South Africa has a new electricity market – but it’s still rough going

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Wits Adjunct Professor Rod Crompton breaks down the possible headwinds that South Africa’s new competitive electricity market faces.

as the single largest risk to South Africa’s economy. At the end of March 2020 Eskom’s debt stood at

“The Act will lead to long-term energy security, a more competitive energy system, more rapid uptake of renewable energy sources, and ultimately lower energy prices for all South Africans.”. However, electricity market reform is a process that evolves over the years as technologies and markets change. It is not a destination.

New technologies are disrupting the old way of doing things. There is no national champion driving electricity reform and with weak government there is the risk of reform being diverted elsewhere. published in 1998. The first round of efforts to implement this policy and to begin the unwinding of Eskom’s monopoly led to:the establishment of the Independent Power Producer Procurement Programme Office in 2006But this first attempt at reform petered out by 2015.

The new act grants “third-party access” to such infrastructure. But that access is not defined. Usually, the first party is the owner of the infrastructure and the second party is its customers. The third party is anyone else. In contrast, the licence period for long-life distribution assets is left to the regulator to decide.To deviate from an integrated resource plan or a transmission development plan if it is in the national interest and when it is “reasonable and justifiable”, without public consultation.

 

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