Eskom is not surprised by national energy regulator Nersa’s decision to approve only one of three licences needed to finalise the establishment of the National Transmission Company, it says.
The restructuring of Eskom’s transmission division into a stand-alone entity is an important step in liberalising the electricity market in SA and attracting private sector financing to upgrade and expand the transmission network, which will conservatively require an investment of about R210bn over the next 10 years.
Nersa on Friday approved the transmission licence application, which will allow the new company to act as the transmission operator for the national grid. However, it did not announce its decision on trading and import/export licence applications.
Eskom’s head of transmission Segomoco Scheppers said on Sunday: “Nersa has indicated that it was considering the other two licence applications and a decision will be made in due course. I believe it is more an administrative issue than an indication of anything else.”
However, a representative of the national energy crisis committee (Necom) said it is concerned about Nersa having not yet made a decision on the outstanding licence applications and the delay this might cause in “operationalising” the company.
Saul Musker, director of strategy & delivery support in the private office of the president and Necom representative at the briefing, said establishing the transmission company is “critical as part of the reform programme in the energy sector”.
Though there was no pronouncement on the approval of the trading and import/export licences it does not mean these applications were rejected, only that the decision has not been made yet, he said.
“But we are concerned about that because the [transmission company] needs all three licences to operate and to fulfil its functions. Including, for example, replacing Eskom as the buyer for [power generated] by legacy independent power projects, which the trading licence would allow.
‘Enormous importance’
“As things stand now we don’t yet have the record of decision from Nersa, we don’t fully understand the reasons why no decision has been made on awarding the two outstanding licences. We also don’t have the time frames in which the decision will be made,” Musker said.
Given the “enormous importance” of fully operationalising the transmission company, the matter of the outstanding licences has to be resolved “sooner rather than later” to ensure there is not “too much of a delay in establishing the entity”.
Musker said the transmission company will create a “meaningfully independent” national grid operator to level the playing field for private and public energy generation projects.
“Also given the scale of investment needed in the transmission network over the next decade, a dedicated transmission company that is able to focus on that rollout is crucial.”
The transmission company was created at the end of 2021, but for it to start operating all three licences have to be approved by Nersa, an independent board has to be appointed for the company, and agreements must be put in place with Eskom’s existing lenders.
Musker said talks with lenders and board appointments are “at an advanced stage”.
At the briefing on Sunday, electricity minister Kgosientsho Ramokgopa gave a summary of grid expansion requirements over the next 10 years.
He said a shortage of available grid capacity in the Northern Cape, Western Cape and Eastern Cape is undermining Eskom’s ability to bring on board new generation capacity from renewable energy sources.
Projects with total generation capacity of about 8,000MW (equal to eight stages of load-shedding) have applied for grid access in these provinces, but only about 200MW of capacity in the Eastern Cape is available.
The only provinces where applications for grid access did not far exceed available capacity were KwaZulu-Natal, which has 6,000MW available, and Gauteng which has 4,000MW of available capacity but no pending application for grid access.
About 14,000km of new transmission lines will have to built over the next 10 years, Ramokgopa said, far exceeding Eskom’s current capacity “We will have to build 2,700km of new [transmission lines] per annum. If you look at the past 10 years, Eskom increased its transmission network by 4,300km in total for the period.”
The most Eskom has been able to achieve in the past was 800km of new transmission lines in a year.
“This shows that outside the money being available [to fund this expansion] we will need to build industry capacity,” he said.
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