Policymakers must learn from mistakes in electricity planning, says Ramokgopa

The government should act now to upgrade and expand the electricity transmission grid to avoid another electricity crisis in the near future.

According to electricity minister Kgosientsho Ramokgopa, SA made the mistake of not acting early enough before 2007 when construction began on Medupi and Kusile to increase electricity generation capacity. This resulted in the energy crisis the country is experiencing.

“We kicked the can down the road as policymakers, and now we are sitting with this [load-shedding] problem that we are trying to rectify. We shouldn’t make the same mistake with transmission and think we have time to resolve [the shortage] of transmission [infrastructure] sometime in the future. Transmission must be solved today.”

Ramokgopa said the transmission system is vulnerable and undermined Eskom’s ability to bring on board new generation capacity from renewable energy sources from areas best suited for this type of electricity generation.

The areas that offer the best potential for wind energy are on the coast of the Western Cape and Eastern Cape — but grid capacity is nearly exhausted in the Northern and Western Cape and there is “insufficient capacity” in the Eastern Cape to connect the amount of renewable energy SA would need to meet current and future demand, he said.

The biggest challenge to expanding the transmission system is access to finance, said Ramokgopa.

“Part of the conditions of the fiscal support Treasury is providing to Eskom is that it cannot borrow more money, so we need to find more innovative ways of resolving the problem — one is to tap into the rich liquidity that is sitting with the private sector in such a manner that the state does not relinquish ownership of the grid.”

The minister said they would soon release a report detailing the “revolutionary” way in which they believe the expansion and necessary upgrades to the transmission grid can be financed and managed.

He also referred to the draft grid capacity allocation rules announced by Eskom last week. These guidelines will seek to better manage the allocation of what grid capacity is available now for new generation projects.

Grid access has already been the cause of some proposed renewable energy projects being turned away at a time when SA is in desperate need of adding new generation capacity to resolve the energy crisis.

As reported by Business Day, leaders in the renewable energy industry blamed this on a lack of co-ordination between the Independent Power Producer office and Eskom.

To ensure fair access to available grid capacity the renewables industry has been calling on Eskom to finalise grid allocation rules that will provide clarity to the market and ensure further delays in allocating grid capacity to renewable energy projects are reduced.

Interim rules published by Eskom last week suggest that to give effect to the “first-ready first-served principle” Eskom allocate grid capacity to projects based on “a demonstrated readiness of the project”.

This shall be assessed based on whether a project obtains all necessary authorisations and power purchase agreements. Projects will also have to demonstrate measured data for primary energy sources (wind and sun).

Niveshen Govender, CEO of the SA Wind Energy Association (SAWEA), expressed fear that the guidelines could prove too “onerous”.

“The proposed rules that include the primary energy resources assessment, which for wind is two years of measured data, is in our view, an unnecessary and unreasonable requirement and could potentially delay the implementation and rollout of new wind projects,” said Govender.

The government and Eskom should consider how investors would view the rules, given that investor confidence in the SA energy sector was already dwindling, he said.

SAWEA called for further engagement and consultation between Eskom and the industry to understand the implications, practicalities, and possible unintended consequences of the rules.

The solar PV industry body SAPVIA raised similar concerns saying that the rules need to ensure there is space and opportunity created for small scale developers.

“Increased onerous requirements and capital requirements only serve to raise the hurdle rate, encouraging the dominance of larger established players,” said SAPVIA CEO Rethabile Melamu.

erasmusd@businesslive.co.za