The government is making steady progress with its plan to open up SA’s electricity transmission network to private sector players and will issue a request for proposals in November, the National Treasury said on Friday.
Expanding SA’s transmission grid is vital, as current constraints are preventing independent power producers from connecting to the grid, putting the brakes on the growth of clean energy providers and slowing efforts to eliminate load-shedding. The available grid capacity is already exhausted in the Western Cape, Eastern Cape and Northern Cape, and the Free State and North West are almost out of space too, parliament heard last month.
“The current grid expansion pace is wholly inadequate, necessitating a minimum of 1,400km per year for the country’s energy security requirements,” said the Treasury.
An extra 14,000km of transmission lines will be needed within the next decade to accommodate the additional 53GW of generation capacity required to meet SA’s energy requirements, according to the 2019 Integrated Resource Plan and Eskom’s Transmission Development Plan.
To reach this target, the National Transmission Company SA is looking to the private sector. On Friday, the Treasury provided an update on its procurement timelines.
The first independent transmission projects (ITP) will include 1,164km of 400kV transmission lines and associated infrastructure in the Northern Cape, North West and Gauteng.
A prequalification tender to identify potential bidders will be issued by the end of July, and a request for proposals will be issued by the end of November, the Treasury said.
The government intends to bring in private sector financing to help cover the more than R440bn cost of expanding the transmission network over the next 10 years, as the scale of the project is beyond the fiscus’ means. The Treasury and the World Bank have been working on a credit guarantee instrument to derisk grid projects, intended to incentivise private sector participation by lowering the risk for investors.
The Treasury said the credit guarantee vehicle will be incorporated as a private company in SA, and will operate as a nonlife insurance company regulated by the Prudential Authority. A draft information memorandum providing “granular details” on how the credit guarantee vehicle will operate had been developed and would be shared with its development partners, it said.
Treasury officials will next month embark on one-on-one discussions with development partners that have expressed interest in participating in the first phase of credit guarantee vehicle, which is expected to become operational in 2026.
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