South Africa’s recent energy crisis has left many citizens feeling disappointed with what would appear to be a lack of strategic planning by the government and Eskom.
While the current load shedding woes may have diminished the confidence in South Africa’s energy sector, I dare venture to say that all is not lost and that in fact, as a country and a sector, we have achieved numerous noteworthy accomplishments.
Less than five years ago, South Africa didn’t have a viable Independent Power Producer programme (IPP).
Yet today, after the successful launch of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), South Africa has an IPP programme that is ranked among the top 10 in the world for investment.
Now in its fourth round of bidding, REIPPPP has been one of the South African power sector’s success stories. Not only by ensuring more clean energy, but also by ensuring that much needed capacity is available on the national grid within a short period of time.
Since the inception of REIPPPP, we have seen the Department of Energy ramp up its efforts to diversify the country’s energy mix by developing IPP programmes across various technologies. More recently, it has released an RFP for its coal programme.
The department is also working on a number of other programmes including gas to power, co-generation, nuclear and small-scale renewables.
While leaps and strides may be taking place at a departmental level, it is important to note that Eskom remains the critical piece of this energy plan.
Without a financially sound and technically stable power utility, many of these programmes will not succeed. Eskom is the buyer of electricity produced by IPPs. As such it is crucial that it has the financial capacity to buy the power produced by these IPPs.
Further Eskom also provides the grid infrastructure required to connect this electricity generated by these projects so that it can be accessed by consumers.
Prior to the launch of REIPPPP, a number of industry experts raised concerns about the extensive upgrades that would be required to Eskom’s grid and transmission infrastructure in order for the IPP programme to succeed.
So far, Eskom has connected 39 IPP projects to the national grid under the REIPPPP process. This has added 2 050 MW of contracted generation capacity and 36 of these projects have achieved full commercial operation.
That being said, it is also important to point out that the grid is under severe pressure especially in light of the various new projects that are coming on board. Some projects in round three of the REIPPPP programme were affected by delays in connection due to upgrades required on the grid.
The country now finds itself in a dilemma. On the one hand government is encouraging more IPPs to produce more power to meet current deficits. On the other hand there is a key challenge in connecting these projects if the grid infrastructure is not upgraded on time and in line when these projects are expected to come online.
Eskom is fully cognisant of the current grid challenges and is investigating a number of solutions, some of which we hope to hear on May 5 at the annual Renewables and Energy Forum South Africa.
Creative solutions will be required to ensure the current grid connection challenges do not adversely affect future programmes; furthermore, more innovative thinking will be required to ensure Eskom’s financial stability does not impact on its ability to act as the single buyer.
With the current woes faced by Eskom, it may be fruitful for policymakers to consider the possibility of moving away from a single buyer model where Eskom is the sole buyer of electricity and perhaps investigate the potential of having multiple buyers to alleviate the pressure on Eskom.
Consumers may also be required to make sacrifices in respect of increased electricity costs and through adopting energy efficiency mechanism.
It may appear to be all doom and gloom but in spite of the current challenges that face South Africa’s energy security, not all is lost. This current energy crisis presents the opportunity for us to rethink our strategies and perhaps from this challenge we can find more efficient mechanisms to ensure energy security in the future.
* Mabhena-Olagunju is managing director at DLO Energy Resources and founder of the Renewable Energy Forum South Africa.