Eskom’s big grid problem
Eskom faces a lack of transmission grid capacity to add new wind and solar plants, and it doesn’t have enough funds for the necessary expansion.
This is according to Electricity Minister Kgosientsho Ramokgopa, who, during a media briefing on Sunday, 23 July 2023, said Eskom must think creatively to come up with a solution.
“The expansion and the strengthening of the grid is going to require an inordinate amount of money, and of course, the Eskom balance sheet is not in a position to finance the kind of expansion that is required,” said Ramokgopa.
“The scale and speed at which we need to respond to the needs on the transmissions side, the Eskom balance sheet will not necessarily be sufficient to be able to support that.”
In May 2023, Intellidex’s head of capital markets, Peter Attard Montalto, told MyBroadband that Eskom is spending less than R1 billion of the R14.5 billion it needs to invest annually to upgrade the transmission grid.
Eskom confirmed to MyBroadband that the transmission grid in the Northern Cape is at capacity, with the Greater Cape region as a whole being close to full.
Montalto said South African residents would only see a meaningful impact from independent renewable power producers by 2026.
“We see BW7 and 8 [bid window 7 and 8] being successful assuming that [trade and industry minister Ebrahim Patel] doesn’t delay things — though he has the last few rounds with demands for local content that simply cannot be met. Both rounds will be 5GW,” said Montalto.
“This will make a serious dent into load-shedding (if combined with new battery rounds forthcoming), but only in 2026, most likely.”
In December 2022, Montalto raised concerns over the lack of effort being put into expanding the transmission grid, adding that the grids in the Northern, Western, and Eastern Cape are saturated.
“There is now no more grid access in key areas for the foreseeable future. The implication is more load-shedding for longer than previously assumed,” said Montalto.
Peter Attard Montalto, Intellidex managing director for capital markets
“Deep change is clearly needed, including political and leadership change at the departments of mineral resources & energy and public enterprises.”
This includes significantly upgrading the transmission grid — something that hasn’t been driven forward despite Eskom and the private sector saying it with increasing desperation.
As a result, the transmission grids in the Northern, Western, and Eastern Cape are full — and will remain so for at least four years.
Montalto’s remarks came after South Africa only appointed five bidders that will add 860MW of the 4.2GW apportioned for bid window 6 of the Renewable Independent Power Producer Programme.
A sixth bidder could join the fray, bringing the total closer to 1,000MW.
Montalto said the failure to allocate the remaining 3.2GW is due to a lack of transmission capacity in preferred locations for renewable power plants.
“Put simply, there was no grid to connect these projects (in the Eastern Cape and the Western Cape) because spare grid capacity that was shown by Eskom at the time of bidding in the two provinces (about 3.8GW) had subsequently (legally and by the rules) been taken instead by private off-taker projects,” he said.
While there is still space for new renewable power plants in other provinces, these aren’t nearly as appealing to independent power producers.
However, Montalto and Ramokgopa have criticised independent power producers for their lack of interest in places where there is grid capacity, explaining South Africa has excellent solar resources almost anywhere.
Ramokgopa said private power companies could basically build solar power anywhere in South Africa and have them perform better than just about anywhere in Europe.
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