President Cyril Ramaphosa has confirmed the government’s intention to allow private sector investment in transmission infrastructure to speed up new build programmes.
During the state of the nation address on Thursday, he said SA would build 14,000km of new transmission lines to allow new renewable energy projects to connect to the grid.
“To fast-track this process, we will enable private investment in transmission infrastructure through a variety of innovative investment models.”
This, he said, was part of the state’s response to ensure that “we never face a similar crisis ever again”.
“We are reforming our energy system to make it more competitive, sustainable and reliable into the future,” Ramaphosa said.
Expanding the transmission grid will significantly contribute to ending load-shedding by allowing more new generation capacity to be connected to the grid.
SA needs an estimated R390bn to strengthen its transmission capacity and connect new energy projects to the grid. This is required to fund Eskom’s current transmission development plan, which outlines the need for the installation of more than 14,000km of new high-voltage power lines by 2032.
Over the past 10 years, Eskom has built a mere 4,300km of transmission lines but it plans to build 1,400km over the next three years at a cost of about R70bn.
The ministry of electricity has developed a transmission financing plan that will set out how the private sector will be able to invest in grid infrastructure projects, but a final version of this plan must still be approved by the cabinet.
Electricity minister Kgosientsho Ramokgopa has previously said the government is likely to allow for such investment through a programme similar to the Independent Power Producer (IPP) Procurement Programme, through which private companies can bid to build new power generation projects with government backing and secure offtake agreements with Eskom.
The investment “architecture”, said Ramokgopa, will have to ensure the state, through the national transmission company, retains full ownership of the grid.
However, a private sector participation model would probably not be restricted to participation through financing only, but would be based on a build, operate and transfer model, which would see any new assets eventually transferred to the original procuring entity (Eskom, through the national transmission company).
On Thursday, Ramaphosa also referred to the Electricity Regulation Amendment Bill that is currently making its way through parliament.
This bill will “support the restructuring of Eskom and establish a competitive electricity market”, he said.
According to Ramaphosa, reforms to liberalise the electricity market, such as lifting the licensing threshold for private generation projects, helped government to “deliver on our commitments to bring substantial new power through private investment on to the grid”.
Over the past five years, he said, 2,500MW of new solar and wind power has been connected to the grid and, after introducing tax incentives for rooftop solar installations, the amount of rooftop solar capacity doubled to about 5,200MW last year, he said.
Power generated from these installations was “already helping to reduce load-shedding”.
“Through all of these actions, we are confident that the worst is behind us and the end of load-shedding is finally within reach,” said Ramaphosa.
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