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The report follows repeated statements by Electricity Minister Kgosientsho Ramokgopa about the need to get the private sector involved in the expansion of the South African grid
The portion of electricity tariffs currently allocated for the transmission function in South Africa is too small to justify the private investment that is envisaged to supplement Eskom’s grid expansion.
This is one of the key findings in a report by Meridian Economics and Krutham– ‘New business and funding models to resolve grid infrastructure constraints in South Africa. The report follows repeated statements by Electricity Minister Kgosientsho Ramokgopa about the need to get the private sector involved in the expansion of the South African grid.
Ramokgopa made it clear that the 1 400km of power lines Eskom plans to construct in the next three years must be increased to 6,000 km with the help of the private sector to unlock the additional generation capacity required for South Africa’s future energy needs.
As matters stand, the grid has been saturated in the Eastern, Western, and Northern Cape, where renewable energy resources are best, and Eskom has resorted to curtailment to squeeze every available bit of capacity out of the grid in those provinces.
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Restricting wind generation to areas where resources are less favorable may result in an increase of 20% in the cost of energy generated, the minister said. It would be better to adjust the transmission tariff. The government proposes to establish an office like the Independent Power Producers (IPP) office, which does the procurement of generation capacity from independent power producers. The model for private sector involvement will be based on the build, operate, and transfer model.
