It took almost a month of intense disruptions due to load shedding for President Cyril Ramaphosa to take charge of the electricity crisis that has deepened year after year, but on Monday (25 July) he eventually announced drastic steps to end load shedding, ensure the sustainability of Eskom, and transform the electricity supply industry.
Without reverting to a state of disaster or emergency, Ramaphosa announced steps to:
- Improve the performance of Eskom’s power stations;
- Accelerate procurement of generation capacity;
- Massively increase private sector investment in generation capacity;
- Enable businesses and households to invest in rooftop solar; and
- Fundamentally reform the electricity supply industry and position it for future sustainability.
Ramaphosa announced that Eskom will over the next 12 months increase its maintenance budget to increase the reliability of its power stations.
Government is also cutting red tape to make it easier for Eskom to procure parts and equipment, and the power utility is recruiting skilled staff – including former Eskom staff.
Over the next three months Eskom will procure additional generation capacity, including:
- Additional capacity from existing independent power producers;
- Additional energy from private generators such as mines, paper mills, and shopping centres;
- Excess capacity from neighbouring countries such as Botswana and Zambia; and
- Interim solutions such as mobile generators.
Eskom will also launch a programme to reduce peak demand.
Ramaphosa announced that a solution for Eskom’s R400 billion mountain of debt will be provided by Finance Minister Enoch Godongwana in his medium-term budget policy statement in October, and the climate funding secured earlier will be used to strengthen the electricity grid and repurpose old power stations.
The Komati, Majuba and Lethabo power stations will be among the first to be converted to solar power and battery storage, amounting to 500 megawatts (MW).
To curb the scourge of theft, corruption and sabotage at Eskom the South African Police Service (SAPS) has established a special law enforcement team.
With all of this in place, there will be no further excuses for non-performance at Eskom, Ramaphosa said.
To get new generation capacity, Ramaphosa announced that:
- Government is working to ensure construction starts on all Bid Window 5 independent power producer (IPP) projects and will address the impractical local procurement requirements;
- Bid Window 6 will be doubled in size, from 2 600MW to 5 200MW;
- A request for proposals for battery storage will be released in September and one for gas soon thereafter;
- All further allocations provided for in the Integrated Resource Plan (IRP) will be expedited; and
- The IRP will be reviewed.
To encourage private investment in generation capacity Ramaphosa announced that:
- The licensing threshold for embedded generation that was lifted to 100MW last year is being removed completely;
- Special legislation will be tabled in parliament to remove obstacles that slow down the development of private generation for a limited period;
- Until then, existing processes will be streamlined; and
- A ‘one-stop shop’ will be established for all energy project applications.
A significant development is Ramaphosa’s announcement that Eskom will develop a feed-in tariff at which to buy energy from households and businesses with rooftop solar.
This differs from the current net-metering, which only allows owners of such solar installations to earn credit for the energy they supply to the grid to a point where their bills stand at zero. Feed-in tariffs on the other hand, allow the owners to earn money beyond that – Eskom may very well be paying them for electricity.
This announcement comes the same day Cape Town Mayor Geordin Hill-Lewis announced that his council will introduce feed-in tariffs for business and plans to expand it to households.
Ramaphosa also announced that a board will be appointed for Eskom’s newly-established transmission company and the generation company.
The finalisation of the Electricity Regulation Amendment Bill will be expedited to establish a competitive electricity market.
Leaving little to chance, Ramaphosa established a national energy crisis committee, led by Director-General in The Presidency Phindile Baleni. Baleni is a former CEO of energy regulator Nersa, with deep knowledge of the electricity sector.
Also represented on the committee will be the departments of Public Enterprises, Mineral Resources and Energy, Forestry, Fisheries and the Environment, National Treasury, and SAPS.
The relevant ministers will report to Ramaphosa directly.
In early reaction, trade union Solidarity welcomed Ramaphosa’s announcements.
Dr Dirk Hermann, chief executive of Solidarity, said the government’s move towards a more decentralised system for power generation is the only workable and sustainable solution to South Africa’s power crisis.
“As also outlined in Solidarity’s earlier plan, the encouragement and facilitation of small-scale power generation on a large scale is of crucial importance to stabilise our power grid,” says Hermann. “Through deregulation and the removal of regulatory barriers, we free the private sector and communities up to present creative and resilient solutions to the crisis.”
Chris Yelland, managing director of EE Business Intelligence, tweeted:
Well I am deeply impressed with the comprehensive message and plan of action by @PresidencyZA @CyrilRamaphosa
Bringing an end to loadshedding with these plans is most definitely possible, in a national priority project.
— Chris Yelland (@chrisyelland) July 25, 2022
Crispian Olver, executive director of the Presidential Climate Commission, tweeted:
Feed-in tariff will radically change the economics of household solar PV and help take the technology to scale
— Crispian Olver (@CrispianOlver) July 25, 2022
And TechCentral editor Duncan McLeod tweeted:
There is now no longer any cap on the size of private power generation projects. Electricity generation in South Africa has been deregulated and liberalised (Ts&Cs apply). This is a major step forward (it should have happened 15 years ago). Progress, finally!
— Duncan McLeod (@mcleodd) July 25, 2022