There's light at the end of Eskom tunnel

2015-04-19 15:00

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SA might be in the midst of a power crunch, but the recently introduced IPP plan is among the top 10 in the world for investment

South Africa’s recent energy crisis has left many feeling very 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 not all is lost.

In fact, as a country and a sector, we have come far and have achieved numerous noteworthy accomplishments.

Less than five years ago, South Africa didn’t have a viable independent power producer (IPP) programme, yet today, after the successful launch of the renewable energy independent power producer procurement programme, 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, the renewable energy IPP procurement programme has been one of the local power sector’s success stories – not only by ensuring more clean energy in South Africa’s energy mix, but by ensuring that much-needed capacity is available on the national grid within a short period of time.

Since the inception of programme, 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 requested proposals for its coal programme.

The department is working on a number of other programmes, including gas, cogeneration, 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.

As the buyer of electricity, it is crucial that Eskom has the financial capacity to purchase power produced by these IPPs.

The power utility also provides the grid infrastructure required to connect the electricity generated by these projects so it can be accessed by consumers.

Prior to the launch of the renewable energy IPP procurement programme, a number of industry experts raised concerns about the extensive upgrades that would be required to Eskom’s grid and transmission infrastructure for the IPP programme to succeed.

So far, Eskom has connected 39 IPP projects to the national grid under the renewable energy IPP procurement programme process, adding 2?050?megawatts of contracted generation capacity, and 36 of these 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 coming on board.

Some projects in the third round of the renewable energy IPP procurement programme were affected by delays in connection due to upgrades required on the grid.

The country now finds itself in a dilemma. On one hand, government is encouraging more IPPs to produce more power to meet the current power deficits, yet on the other hand, there is a key challenge in connecting these projects if the grid infrastructure is not upgraded timeously and in line with when these projects are expected to come online.

Eskom is fully cognisant of the 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.

Creative solutions will be required to ensure that the current grid connection challenges do not adversely affect future programmes, and innovative thinking will be required to ensure that Eskom’s financial stability does not affect its ability to act as the single buyer.

With Eskom’s current woes, it may be fruitful for policy makers to consider moving away from a single-buyer model and investigate the potential of having multiple buyers.

Consumers may also be required to make sacrifices in terms of increased electricity costs and through adopting energy-efficient mechanisms in their homes and businesses.

It may appear to be all doom and gloom, but in spite of the challenges, not all is lost. The current energy crisis presents an opportunity for us to rethink our strategies and perhaps from this challenge, we can find more efficient mechanisms to ensure a secure energy future.

Mabhena-Olagunju is an adviser to IPPs on the continent

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