Eskom has significant grid capacity constraints, compounded by companies ‘hogging’ grid allocations given to them through contracts with the Independent Power Producer (IPP) office.
Professor Mark Swilling from Stellenbosch University explained to Newzroom Afrika that this is because many companies applied for grid allocations and received grid capacity but have been unable to supply electricity to the grid.
For example, only half of all renewable energy projects procured during Bid Window 5 have come online, with the rest unable to reach financial close.
4,600 MW of renewable energy generation was expected to come online from Bid Window 5 in 2021. However, 12 of the 25 projects have failed to reach financial close while a further 4 are awaiting financial closure.
This leaves only 9 projects from Bid Window 5 that have reached financial close.
Those that failed to reach financial close blamed rising interest rates, increasing costs of renewable technologies, and declining production of materials used to construct the plants for distorting its calculations.
However, Swilling and others pointed out that the tariff pricing strategies of many of the IPP applicants were unviable as their prices were unsustainably low to win the contracts.
This gave the companies little flexibility to absorb rising costs. Therefore, when costs rose, the projects were no longer financially viable.
Even though these projects did not reach financial close and thus did not connect to the grid, they keep the grid capacity allocated to them until the contract’s end date.
For example, Karpowership has been unable to dock its power ships at South African ports and supply electricity to the grid. Yet, it still has 1,800 MW of grid capacity allocated to it.
Karpowership’s deadline to connect to the grid is in December. This means the company must complete all environmental appeals and paperwork before the deadline to keep its grid capacity allocation.
Winkler’s comments come on the back of other energy experts, such as former Eskom manager Matthew Cruise, who also warned that load-shedding will be around for many years to come.
Cruise, who now serves as head of business intelligence and public relations at Hohm Energy, said load-shedding intensity could double over the next five years.
He pointed to a study from the Council for Scientific and Industrial Research about constraints on the transmission grid.
These constraints prevent many renewable energy projects from feeding into the grid because of capacity constraints in the northern part of the country.
Scatec Sub-Saharan Africa GM Jan Fourie said Eskom’s grid is becoming the bottleneck, especially in areas with wind and solar resources.
South Africa’s grid is designed to carry electricity from large, central power stations in the country’s northeast to other parts.
Renewable energy generation is decentralised, with generation facilities located almost anywhere in the country.
Areas with rich renewable resources, such as the Western Cape, Eastern Cape, and Northern Cape, do not have the grid capacity to distribute electricity to the rest of the country.
The grid in these areas can only carry limited load, which is insufficient for large-scale solar and wind projects.
Because of Eskom’s grid capacity constraints, especially regarding renewable energy, Cruise believes load-shedding will be with South Africa for the next ten years.
Cruise predicts increased load-shedding for the next five years, peaking in 2028 with average stage 7 power cuts.
This article was first published by Daily Investor and is republished with permission.