Eskom and South Africa are on course to resolving the country’s electricity crisis, EE Business Intelligence managing director and energy expert Chris Yelland has stated.
Yelland has often been cautionary or given a negative outlook on the future of rotational power cuts in South Africa, making the positive developments he highlighted significant.
He recently stated that he had the impression that some “big and positive things” were underway in the electricity supply industry and within Eskom.
“More so now than before, I have a growing sense that things are starting to move,” Yelland said.
Yelland listed several developments in the electricity sector as motivation for his positive outlook, including:
Eskom’s Just Energy Transition and other JET plans will see Eskom decommission most of its coal-fired power plants by 2030.
The restructuring/unbundling of Eskom’s transmission division into a separate entity by the end of 2022.
The establishment of the new national transmission company for South Africa to support more electricity generators.
Changes to the Electricity Regulation Act to put in place the necessary legal framework for the above, recently published for public comment.
Regulatory and pricing methodology changes underway in light of the above.
The establishment of electricity and balancing markets.
Municipal generation and procurements from Independent Power Producers (IPPs) by metros.
Facilitating bilateral and multilateral power purchasing agreements for electricity wheeling and trading.
A significant increase in IPPs due to bid windows 5, 6, and 7 of the renewable energy IPP procurement programme (REIPPP)
A gas-to-power procurement programme that will add 3,000MW of capacity to the grid.
Battery storage procurement by Eskom in terms of the Integrated Resource Plan.
Significant self-generation, embedded generation, and distributed generation by customers.
Yelland also recently spoke to Talk 702’s Bruce Whitfield regarding his change in attitude about South Africa’s future electricity prospects.
“We’ve become accustomed to a lot of doom and gloom, negativity, and a declining performance of the electricity supply in South Africa,” Yelland said.
“The amendment to the electricity regulation act has very far-reaching positive consequences for South Africa, and it comes amidst a whole lot of other, somewhat obscure, but also positive developments, which I like to call ‘green shoots’”
Yelland said some ideas around electricity policies that go back more than 20 years are finally starting to take shape.
That includes concepts from the energy policy white paper of 1998, which had never been enacted.
Of the changes proposed in the policy paper, Yelland said the most urgent step was to finalise Eskom establishing an independent transmission grid company.
The utility is riddled with nearly R400 billion in debt, making it unattractive to potential investors.
Yelland said this was primarily down to the performance of two divisions — generation and distribution — which are also set to be spun off as separate entities.
The generation division has suffered from the poor performance of Eskom’s ageing coal-fired power stations and corruption-riddled projects at these stations, and excessive spending on diesel for emergency generation.
Distribution has a historical debt of billions owed by municipalities.
He said these two businesses have dragged down Eskom’s transmission division, which typically performed quite well.
This could be a substantial hurdle in the country’s diversified electricity roadmap, as the transmission network will require significant upgrades to facilitate more generators coming online.
“It needs to make huge investments in the grid to enable a truly competitive and diverse generation sector comprising not just Eskom, but literally hundreds or even thousands of other generators who can transmit power across that grid and can do so on a competitive basis,” Yelland said.
“If you are going to get this investment into the grid, you need to create a credit-worthy grid company that is not dragged down by the toxic debt of the distribution and generation businesses.”
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