Anton Eberhard | Investment in the transmission grid is critical for SA

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Eskom's Transmission Generation Connection Capacity Assessment of the 2024 Transmission Network (GCCA – 2024) depicts the generation connection capacity available within each supply area.
Eskom's Transmission Generation Connection Capacity Assessment of the 2024 Transmission Network (GCCA – 2024) depicts the generation connection capacity available within each supply area.

Eskom estimates that R130 billion is required to alleviate transmission constraints. It is not clear how South Africa's national power utility will finance this, though the transition to clean energy is inexorable, writes Anton Eberhard.


South Africa's clean energy transition is inexorable. It is driven not just by climate change concerns but also the economics of power generation. Large solar and wind energy projects, procured through reverse auctions, are now cheaper than the fuel and running costs of Eskom's coal power stations.

A business case can be made for a massive increase in investment in renewable energy and accelerated closure of Eskom's dirty, old and expensive coal power stations. There are plenty of equity and debt providers willing to finance this clean energy future, but the constraint now is access to the grid to transport electricity to consumers.

Grid access constraints include expensive and bureaucratic cost estimation and budget quote processes with Eskom's Transmission Division, and uncertainties and time to conclude use of system agreements and wheeling tariffs. But the biggest constraint is inadequate transmission capacity to evacuate power from the most favorable solar and wind resource areas. 

South Africa's national high voltage transmission grid was designed chiefly to take power from Eskom's coal power stations, built on the coalfields in the Northeast and Northwest, to the rest of the country. Now the grid needs to be reconfigured to connect renewable energy.

Renewable energy resources are distributed around the country, but the best solar resources are in the Northern Cape and the best wind resources in the Western Cape and Eastern Cape. 

Eskom recently published its Generation Connection Capacity Assessment of the 2024 Transmission Network (GCCA – 2024). As depicted in Figure 1, the GCCA-2024 shows that, following the construction of projects procured in the first five bid windows of the Renewable Energy IPP Program - there is no further capacity in the Northern Cape grid to evacuate power to the main load centers in Gauteng and elsewhere. And after bid window 6 (currently being auctioned), and IPP projects being developed with direct agreements with large customers, there will soon be no transmission capacity left in other key resource areas.

energy transmission
Eskom's Transmission Generation Connection Capacity Assessment of the 2024 Transmission Network (GCCA – 2024) depicts the generation connection capacity available within each supply area.

Eskom estimates that R130 billion is required to alleviate transmission constraints. It is not clear how South Africa's national power utility will finance this. At the end of its 2021 Financial Year, Eskom had a Debt Service Cover Ratio of 0.28 – in other words, it generated less than a third of the cash needed to service the interest and principal on its debt.

It is in no position to take on substantial amounts of new debt.

There is hope that part of the US$ 8.5 billion promised to South Africa at the COP26 climate conference will be earmarked for transmission projects to connect renewable energy. While some of this funding will be at concessionary rates, it is still debt that needs to be repaid.

A further option is allowing private investment in transmission lines and substations. 

IPPs already build the transmission connections from their projects to the nearest Eskom substations. Allowing private investment to strengthen the transmission backbone might be necessary but would require development of appropriate public private partnership concessions.

Ultimately the issue of transmission grid constraints will only be resolved sustainably when Eskom's transmission division is unbundled. This process has started, and a National Transmission Company has been incorporated as a subsidiary of Eskom Holdings. Once it is out as a separate, independent company, with predictable regulated revenues, it will be able to migrate back to investment grade and raise competitively priced funding on capital markets.

An independent Transmission System and Market Operator will also create a transparent and fair platform for contracting renewable energy IPPs, with non-discriminatory access to the grid, thus facilitating South Africa's clean energy transition.

Emeritus Professor and Senior Scholar at the Power Futures Lab at the University of Cape Town’s Graduate School of Business. Views are his own.


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