People dumping Eskom
André de Ruyter has warned that Eskom could be left primarily with non-paying customers due to the surge in privately generated electricity by large businesses and more affluent South Africans.
Speaking in an interview with BusinessDay, the former Eskom CEO said government’s failure to embrace the global green energy transition and transform the utility’s grid would lead to smaller businesses and people who cannot afford their own generation being left behind.
“If you extrapolate from current credits, then Eskom will eventually be left with a customer base of people who cannot afford electricity and, therefore, don’t pay for it,” De Ruyter said.
Large companies and households with the financial means are increasingly switching to self-generation.
These customers are Eskom’s most valuable as they use the most electricity and are more capable and likely to pay their monthly bills.
However, the government’s failure to switch Eskom’s generating sources to greener sources and to subsidise solar power for poorer households will mean that many people will continue to rely on the utility’s “dirty” and unpredictable coal-generated power simply because they have no choice.
It is often in low-income areas like townships and informal settlements where Eskom struggles with illegal connections and defaulting customers.
De Ruyter said government’s lifting of the cap on private power generation in early 2023 would effectively privatise South Africa’s electricity industry.
“Eskom is going to be left behind in that process and be stuck maybe with plants on which it has spent R40 billion to extend their lifetimes for five more years,” he said.
André de Ruyter on My Guest Tonight with Annika Larsen. Source: @Annikalarsen1/Twitter
The 2023 South African Renewable Energy Grid Survey, compiled by Eskom in collaboration with the South African Wind Energy Association and the South African Photovoltaic Industry Association, found that there was around 66GW of private renewable power in the pipeline for South Africa as of June 2023.
De Ruyter pointed out this was about 25% more than Eskom’s installed nameplate capacity.
To put the numbers into perspective, South Africa’s electricity demand typically ranges between 23GW and 33GW.
Crucially, over 19GW of the solar projects and 7.5GW of the wind projects in the survey are set to be coupled with battery storage.
Around 18GW of the renewable capacity in the pipeline was at an advanced stage by the time the survey was conducted.
In the case of these projects, environmental approvals had been granted, site measurement campaigns and feasibility work completed, and a power purchase agreement was signed or was close to being signed.
Such projects could come online in about three years if Eskom or another distributor granted them a grid connection.
A further 21GW was under development, and 27GW was in an early stage of development.
In addition to investments in power plants, there has been a huge increase in the buying of solar power equipment for localised self-generation that households are investing in to become less grid-reliant.
According to senior economist at Trade and Industrial Policy Strategies, Gaylor Montmasson-Clair, the first half of 2023 saw a record 2.2GW’s worth of solar panels imported into the country.
This includes panels imported to sell to home users who want to self-generate their power.
Look at this curve! The flood of #solar panel imports into SA continues: $650 million (R12 billion) in the 1st half of 2023. That’s roughly 2200 MW worth of panels.
Great to see the transition to #renewableenergy accelerate, but we need to seize the industrial opportunity! 🇿🇦 pic.twitter.com/xohCECGMOV— Gaylor Montmasson-Clair (@GaylorTIPS) August 2, 2023
Another former Eskom CEO — Matshela Koko — shared De Ruyter’s view that Eskom would become irrelevant over the next few years.
He contends that Eskom could be dead within ten years due to the uptake of private power.
Koko pointed towards the utility’s rapidly declining electricity sales over the past few years as a sign of its imminent demise.
“The writing is on the wall. This is what is called death spiral. This Eskom is dying,” he said.
However, unlike De Ruyter, Koko does not believe renewables like solar and wind can provide the baseload power needed to sustain South Africa’s grid.
Instead, he has called on government to rapidly start plans to develop new nuclear and pumped storage power, which must be ready for commercial operation by 2035.
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