The US Trade and Development Agency (USTDA) announced on Tuesday it is awarding a $1.3m (R24m) grant to Eskom.
The grant will fund technical assistance to assess the economic, technical, commercial and financial viability of using new technologies to improve SA’s transmission grid.
Electricity minister Kgosientsho Ramokgopa recently highlighted the urgent need for Eskom to invest in expanding and upgrading the grid transmission system. It is vulnerable and undermines Eskom’s ability to bring on board new generation capacity from renewable energy sources from areas best suited for this type of electricity generation, he said.
At the signing ceremony for the USTDA grant at the US embassy in Pretoria, Eskom acting CEO Calib Cassim said the utility will need to invest R210bn in expanding the transmission grid by about 14,000km over the next 10 years.
According to Eskom’s latest Transmission Development Plan (TDP), about 4,300km of new transmission lines were built in the 10-year period between 2013 and 2022.
Over and above the TDP, which is updated every year, Cassim said Eskom hopes the assistance to be provided under the grant will offer “a fresh set of eyes to revisit the TDP and whether the planning was done on an optimal basis that takes the latest technologies into account”.
Eskom now has about 7GW of renewables connected to the grid, but this is expected to increase to 70GW over the next decade.
“We don’t have experience managing a grid with so much renewables, so as part of this technical grant support is some of the expertise that we need to transfer to the Eskom transmission colleagues,” he said.
Eskom had to increase capital expenditure on transmission from about R3bn per year to R20bn per year over the next five years.
“Having all the funding in the world will not help us if we don’t have the ability to implement and execute the TDP — we hope the assistance that will be provided through this grant can point us in the right direction,” Cassim said.
The mission now, he said, is to make sure transmission receives the same attention and urgency as generation is getting, from a country perspective.
The provision of the grant “reflects concrete action [by the US] to advance the Just Energy Transition Partnership (JETP)”, said USTDA director Enoh Ebong.
The $1.3m grant could potentially help leverage up to $200m (R3.7bn) in additional financing should any of the projects identified by the technical team be implemented, she said.
The grant is in addition to the roughly $1bn that the US will contribute as its share of the $8.5bn in financing pledged to SA by the US, EU, France, Germany and the UK under the JETP that was announced at COP26 in 2021.
The US previously indicated that it would contribute an additional $45m for projects focusing on the “just” element of SA’s energy transition from coal to renewables.
The US ambassador to SA, Reuben Brigety, said on Tuesday that supporting the upgrade of Eskom’s grid transmission system was key to SA’s just energy transition investment plan.
The grant from the USTDA showed that the US was “committed to building stronger ties with SA” and to supporting the country’s just energy transition, Brigety said.
The grant will “help identify US technologies that can strengthen Eskom’s transmission grid”.
The technology assistance that will be provided through this grant will focus on solutions that can reduce carbon emissions while providing more grid reliability. This will include artificial intelligence (AI) tools for system stability, energy storage systems and market modelling, said Ebong. The technical assistance will be done by US contractor Power Engineers.
Correction: July 11 2023
A previous version of the story incorrectly stated the rand value of the grant was R18.6m.
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