Successful bids of 2 000 MW emergency power to be announced soon - Ramaphosa

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  • The Department of Mineral Resources and Energy will soon be announcing the successful bids for 2 000 megawatts of emergency power, President Cyril Ramaphosa said. 
  • In December 2020, government and its social partners signed the Eskom Social Compact.
  • It outlines the necessary actions to meet the country's energy needs now and into the future.

Restoring Eskom to operational and financial health and accelerating its restructuring process is central to South Africa's economic recovery plan, President Cyril Ramaphosa said during his State of the Nation Address (SONA) on Thursday.

"Eskom has been restructured into three separate entities for generation, transmission and distribution. This will lay the foundations for an efficient, modern and competitive energy system," he said.

He said Eskom was making substantial progress with its intensive maintenance and operational excellence programmes to improve the reliability of its coal fleet.

"We are working closely with Eskom on proposals to improve its financial position, manage its debt and reduce its dependence on the fiscus. This requires a review of the tariff path to ensure that it reflects all reasonable costs and measures to resolve the problem of municipal debt," said Ramaphosa.

In December 2020, government and its social partners signed the Eskom Social Compact, which outlines the necessary actions to meet the country's energy needs now and into the future.

Over the past year, there have been attempts "to urgently and substantially" increase generation capacity in addition to what Eskom generates, according to Ramaphosa. He said the Department of Mineral Resources and Energy will soon be announcing the successful bids for 2 000 megawatts of emergency power. 

Independent power producers

In addition, Ramaphosa said the necessary regulations have been amended and the requirements clarified for municipalities to buy power from independent power producers. Systems are being put in place to support qualifying municipalities.

"Government will soon be initiating the procurement of an additional 11 800 megawatts of power from renewable energy, natural gas, battery storage and coal in line with the Integrated Resource Plan 2019. 

"Despite this work, Eskom estimates that, without additional capacity, there will be an electricity supply shortfall of between 4 000 and 6 000 megawatts over the next five years, as old coal-fired power stations reach their end of life. As part of the measures to address this shortfall, we will in the coming weeks issue a request for proposals for 2 600 megawatts from wind and solar energy as part of Bid Window 5," he said.  

This will be followed by another bid window in August 2021.

He said recent analysis suggests that easing the licensing requirements for new embedded-generation projects could unlock up to 5 000 megawatts of additional capacity and help to ease the impact of load shedding.

"We will therefore amend Schedule 2 of the Electricity Regulation Act within the next three months to increase the licensing threshold for embedded generation. This will include consultation among key stakeholders on the level at which the new threshold should be set and the finalisation of the necessary enabling frameworks," said Ramaphosa.

"Eskom has already started work to expedite its commercial and technical processes to allow this additional capacity on to the grid without undue delay."

Environment 

Ramaphosa added that the country cannot lose sight of the threat that climate change poses to our environmental health, socioeconomic development and economic growth. Therefore, in line with SA's commitments under the UN Framework Convention on Climate Change and its Paris Agreement, Eskom, the country's largest greenhouse gas emitter, has committed in principle to net zero emission by 2050 and to increase its renewable capacity. 

"Eskom will be looking to partner with investors to repurpose and re-power part of its coal fleet. This will be done in a way that stimulate investment, local economic activity and local manufacturing, as part of a just transition," said Ramaphosa.

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