The next steps in President Cyril Ramaphosa’s structural reform agenda are being taken through power market and regulatory reforms that will facilitate increased private investment and competition.
This is a significant development. The energy minister and Nersa were acting as gatekeepers to market access, and new private power projects faced onerous, uncertain and lengthy delays. The previous licence exemptions were only for off-grid, self-generators and for projects less than 1MW.
No-one will lend Eskom money for new power generation until its balance sheet is deleveraged. The state has no fiscal space to invest in power and its ability to provide sovereign guarantees is evaporating. That leaves the private sector as the main source of funding for new power. A separate transmission subsidiary company will be established by year’s end. The next step will be taking that subsidiary out of Eskom as an independent transmission system & market operator , which has responsibility for least-cost and reliable power planning, procurement, contracting, dispatch, system balancing and transmission.Eskom unbundling will facilitate further utility-scale procurements.
With all the competitive options available to SA it is almost unbelievable that 20-year contracts are now being considered for emergency power ships and solar, wind or battery hybrid projects that, because of flaws in the procurement specifications, will involve huge curtailment and wasted energy.