South Africa to co-host grid financing seminar with JSE in September
Electricity Minister Dr Kgosientsho Ramokgopa reports that he is planning to co-host a seminar with the JSE in September to unpack various financing options for the expansion of South Africa’s electricity grid.
Insufficient investment in the transmission system over the past number of years has emerged as a key constraint to the integration of much-needed new generation capacity and is particularly acute in regions with high-calibre wind and solar resources such as the Eastern, Northern and Western Cape provinces.
Ramokgopa reports that government has received various grid-related funding proposals, including from the International Partnership Group that has agreed to extend $8.5-billion in concessionary finance under the Just Energy Transition Partnership, as well as from the Brics bloc’s New Development Bank.
“We want to understand, firstly, what is the size of these facilities that are available, what are the conditions . . . [and] what are the kind of structures that, in the view of the financing community, will be acceptable for them to participate in,” he reported during his weekly briefing on the implementation of the Energy Action Plan.
Lessons will also be shared from countries that have experienced similar grid constraints, with the Minister highlighting Brazil as an example of a country from which South Africa could learn.
A report outlining the possible financing options would be drafted for Cabinet consideration and Ramokgopa indicated that it could have implications for the current moratorium imposed on Eskom with regards to the utility raising new debt. The moratorium is one of the conditions linked to the R254-billion Eskom debt relief package approved earlier this year.
The Minister highlighted a footnote to the National Treasury conditions, which indicated that Eskom could approach the Finance Minister should it believe there was a case for it to take on new debt.
He did not immediately indicate whether government would consider public-private partnership models for the delivery of new grid infrastructure, saying only that any model decided upon should be responsive to the views of the private sector, “otherwise you are unlikely to attract any significant amount of interest”.
It is estimated that up to R235-billion in investment is required to strengthen and expand the grid in a way that positions it to connect the 53 GW of new generation capacity that will be required by the early 2030s, and there are concerns that the balance sheet of the unbundled National Transmission Company South Africa will not be sufficient to support such a roll-out.
News of the grid-financing seminar comes days after Eskom and independent power producers agreed to adjusted new rules for grid access, which resulted in G7 Renewable Energies withdrawing its court case against the Interim Grid Capacity Allocation Rules (IGCA) unveiled by Eskom on June 17.
Many of the initial IGCA conditions that were considered onerous by the industry have been adjusted, including those relating to water-use licences, wind-measurement periods and land leases.
In addition, Eskom is reportedly close to finalising the approach it will be taking to the issue of curtailment as it moves to immediately unlock scarce grid capacity in high-potential renewables regions ahead of a grid investment roll-out.
Eskom is likely to outline the approach it will be taking when it publishes an updated Generation Connection Capacity Assessment later this month.
Curtailment involves the reduction of the output from renewables plants in response to system-security needs or constraints and is widely employed globally to release grid capacity.
Engineering News understands that a preliminary analysis has indicated that if Eskom accepts curtailment of no more than 10%, the capacity of a grid-constrained province such as the Western Cape to host additional renewables generators could be almost doubled, and that as much as 4 GW of additional capacity could be connected immediately.
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