South Africa has an electricity infrastructure plan to keep the lights on and to decarbonise the electricity sector. The plan was promulgated by Gwede Mantashe in his capacity as the Minister of Mineral Resources and Energy on October 18, 2019. The plan sets out nine policy decisions to ensure the security of South Africa’s electricity supply.
It is an indictment on all of us as South Africans that with such a plan in place, the country still suffered 47 days of rolling blackouts during the 2020/2021 financial year. The financial year 2022 is set to be far more catastrophic and yet no one is being held to account for the debilitating effect of load shedding on the economy. Clearly, South Africa is not a country known for holding decision-makers to account.
The approved electricity infrastructure plan is very prescriptive and provides clear actions to be undertaken: 6 000MW of new photo-voltaic generation capacity at a rate of 1 000MW per annum and 14 400MW of new wind power capacity at a rate of 1600MW per annum should be commissioned by 2030. In the same vein, a total 3 000MW of gas generation capacity should be installed, with an allocation of 1 000MW in the year 2023 and 2 000MW in the year 2027.
The prescriptive and yet implementable plan also provides for uncapped procurement of distributed generation capacity up to and including 2022, and after that a total of 4 000MW of distributed generation at 500MW a year up to 2030. The embedded generation installations of more than 10MW needed to have a “Ministerial deviation in line with the Electricity Regulation Act”. The embedded generation threshold has since been increased from 10MW to 100MW.
The amendment enables private producers to install up to 100MW of embedded generation capacity without needing to obtain a licence from the National Energy Regulator of South Africa.
Eskom’s existing generation capacity is a dominant variable in the electricity infrastructure plan, and it will continue to be so in the foreseeable future. The current and future performance of Eskom plants is critical for the security of electricity supply and heavily influences the capacity that is planned to be introduced in the future. The plant performance projections in the plan start with the energy availability factor of 71% in year 2022 and increases to 75.5% by year 2025 and beyond.
The electricity supplier of the last resort in terms of the Electricity Regulation Act is the Department of Mineral Resources and Energy (DMRE). It is neither Eskom nor the Department of Public Enterprises.
To keep the lights on and to decarbonise the electricity sector the DMRE is accountable in terms of the Electricity Regulation Act to ensure that 2 600MW of generation capacity from renewable technologies is connected to the national grid every year until 2030, 1 000MW and 2 000MW of gas power plants are connected to the national grid in 2023 and 2027 respectively, and a total of 4 000MW of distributed generation are installed at a rate 500MW a year up to 2030.
In addition to the obligations above, the DMRE as the supplier of the last resort must cause Eskom to meet the plant performance projections that are in the approved electricity infrastructure plan that starts with the energy availability factor of 71% in the year 2022 and increases to 75.5% by 2025 and beyond.
Regrettably, Andre de Ruyter of Eskom is not committed to the energy availability factor of 71% in the year 2022 and to increase it to 75.5% by the year 2025 and beyond. He maintains that he “is a jockey riding a dead horse”. This is a contrary position to his commitment made in January 2019, where he promised to get the “dead horse” up and racing within 18 months.
Today he says, “Eskom is an old car, and it cannot be fixed”, which begs for a conversation on whether he appreciates his mandate as the Eskom CEO and the impact thereof on the country’s economy. The energy availability factor is currently below 64%. This low energy availability factor is the reason for the constrained capacity environment since 2018 that resulted in load shedding.
The approved electricity infrastructure plan of 2019 uses the cost of unserved energy of R87.85 per kilowatt-hour. Since December 2018 the amount of unserved energy due to load shedding is more than 5GWh. The opportunity cost to electricity consumers and the economy from electricity supply interruptions of more than 5GWh due to load shedding is at least R443 billion.
This figure is outrageous, and it is clearly an unmitigated disaster. The bondholders of Eskom have said nothing. The government continues to believe that Eskom is in safe hands, but the voters are having none of it. The ANC was punished for these blackouts during this month’s local government elections.
In his response to the electricity crisis, the finance minister wants the government to focus on the security of electricity supply and move away from the focus to fix Eskom. Finance Minister Enoch Godongwana asserted that “a focus on fixing Eskom over the past 13 years, rather than fixing the grid, was a mistake that had to be corrected. One of the things we need to talk about is how do you bring power to the grid.”
Godongwana’s statement is a mistake at best and reckless at worst. You cannot focus on the security of electricity supply to the national grid without fixing Eskom. The focus must be on the implementation of the electricity infrastructure plan of October 18, 2019, and also on getting Eskom to deliver the energy capacity factor of 75.5% by 2025 and beyond.
As mentioned earlier, the DMRE is the electricity supplier of the last resort in terms of the Electricity Regulation Act. Pursuant to the Electricity Regulation Act, Gwede Mantashe promulgated the electricity infrastructure plan on October 18, 2019. The reasonable expectation in the electricity infrastructure plan of 2019 is that Eskom must commit to the energy availability factor of 71% in the year 2022 and increase it to 75.5% by the year 2025 and beyond.
My engineering experience has taught me that infrastructure projects require a plan and once the plan is in place, you work that plan. You do not execute first, then plan as you go. Godongwana wants us to plan as we go.
Mantashe gave us the electricity infrastructure plan and the government must work this plan. De Ruyter cannot hide. Eskom must show up and deliver on the targets in the integrated resource plan.
Matshela Koko is Eskom's former interim group chief executive.