Power supply reforms to address SA’s electricity shortfall – expert

With plans for fundamental transformation in the electricity sector underway, President Cyril Ramaphosa’s reform strategies are welcomed by South Africa’s biggest industry players.

With SA enabling itself in the most “significant reform process” in the country’s history, according to Ramaphosa, energy expert Chris Yelland said the action was “better late than never”.

Yelland said he hoped the plans would make a big difference in the short and long term.

The current electricity shortfall was estimated at up to 6,000 megawatts (MW).

Ramaphosa said once these changes were implemented, SA would have multiple generators competing with Eskom to supply electricity at the lowest cost and sell power directly to customers.

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“We will unleash new public and private sector investment in generation capacity at a massive scale.

“In the short term, however, we are seized with the need to get as much new generation capacity onto the grid as possible, as quickly as possible,” he said.

Yelland said a sense of urgency was emerging because of the crisis.

“I think there is a sense of urgency that has developed, driven by load shedding, and it has forced people to start making crucial decisions,” he said.

“Load shedding has damaged the economy, jobs and people. It is something we need to bring an end too.”

While the Electricity Regulation Amendment Bill provided the establishment of a separate transmission company, a competitive market for electricity and also published for public comment, Yelland said these documents were very important and provided a framework for restructuring the electricity supply industry.

“They were necessary in enabling legislation and for reform to take place – a legal framework was needed,” he said.

“It is a work in progress but we hope it will be successful.”

Although delays were expected, Ramaphosa outlined the work underway aimed at increasing the energy availability factor, and closing the electricity gap between generation and demand which, he said, was the root cause of load shedding.

The work included projects from existing procurement programmes to reach financial close and were connected to the grid as quickly as possible.

Ramaphosa said there were plans to accelerate private sector investment in generation capacity under 100MW and assist Eskom to purchase surplus power from existing power producers, while also supporting municipalities to procure power independently.

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The South African Wind Energy Association applauded Ramaphosa’s unequivocal support of the energy sector’s transformation.

Chief executive Niveshen Govender said the work underway would deliver a robust, competitive energy sector with multiple generators competing to supply electricity at the lowest cost and selling power directly to customers. Govender said this would go a long way in supporting local business and South Africans individually.

“This is a historical moment in our country as we are recreating not only our energy generation sector, but providing stable foundations for economic growth that is in line with the National Development Plan, which sees 2030 as a time when South Africa will reduce its dependency on carbon,” he said.

Ramaphosa added the government had made progress in signing deals with independent power producers, under the Risk Mitigation Independent Power Producer Procurement Programme.

Minister of Mineral Resources and Energy Gwede Mantashe said this was the “first of a kind” in South Africa, consisting of a combination of solar PV and battery technologies contributing “150MW of dispatchable capacity” to the national grid.

According to Mantashe, all three projects were located in Kenhardt in the Northern Cape.

In total, the projects had attracted R16 billion in investments and would create about 4 968 job opportunities during construction and operation phases, he added.

The projects were expected to deliver energy within 12 to 18 months from financial close.

“The signing of these projects carries the full support of government. The Risk Mitigation Independent Power Producer Procurement Programme was unique in approach, wherein diverse technologies and their application were allowed to compete.

“This approach allowed the bidders to tailor-make solutions, which would meet the specification to close the energy and capacity gap as prescribed by Eskom system operator,” he said.