Despite having one of the best solar resources in the world, and good wind potential too, no further renewable energy projects can be connected in the Northern Cape as the provincial power grid is full and stretched to its limit, an Eskom report confirmed.
Eskom’s latest Generation Connection Capacity Assessment (GCCA) 2023 startled many in the green energy community as it shows there is now 0MW capacity to connect new power projects to the grid in the Northern Cape. It cannot take more.
The news comes just as the government’s green power programme has been revived and as meaningful plans to liberalise the sector get under way. But the grid constraints have been a long time coming.
“The best solar [and potentially also wind] resources we have in SA are exactly in the place where we have the weakest grid,” says Mike Levington, director of Kabi Solar.
It’s a consequence of there being no major industrial activity in the province. In fact, Levington says the provincial grid was designed to take about 1,000MW or so — a fraction of national installed capacity of more than 40,000MW.
As early as 2014, the need to strengthen and expand the grid to accommodate renewables was identified and addressed in Eskom’s Transmission Development Plans, and budget was allocated.
Yet the plans do not appear to have been implemented.
According to Eskom, financial constraints have seen grid strengthening plans, along with various other projects, taking a back seat to the utility’s other critical business imperatives, including the Medupi and Kusile new builds. Implementation of grid strengthening plans has also been negatively affected by the difficulty in obtaining servitudes rights timeously.
The grid capacity problem is not a uniquely SA one, Levington. said. “There are a lot of countries around the world that are overly focused on generation technology and woefully underestimate the need of the grid,” he said.
“The grid is the catalyst. When we want to all talk about renewable energy or any electricity generation to solve the energy crisis ... They are all dependent on having a functional grid.”
When it comes to renewables, generation is certainly not the problem if one considers that in the latest bid window of the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP), solar PV and wind power were hugely oversubscribed.
Without the ability to connect projects in the Northern Cape anymore, project developers will have to look to other provinces.
This is good news to Jan Fourie, GM in Sub-Saharan Africa for Scatec, a Norwegian renewables company and a REIPPPP winning bidder, who says an estimated 70% of new PV and 60% of wind projects developments are located in the Northern Cape. Fourie says the limited capacity in the province could now create more opportunities for communities in other provinces as project developers will now be forced to look beyond the Northern Cape, injecting cash and creating jobs in other provincial economies.
The reason the Northern Cape has been the destination of choice for green power projects under the REIPPPP relates to the way the tender is designed.
In essence, it looks at the cost of power generation at the point of generation and does not consider the cost of the power once it has arrived at a destination where it will be used. That means it does not factor in how much energy is lost as the power moves from the Northern Cape to Gauteng, or the cost of strengthening and expanding the grid to connect the projects.
While the Northern Cape, with its high radiation, may generate power cheaply on site, after connecting and moving it through the grid, it is likely to be cost-comparable with power generated anywhere else in SA close to industry and where there is optimal grid connectivity and capacity.
The solar potential anywhere else in the country is still very good by European standards, Levington notes. “Right now, we are in this position where, certainly for rounds six, seven and eight [of the REIPPPP], we may need to build much closer to Gauteng.”
Eskom confirmed the constrained generation capacity in the province was a result of rounds one to four of the REIPPPP, as well as the Risk Mitigation Independent Power Producer Procurement Programme, which consumed all the last available network capacity there.
While the Northern Cape is the first — and a dire — example of insufficient grid capacity in SA, there is a pressing need to strengthen and expand the grid nationally too.
“Eskom is holding back the whole country. And they should have been dealing with this problem for years,” Chris Yelland, energy analyst and MD of EE Business Intelligence, said.
While Yelland noted that a number of loans that were given to Eskom were for the specific purpose of upgrading the grid to enable access for renewable energy — the New Development Bank for one — it remains unclear if those facilities were ever used.
Eskom confirmed it received a $180m loan from the bank for upgrading the grid but did not respond to questions asking if or how it had been used.
Strengthening and expanding the grid will be critical if SA is to meaningfully decarbonise the economy and also to the realise lofty ambition of becoming a large-scale producer of green hydrogen.
This will necessitate a rapid development of the grid, Levington said.
Eskom said it is working to prioritise the substantial upstream network strengthening to enable new generation capacity in the Northern Cape. “However, due to the fact that major transmission projects take between 7-10 years to implement, often longer because of complexity of obtaining servitudes over the long distances associated with transmission lines, the grid strengthening projects are likely to be completed between 2028 and 2032, unless extraordinary measures are put in place to expedite the roll out of the grid, which requires significant support and collaboration between government and key stakeholders.”
Eskom will publish a new Transmission Development Plan in October, which will provide further updates on progress with grid expansion projects and the requirements for the next 10 years.
The utility also noted that grid strengthening is provided for in its capital requirements put forward in the Multi Year Price Determination (MYPD) 5, which the National Energy Regulator of SA will adjudicate on.
“Should adequate capital budget be made available for system strengthening, and that servitudes can be obtained speedily with the government’s support and that the supply of plant and equipment and provision of contractor resources be in place, we will be in a position to expedite the Transmission infrastructure build programme,” the utility said.
The SA Wind Energy Association (Sawea) said the grid capacity problem highlighted the urgency for the government to deliver on its commitment to implement an Independent Transmission Grid System and Market Operator (Itsmo). Sawea said Eskom’s CEO, Andre De Ruyter, alluded to the availability of “green financing” as a vehicle for investment and specifically to draw finance to the decarbonisation of the country’s national grid, to make an Itsmo a reality.
Levington said an independent transmission company would be able to make decisions in the best interests of the grid, rather than it being part of a collective where the grid took a back seat to other priorities.
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