Eskom CEO says getting independents onto power grid will be costly

Initial costs will be significant says Andre de Ruyter.
'There is an amount of about R18bn that needs to be invested in order to accommodate the entry of independent power producers into the grid,' says the CEO. Image: Moneyweb

Andre de Ruyter, Eskom’s chief executive officer, said that while he favours letting companies generate their own power there will be significant initial costs if they are to sell their excess generation into the South African grid.

Frustrated by regular power cuts, mining and industrial companies have been pushing the government to allow them to build their own power plants to ensure security of supply. They also want to sell surplus power to other customers.

Eskom, the indebted state power utility that De Ruyter took leadership of this month, will eventually be split into generation, transmission and generation divisions, the government has said.

“There is an amount of about R18 billion that needs to be invested in order to accommodate the entry of independent power producers into the grid,” he said in an interview with Johannesburg’s Business Day TV. “Now somebody needs to pay for that and it can’t be Eskom without recovering that cost in one way or another.”

The entry of private power producers into the industry would give Eskom the ability to carry out more maintenance on its ageing plants, he said. They could also replace plants that are due to close.

There is a “need to crowd in private capital particularly into the generation sector where a number of Eskom assets are reaching the end of their lives and they need to be retired,” he said. “Eskom doesn’t have the balance sheet to build additional capacity and we think that its time that we structure the electricity industry in such a way that we encourage private investment, particularly in generation.”

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I take what he say’s with a pinch of salt.

His strings are pulled by CR and his troop. He mentioned on BDTV that his mandate from CR is not to retrench any people and he is sticking by that.

So all he is there for is to execute what CR and his troop tells him to do.

The failure will just get worse. Now they will have a boertjie to blame.

R18 billion now and when actually implemented it will cost 50 times that… Watch this space.
SOE’s are a cash cow for the connected few.

Sounds like he’s been bought already

OK. But start cutting expenses. Save money throughout the system. Get rid of people. Etc. etc.

Instead of wasting funds on attempts to keep unreliable generation units online. Those funds could rather go towards accessing the surpluses from mines, IPP’s, etc.
The objective should be to remove the inefficient, cash burning and heavy polluting units as the EAF eases due to these industries producing their own power … Instead of pouring money into revamping the old units.

Eskom’s approach to generation, remains flawed despite it’s significant contribution to the current crisis.

Eskom (as an ANC extension) wants to “have its cake and eat it”.
On the one hand they want to keep all the jobs and then have “private capital” install new capacity, but do not want to buy any excess to the grid? What is the point of the proposed split-out of Transmission if the only supplier is Eskom Generation?
I think Mmmm said it so well.

So the estimated cost is R18bn to connect independent power producers onto the grid.

Remind me again where we are standing with Kusile and Medupi project overruns in rand terms, yet you call R18bn substantial.

In the bigger scheme of things I think R18bn is a small price to pay for the damage ESKOM has inflicted on business, the markets and the SA populace in general.

The windfarm on my property had to fund and build there ouw substation for the connection. Eskom supplied the cable from there to the line all 100 meters of it.

I think he’s blowing the SASOL and Nampak type smoke. Eskom flavour, that institutional old boy shareholders who have no real skin in the game sometimes buy into. He fails to mention that costs (new transmission lines etc) are only needed for the REIPP type schemes in remote areas that are really just a variation in etolls in my opinion. i.e. take a good concept and get greedy for loafing ANC elites to benefit.

There are 100’s of MW of power from industry co-generation schemes that Eskom brutally stifled just waiting to be plugged into the existing grid. BUT, these will erode Eskom and municipal electricity profits and generally not benefit the ANC cadres who are looking for mega bucks.

Go kid someone else.

He’s just a puppet on a string

A month at the helm and he’s already toeing the party line….

Not even a month yet…

He has not even been paid yet… Maybe they get paid in advance.

How could one sell his country like this… Where is the decency.

I have great respect for Vuyani Jarana, Ex SAA CEO who could not be bought.

