EnergyWatch

South Africa finally sees light in the dark

In the midst of a crippling energy supply crisis, South Africa's president vows an imminent power auction and several other promotional actions for expanding the country's wind capacity by roughly 16 GW ahead of 2030. GWEC also sees signs of looming gigawatts.

Many South African residents have had to use analog light sources in recent months due to power outages tied to the floundering state-owned utility, Eskom Photo: Siphiwe Sibeko/Reuters/Ritzau Scanpix

Energy supply policy seldom appears high on the list of talking points when heads of state make ceremonial speeches. Nonetheless, the subject occupied much of South African President Cyril Ramaphosa's annual national address delivered on Thursday. Ramaphosa dove down into the details of energy policy initiatives the country's government will enact.

The Department of Mineral and Energy Resources says it will soon issue a decree implementing last year's Integrated Resource Plan that sets out to achieve add 40 GW ahead of 2030 – including approximately 8 GW of solar power and almost 16 GW of wind energy.

The latter will be helped along by the government opening the delayed fifth South African renewable energy (RE) tender round, REIPPPP, and joint efforts will also be made with developers to expedite projects from the preceding round. Further negotiations will also need to be held on additional power sales from existing projects. According to the South African Wind Energy Association (SAWEA), the country's excess wind fleet capacity of around 500 MW would become immediately available, if the agreed-upon maximum limitations were lifted.

Meanwhile, municipalities will be able to buy electricity directly from independent power producers (IPPs).

"It's a game changer," SAWEA said about the latter measure in a Twitter post.

Insolvent giant

All in all, the speech was well received by the interest group. However, the possibility for municipalities to circumvent state institutions when buying power – which otherwise pales in comparison to the prospect of new public tenders and a massive capacity build-out – still says quite a lot about why supply policy ranked so highly in the President's national address.

This is not least due to the fact that state-owned utility Eskom, Africa's largest power generator and supplier of more than 90 percent of South Africa's electricity, is being held together by its shoe strings.

Ramaphosa has on several occasions stated that Eskom is too big to fail - although critics claim that the utility, after many years with poor performance, has long been a failure. With a debt of ZAR 420 billion (EUR 25.83 billion), Eskom is technically bankrupt and has neither the means nor the time to maintain the country's ageing fleet of, primarily, coal-fired power plants.

Daily power outages

Even though the president initiated a grand clean-up after taking office in February 2018 – the latest dismissals citing corruption were announced in late December – the consequences of the problems have never been more extensive.

In recent months, sudden power outages have been more the rule than the exception. Of its 47.2 GW, Eskom budgets with a constant operational capacity reserve of 2.2 GW and in these months has taken around 5.5 GW offline due to planned maintenance. Moreover, the utility has reserved 9.5 GW for unplanned breakdowns.

All this, however, has been inadequate every day since Dec. 4: Thus far this year, a daily average of 3 GW has been removed from the grid to avoid network collapse.

These major breakdowns have not only meant that some South African residents were unable to see the president's televised speech. Rather, the 1.352 TWh – corresponding to 530 hours of power that was load shed last year -- removed ZAR 60-120 billion from the nation's burdened economy in 2019, according to a report from the independent Council of Scientific and Industrial Research (CSIR) published in January.

The report also stated that, if serious measures are not taken, things will only become worse in the coming years. This year, South African households and businesses can look forward to 2 TWh in lacking generation, and this will increase to 3 TWh in 2021 and then to 4.6 TWh in 2022.

GWEC: 3.3 GW in five years

Such insufficiency is also greater than assumed in the ministerial resource plan – a plan that, even prior to implementation, is already stumbling. For instance, 244 MW were not connected to the grid as planned in 2019, and South Africa didn't even make it onto the list when the Global Wind Energy Councils (GWEC) presented its annual overview of new installations in the Middle East and Africa

 

Even though it's been almost five years since the winners of the latest REIPPPP round were announced, Eskom signed the last power purchase agreements (PPAs) in 2018 – paradoxically justifying that the country already had a surplus of electricity. That's why many projects were delayed – similarly to the latest auction, which has been announced for nearly 18 months.

This is certainly one of reasons why bypassing Eskom looks like a real game changer for the South African wind industry.

Immensely relieved

In its annual report, which was compiled before the president's speech, GWEC projects an imminent improvement for Africa's most industrialized nation. Of the 10.7 GW the organization forecasts installed in the region during the next five years, South Africa is expected to take the largest portion at 3.3 GW.

SAWEA is also pleased with all of the points made in Ramaphosa's speech.

"The industry is immensely relieved to receive such strong support from the president, who acknowledged the key role that the country’s renewable industry has to play in delivering power," SAWEA Chief Executive Ntombifuthi Ntuli tells domestic daily Business Report, while remaining cautious about saying too much.

English Edit: Daniel Frank Christensen

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