Last night (25 July), President Cyril Ramaphosa announced a number of interventions to overcome the immediate power crisis being experienced in South Africa.
In collaboration with Eskom, labour federations and energy sector experts, the interventions are aimed at achieving the following:
- Improving the performance Eskom’s existing fleet of power stations;
- Accelerating the procurement of new generation capacity;
- Massively increasing 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.
New interventions will aim to fix Eskom and improve the performance of our existing fleet of power stations. Government will achieve this be increasing the maintenance budget and cutting red tape hindering the purchase of spares and equipment.
The utility is also recruiting skilled personnel, including former senior Eskom plant managers and engineers from the private sector, who will help to ensure that world-class operating and maintenance procedures are reinstated.
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 as well as existing private generators such as mines, paper mills, shopping centres and other private entities that have surplus power.
A number of neighbouring countries in Southern Africa, such as Botswana and Zambia, have more electricity capacity than they require, and Eskom will now import power from these countries through the Southern African Power Pool arrangement.
Eskom will also use interim power solutions, such as mobile generators, to supplement current generation capacity for a limited period.
The utility will also implement a programme that encourages efficient energy use by consumers to reduce demand at peak times.
The National Treasury is working to finalise a sustainable solution to Eskom’s R400-million debt, which will be outlined in the Medium-Term Budget Policy Statement in October.
Eskom will also 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.
The first solar and battery storage projects will be constructed at Komati, Majuba, Lethabo and several other power stations, adding over 500 MW to the system.
The South African Police Service has set up a special law enforcement team to help Eskom in confronting crime and corruption. A number people have been arrested in recent days and several others are already being prosecuted for corruption and fraud involving Eskom contracts.
“These steps will allow us to limit load shedding to lower stages and reduce the risk of such severe load shedding in future,” Ramaphosa says. “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 relevant government departments will ensure that all projects from Bid Window 5 of the renewable energy programme can start construction on schedule, and the amount of new generation capacity procured through Bid Window 6 for wind and solar power will be doubled from 2 600 MW to 5 200 MW.
A request for proposals for battery storage will be released by September, and a further request for gas power as soon as possible thereafter
The Minister of Mineral Resources and Energy will issue a determination for the remaining allocations in the Integrated Resource Plan 2019, and will open further bid windows on an expedited basis.
Government is also accelerating greater private investment in generation capacity.
Last year the licensing threshold was raised to 100 MW, and now the licensing threshold for embedded generation will be removed completely.
“This will enable private investment in electricity generation to rise to higher levels,” Ramaphosa says.
Special legislation will be table in Parliament to address the legal and regulatory obstacles to new generation capacity for a limited period, and regulatory requirements for solar projects in areas of low and medium environmental sensitivity will be determined.
“It also means Eskom can expand power lines and substations without needing to get environmental authorisation in areas of low and medium sensitivity and within the strategic electricity corridors,” the president says.
“We are also establishing a single point of entry for all energy project applications, to ensure coordination of approval processes across government.”
There will be a big push to enable businesses and households to invest in rooftop solar, and Eskom will develop rules and a pricing structure – 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,” Ramaphosa explains.
“Finally, we are fundamentally transforming the electricity sector and positioning it for future sustainability.
“Eskom has established an independent transmission company and is on track to separate its generation and distribution businesses by the end of 2022.”
Broader reforms to establish a competitive electricity market will be expedited through the finalisation of the Electricity Regulation Amendment Bill to enable private sector investment.
The grid will remain state-owned, and Eskom will continue to be the mainstay of our country’s energy industry.
The president has established a National Energy Crisis Committee chaired by the Director-General in the Presidency, and brings together all the departments and entities involved in the provision of electricity.
You can read the full speech here