Forget it. The dilemma is quite obvious – if those who actually pay for electricity were permitted to generate their own, Eskom will left to generate electricity solely or largely for those who do not and will not pay – the municipalities; Soweto; government departments; etc., and Eskom will come crashing down and take down good ‘ole long and all-suffering RSA with it. And authorities such as the WC will simply devise creative means to milk the already dry udders of those who actually still pay – increases in property taxes based on inflated property values (which in the WC already exceeds actual market value – Jeez, if they can produce a purchaser for my house at their valuation, I would be eternally grateful); “availability” fees (imagine getting a monthly bill from Checkers for the mere fact that they have groceries on their shelves, even if you do not buy anything); the registration of solar panels on private residences (and the viability of levying a monthly “licence” fee for leave to generate power or heat water in such a manner probably already in discussion …).

I would like the journalist to interrogate the “about R18 billion that needs to be invested in order to accommodate the entry of independent power producers into the grid”.

All costs to connect to the grid are borne by the IPP and are part of the price that the IPP’s bid. There should be no cost to Eskom.

To me this is just the monopoly incumbent electricity producer and grid operator creating a barrier to new entrants and is why in every country (capitalist, communist, east and west) that the grid is separated from generation

Let’s spell this out:
1) Eskom has a debt of plus-minus R440 billion rand. This has been caused through corruption and mismanagement by the ANC. Proper action must be taken to reduce Eskom’s costs, and damn the greedy obstructionist unions.
2) South Africa MUST have a reliable power supply to prosper – and more than is currently available so new businesses can invest here.
3) Yes, we still do need coal – but the world is undeniably moving away from coal to renewable energy. So we need to lessen our dependence on this massive polluter.
4) Yes, Eskom does need time to undo the horrific lack of maintenance occasioned by the Zupta administration.The answer: buy in additional power in the meantime.
5) Significant amounts of renewable power can be brought aboard within a year. These will be paid for BY THE PRIVATE SECTOR, who must then be enabled to sell power to Eskom for distribution.Laws must be changed and fast.
6) THIS IS ABSOLUTELY VITAL: THE REALISATION MUST DAWN ON ESKOM AND THE ANC’S MIND THAT ESKOM IS A DINOSAUR. SOUTH AFRICA CAN NO LONGER RELY ON GETTING 95% OF ITS POWER FROM A COMMUNISTIC-STYLE CENTRALISED PRODUCER. THE WORLD IS CHANGING, AND SOUTH AFRICA IS BEING LEFT BEHIND. WE NEED TO MOVE ON, AND WE HAVE THE RESOURCES TO DO SO RIGHT AT HAND.

The truth of the matter is everything that the government cannot fund out of the national budget has to be privatized… finish-en-klaar. If any entity requires a bailout, government needs to hand it over to private owners…

Ah but do not forget the cookie jar of the GEPF / PIC. I am surprised we haven’t seen a “Motsepe Energy” type “business” either buy into Eskom or build a power station using this money. The only reason I can think of, beside incompetence and greed, that it hasn’t happened is that there are too many Motsepe’s jockeying for position to get to the trough.

cough cough – coronaeksom

ZAR 18b to connect to the grid?? Come on ….

Go to those resilient fellows forced to survive in the townships – they’ll show you how to connect to the grid for free.

Eskom is both the iceberg and and the titanic. The ANC brains trust has no silver bullet for this mess, just like it doesn’t for all of the other SOE’s that it has looted into bankruptcy. next month Tito will stand there and tell us how our worlds are going to shrink courtesy of the increases in taxes required to PAY FOR ALL THIS [insert expletive]. the cost of the ANC being in ‘power’ has caught up with them and us. the future is over and there is no turning back.

What must Eskom invest in order to onboard more generation from IPP?

If these are users on existing network of any significant size they already have the entire reverse feed in place. Electricity works both directions through same cables transformers etc. Fine : stick to NRS097 and no little user on a shared feeder will in any event be allowed to connect big solar.

If these are IPP of the farm scale, there is an existing pricing structure in place to charge them for connection to the transmission system.

Of course he’s going to say that. Eskom is not his company. He now works for a corrupt Government who’s in it to fleece every SOE. In effect he’s now a servant to the Elite.

He’ll soon disccover how different a State Run Entity is to a listed public com

Give or take 6 months and he too will be history

Agree if not sooner, just what the cadres wanted, then they will say “You see we tried! We neeed a comrat for this job.”

End of comments.

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