewables, gas and battery storage.”
The president said the relevant government departments were working together to ensure that all projects from Bid Window 5 of the renewable energy programme could start construction on schedule.
This included taking a pragmatic approach to the local content requirements for these projects, prioritising the need to build new capacity as quickly as possible. The department of trade, industry and competition, together with the Independent Power Producers office, would provide further details in this regard soon. The amount of new generation capacity procured through Bid Window 6 for wind and solar power would be doubled from 2 600MW to 5 200MW.
Ramaphosa said the government would release a request for proposals for battery storage by September and a further request for gas power as soon as possible thereafter.
Mineral resources and energy minister Gwede Mantashe, he said, would issue a determination for the remaining allocations in the Integrated Resource Plan 2019 (IRP), and open further bid windows on an expedited basis.
To ensure effective planning, the IRP is being reviewed to reflect the need for additional generation capacity and our climate commitments.
Last year, the government announced it was raising the licensing threshold to 100MW, which unlocked a pipeline of more than 80 confirmed private sector projects with a combined capacity of over 6 000MW.
“Following the success of this reform, and the enthusiasm shown by the private sector, we will remove the licensing threshold for embedded generation completely. This will enable private investment in electricity generation to rise to higher levels,” he said.
While they will not require licences, all new generation projects will still have to register with the regulator and comply with the technical requirements for grid connection and environmental legislation.
To incentivise a greater uptake of rooftop solar, Eskom will develop rules and a pricing structure – known as a feed-in tariff – for all commercial and residential installations on its network.
“This means that those who can and have installed solar panels in their homes or businesses will be able to sell surplus power they don’t need to Eskom,” the president said.
Eskom has established an independent transmission company and is on track to separate its generation and distribution businesses by the end of the year. “We will soon be appointing boards for the transmission and generation entities.”
The grid, Ramaphosa said, would remain state-owned. “Eskom will continue to be the mainstay of our country’s energy industry as we improve its efficiency, financial sustainability and performance.”
To ensure that these measures were implemented in a coordinated manner, he has established a national energy crisis committee, which will report to him regularly.
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