Related Articles
Forward article link
Share PDF with colleagues

South Africa to embrace off-grid generation

Africa’s richest nation will resort to allowing industry to generate its own power, to relieve pressure on beleaguered state utility Eskom amid load-shedding crisis

South African president Cyril Ramaphosa has publicly stated that his government will facilitate the generation of power by private firms, and even households, to relieve pressure on the national grid during ongoing periodic load-shedding and blackouts.

Ramaphosa heard from business leaders at the Business Unity South Africa’s (BUSA) Economic Indaba on 14 January in Johannesburg that energy supply was the number one priority and urgent action is needed. Industry, particularly the mining sector, has been lobbying hard for regulatory approval to generate its own power.

Amid a deteriorating economic and employment situation, and a falling sovereign credit rating, power has become a pre-eminent issue in national politics and is threatening to engulf the presidency.

“For the first time… let us have self-generation,” Ramaphosa said to the conference. “We have opened up a new era ... we are now embracing the fact there are those companies and households that want to generate their own energy.”

Transition from coal

South Africa depends on coal for an overwhelming majority of its power generation. Its network of coal-fired power stations is rapidly aging and in desperate need of investment to even maintain existing levels of supply. The most recently built plants have been beset by cost overruns and dire quality control problems, reportedly resulting from state-capture and corruption during the Zuma era.

State-owned utility Eskom is in no position to finance improvements; indeed, its finances are a major contributory factor to the nation’s precarious financial position.

The country is trapped between needing huge investment that it cannot afford on one hand and the demands of multilateral institutions to tackle climate change on the other. The World Bank and its affiliate International Finance Corporation will certainly not bankroll investment in another wave of coal-fired generation.

Africa’s richest nation will resort to allowing industry to generate its own power, to relieve pressure on beleaguered state utility Eskom amid load-shedding crisis

The department of mineral resources launched the cabinet-approved Integrated Resource Plan in October 2019, including ambitious plans to transition to generating a far greater proportion of energy from renewables. It also includes ramping up gas-to-power via fields that will soon come onstream in neighbouring Mozambique as well as, several years later, its own huge offshore Brulpadda field, which is undergoing further testing by Total during 2020.

Minister of mineral resources and energy Gwende Mantashe provided more detail on the plan at Africa Oil Week in November but some doubt the commitment of the union-affiliated leader dubbed ‘King Coal’ to move to alternative sources, with its inevitable consequences for employment in the country’s mines.

In any case, the integrated plan would take years to implement and there is overwhelming immediate need. Having lost faith in the ability of the government to turn around Eskom within a reasonable timeframe, industry has turned its attention to operating outside the grid.

“The reality of the matter is that we need to fast track processes of diversifying sources of electricity generation,” Busa president and prominent businessman Sipho Pityana says to local news broadcaster ENCA. 

Load shedding 

Load shedding—the deliberate shutting down of power distribution to all or part of the grid to relieve demand pressure on systems—is an ongoing reality. Eskom was forced into level six load shedding in December—shedding 6000MW and implying a 40pc decrease in generating capacity resulting from an unspecified technical problem—up from level four in previous months. The most severe warning that Eskom has issued was level eight, which equates to Cape Town experiencing a blackout for up to 4.5 hours.

Eskom has been reduced to issuing daily statements about the stability of the grid and the possibility of load shedding, complete with requests to its customers to turn down air conditioning and even switch off electronic devices.

The management of Eskom has understandably come under heavily pressure from all sides in the media—from trade unions and business interests—and an overhaul of its leadership is well underway. A new interim board chair, Malegapuru Makgoba, was appointed on Thursday, to replace Jabu Mabuza.

The nuclear industry, a significant contributor to power behind coal, is also undergoing an overhaul. The Department of Mineral Resources and Energy (DMRE) released a statement on Wednesday relating to the resignation of the board of the Nuclear Energy Corporation of South Africa (Necsa). “Governance must be stable and strengthened in order to adequately attend to operational and financial risks in the entities,” DMRE noted.

Also in this section
Battlefield China in Russo-Saudi tussle
10 July 2020
Russia and Saudi Arabia have largely buried, rather than settled, their issues. China is a microcosm of the ongoing tension
Letter from Australia: Gas-fired recovery hits turbulence
10 July 2020
The Australian government’s vision is at risk of unravelling under intense scrutiny
Letter from the Middle East: NOCs juggle priorities
8 July 2020
From boosting oil production to throttling it back and with challenging oil and gas dynamics in both the short and longer-term, the region’s producers have their hands full