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For years, South Africa’s dependency on Eskom’s primitive coal-fired power stations left the country leagues behind the rest of the world in energy production and supply. This not including apparent issues such as loadshedding, the uniquely South African swear word.
However, looking at solutions, the government now aims to create a more open market, removing the monopoly from turmoiled Eskom. This will be achieved if the draft National Infrastructure Plan 2050 (NIP 2050), now gazetted for public comment by the Department of Public Works and Infrastructure, is approved.
In short, the NIP 2050 recommends a focus on strengthening the performance of state-owned enterprises, sector-specific regulations, state capacity and private participation in public infrastructure delivery and management. The NIP 2050 aims to create certainty in energy sector reforms and is expected to address critical blockages to potential economic growth and development.
According to the draft plan, since 2014, loadshedding is a result of a combination of factors, such as delayed commissioning, the underperformance of new-build coal generation capacity, and the degradation of the existing Eskom coal fleet—with the energy availability factor declining from 94% in 2002 to 67% in 2019.
Adding to the list of state-owned enterprises (SOEs) failing over the past few decades, the department also noted that Eskom has declined from a world-leading utility to one that is financially insolvent, operating at very low levels of energy availability while jointly struggling under a load of poorly designed and project managed new mega coal projects.
According to the NIP, notable plans are in the pipeline for the energy sector. These include:
- Significant strides are being made in addressing challenges at Eskom, as evidenced by the unbundling of the entity into three separate entities, namely Generation, Transmission and Distribution divisions with ring-fenced balance sheets and governance structures.
- The lifting of the licence limit for embedded generation from 1MW to 100MW is another recent show of the government’s commitment to market reform and ensuring electricity is available.
- Capacity in the State and its entities be strengthened to effectively regulate, plan, and oversee energy delivery.
- The transition away from fossil fuels progresses in a convincing and just manner. New installed capacity consists primarily of wind and solar where South Africa has a comparative advantage.
- The top 10 municipalities that deliver to large populations must either be given support and/or capacity developed to maintain distribution systems by 2023/4 adequately.
It is also important to note; the department states that the NDP set a target that more than 90% of the population should enjoy access to grid-connected or off-grid electricity by 2030. To realise this vision, the department explains that South Africa’s energy system will be supported by effective policies, institutions, governance systems, regulation and, where appropriate, competitive markets.
“Coal will contribute significantly less to primary energy needs in the future, while gas will have an important enabling role, energy supply will be increasingly dominated by renewable energy resources– especially wind and solar which are least cost and where South Africa has a comparative advantage. Off grid innovations such as micro grid solutions will increasingly contribute to electrification, while at the same time providing opportunities for industrialisation and empowerment.”
When looking at how this will be done, the NIP makes several points, including:
- The approach to defining the energy mix will become technically strong. The imperative for expanded capacity in a context of accelerated technological change and a changing energy mix requires that the institutional planning and delivery mechanisms become more adaptive, responsive and dynamic.
- ·Market structure will facilitate more responsive and sustainable supply. This will require stabilization and separation of Eskom and the introduction of greater private participation.
- State capacity will be strengthened to effectively regulate and oversee energy delivery.
However, while the Department of Public Works has grandiose plans in the pipeline to improve the country’s electrical supply, will they be able to pull it off? Especially considering gov wants the State to once again regulate and oversee energy delivery within the country. This on the back of a failed and corrupted Eskom.
Just looking at the recent controversy surrounding Eskom’s latest multi-billion Rand project failure at Medupi Power Station on 8 August 2021, coupled with their terrifying history—one cannot but wonder just how this will all play out.
Therefore with their track record in mind, should the government instead step back and allow the private sector to expand into the energy sector, pulling SA out of the “electricity is precious era”? Or do you feel they will pull this off successfully?
Share your views in the comment section below.