DailySun
It has been over a year since Dr. Kgosientsho Ramokgopa, the previous electricity minister, convened an investor conference to promote private sector participation in the enhancement of the South African electricity grid. On Wednesday (11 December), a Request for Information (RFI) was published.
This signifies the first step towards procurement, anticipated to commence in the first quarter of the next year.
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Nonetheless, the deadline for the RFI is set for February, raising questions regarding compliance with the timeline for the Request for Proposals (RFP).
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The South African Independent Power Producer Association (Saippa) has voiced its support for the RFI, perceiving it as a crucial first step towards attracting private investment to improve vital grid infrastructure.
The enhancement and restructuring of the grid has become a focal point to support the expansion of various renewable energy projects initiated by both governmental and private sector players.
Grid Congestion
In areas like the Eastern, Western, and Northern Cape, where the best wind and solar resources exist, the grid is approaching its capacity limits, hindering the addition of further projects. Eskom has initiated a curtailment program to relieve some of the pressure, but the energy regulator Nersa still needs to finalize the relevant tariffs.
The National Transmission Company of South Africa (NTCSA), which became an independent subsidiary within the Eskom group in July of this year, has unveiled a bold Transmission Development Plan (TDP) aimed at integrating 56,000 MW of new generating capacity into the grid over the next decade.
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“To satisfy this demand, we will require 14,500 km of new transmission lines and 210 transformers, resulting in a total capacity of 133,000 MVA,” remarked NTCSA interim CEO Segomoco Scheppers during the TDP launch.
“This represents a fivefold increase in delivery over the next decade compared to the previous ten years. R112 billion has been earmarked for the TDP program in the forthcoming five years.”
Eskom lacks the necessary resources and capital to accomplish this independently, thereby necessitating private sector participation.
RFI
The RFI encompasses an online questionnaire that seeks market feedback regarding the duration and structure of contracts—such as build, own, operate, and transfer—as well as financing options, security considerations, risk allocation, and regulatory aspects.
It asks about potential offtakers and examines the feasibility of establishing contracts without government guarantees.
Following the investor gathering in September of last year, Ramokgopa expressed excitement about progressing with the Independent Transmission Projects (ITP) initiative, pledging a rollout announcement in the following weeks.
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Shortly thereafter, the late Pravin Gordhan, then minister of public enterprises, announced the establishment of the NTCSA board, thus taking the matter out of Ramokgopa’s jurisdiction.
After the elections in May, the public enterprises department was dissolved, and Ramokgopa transitioned to managing the energy portfolio, which includes oversight of Eskom regulations. The Independent Power Producers (IPP) Office, responsible for the RFI management and likely the procurement process, is situated within the energy department under Ramokgopa’s supervision.
He previously indicated that the ITP pilot project is expected to commence in early 2025.
Be ‘Realistic’ About Timelines
Saippa chair Brian Day expresses doubt about the feasibility of meeting this timeline.
“We must remain pragmatic regarding the timelines required for this overall process,” he asserts.
“With the RFI closing at the end of February 2025, evaluations will need to follow, and the insights gained will shape the pilot initiative.
“I predict that the pilot scheme RfP will be issued around September 2025, setting the stage for subsequent bids,” adds Day.
“The full timeline remains uncertain, as we need to navigate the adjudication process, select preferred bidders, negotiate commercial contracts, and achieve financial closure before construction on the pilot project begins.
“This indicates a timeframe of at least 3 to 5 years before the pilot project becomes operational. Only after that can a broader program be initiated.”
Consequently, Saippa now underscores the importance of focusing equally, if not more, on immediate and medium-term solutions, such as formalizing Nersa’s curtailment regime and accelerating the NTCSA’s grid project development, as emphasized by Day.
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