by Chris Yelland, EE Business Intelligence

South Africa has been experiencing load shedding intermittently for 15 years since 2007. The impact of load shedding on the economy of South Africa has been devastating, contributing to low GDP growth and increasing levels of unemployment and poverty.

This article proposes short- and medium-term solutions to South Africa’s electricity challenges. For longer-term solutions addressing South Africa’s electricity future, see here.

In recent years, the hours and energy lost to load shedding has been steadily increasing, whilst the EAF (energy availability factor) of Eskom’s generation fleet has been steadily worsening (Figures 1 and 2 below). The trend continues in 2022.

A recent study report by Meridian Economics, published on 13 June 2022, indicates that in the absence of further urgent and drastic interventions, load shedding in 2023 may see up to a 4-fold increase compared to 2021; up to 5-fold in 2024, 4-fold in 2025 and up to 10-fold in 2026, all when compared to 2021, the worst loadshedding year on record so far.

The time for action is now

Load shedding in South Africa has become a national crisis, requiring a properly coordinated “Marshall Plan”, pulling in all affected stakeholders to become part of the solution.

Failure to attend to the load shedding crisis could turn this national emergency into a national disaster – in the worst-case scenario: a partial or a national blackout with all its consequences, including social unrest.

Government and Eskom have had more than a decade to talk though and address the challenges, but the hard statistics show that the situation is not improving.

The public and customers of electricity are tired of hearing about why we are having load shedding, and instead want to hear about how we as a country are going to end load shedding, and fast.

Eskom has acknowledged that it is unable to deal with this matter alone through increased maintenance or delaying the decommissioning of old, poorly performing coal-fired power stations.

However, feelings of helplessness in the face of load shedding are completely unwarranted.

There are indeed solutions available to end load shedding in two years from green light, and this document proposes a national priority project at relatively low cost to Eskom, municipalities and the fiscus to achieve this.

The goal

The goal of the national priority project to end loadshedding would be for different customer categories to work together to connect an additional 10 GW of new wind and solar PV power generation capacity, and 5 GW of new battery storage capacity, to the grid in two years.

This additional 10 GW of new wind and solar PV power generation capacity, and 5 GW of new energy storage capacity would be over and above (and does not replace) the existing and planned RMIPPP, REIPPP and IRP 2019 public procurements being facilitated by the DMRE and its IPP Office, which cannot deliver new power in the next two years.

Nor does the proposed national priority project replace, rule out or obviate the need for other important levers such as demand side management, demand response, demand market participation, domestic time-of-use tariffs and energy efficiency.

Detailed modelling shows conclusively that if executed properly and on time, the national priority project proposed will stop load shedding in its tracks and provide adequate generation capacity reserve that will serve South Africa in good stead.

Although further work is needed in refining both the overall quantum and the breakdown of the national priority plan into its constituent parts, and its timing, from the breakdown of capacity allocations to the different customer categories shown below, it is suggested that the plan is most definitely achievable:

TOTAL	15 GW
Domestic sector	1,5 GW
Commercial and industrial sectors	2,5 GW
Agricultural sector	1,5 GW
Mining sector	3,5 GW
South 32	1,5 GW
Sasol	1 GW
Arcelor Mittal	1 GW
Eskom	1,5 GW
Municipal metros	1 GW

Table 1 Suggested sectorial breakdown of capacity allocations to different customer categories

Example of a previous national priority project in the electricity sector

In the 1990s, the Eskom CEO at the time, Dr Ian McRae, conceived and initiated a national priority project under the slogan: “Electricity for All”.

The project received the overwhelming support of the Eskom chairman, board and workforce, as well as the committed support of the new, democratically elected government of South Africa.

In this project, under McRae’s stewardship, the word "problem" by Eskom people was not permitted or tolerated by the project team. Only potential solutions were allowed to be heard.

With the full support of government, municipalities and electricity customers, the “Electricity for All” initiative captured the imagination of the South African nation.

The campaign went on to become the biggest electrification project in the world at the time, earning international acclaim for its vision and success.

Today, South Africa and Eskom are faced with different challenges, which, with the necessary commitment and determination, are equally solvable.

Leadership challenges

It is critical that the proposed national priority project should have the committed leadership of government at the highest level, supported by an experienced project execution executive team.

One possibility is for the proposed national priority project to be led and driven by Eskom, who are at the proverbial coalface of electricity supply in South Africa, and have the necessary specialised experience, resources and structure to put the project into effect, as it did with the “Electricity for All” campaign.

Another option is that it should be led and driven by Operation Vulindlela, directly from the office of the Presidency, as they are a body already established and seized with the task of unlocking bottlenecks to economic growth and investment in South Africa and are achieving a measure of success with this.

A preferred third option may be for the project to be led and driven by a newly formed National Command Council comprising appointed leaders and experts from government, Eskom, industry and civil society, acting in their individual professional capacities. Until the national priority project has been resolved, the National Command Council should be given the necessary emergency powers to gazette new regulations, amend or suspend existing regulations, remove bottlenecks, and coordinate and execute the project.

Suspending the prescriptive aspects IRP 2019 and associated regulations

There is a broad consensus that the current IRP 2019 has significant holes in the plan in the years up to 2030, as a result of:

• Unrealistic Eskom energy availability factor (EAF) assumptions
• Unrealistic and unrealised economic growth and electricity demand forecasts
• Changes in the energy intensity of the South African economy
• Changes in technology prices, particularly wind, solar PV and battery storage
• Changes in gas and coal prices due to the global political and economic environment
• Elasticity of demand in the face of increasing electricity prices
• Delays in rollout of new units at Medupi and Kusile
• Delays in the rollout of the Risk Mitigation IPP Procurement programme (RMIPPP)
• Delays in the rollout of the renewable energy IPP Procurement programme (REIPPP)
• Delays in the rollout of the gas-to-power procurement programme (REIPPP)
• Delays in the rollout of the new coal-fired power procurements, which may in fact never materialise
• Delays in the rollout of the energy storage procurement programme (REIPPP)
• General consensus that the imported hydro power from the DRC is not possible by 2030
• The possibility of nuclear power being forced into the mix to replace hydro power from the DRC
• The rapid uptake of distributed, embedded and self-generation, wheeling and trading of electricity
• The planned procurement of electricity from IPPs by municipal metros

Continuing with the current IRP 2019 generation capacity planning process without intervention therefore poses massive risks to continuity of supply in South Africa, with a resulting high likelihood of significantly increasing load shedding in the years ahead.

Similarly, requirements for Section 34 ministerial determinations, concurrence of NERSA with Section 34 determinations, and the need to obtain ministerial approval for any deviations from IRP 2019 is considered inappropriate for dealing with the current emergency.

A new plan

In his recent budget vote, President Ramaphosa announced that that IRP 2019 would be updated, and this was subsequently repeated by the DMRE minister, although no details or timelines were publicly provided.

But it is clear that the process used to produce a new IRP will take too long to adequately address the short and the medium-term holes in the IRP 2019. Questions are also being raised by energy thought leaders as to the very purpose, value and need for a prescriptive IRP (as opposed to an indicative, non-binding IRP) in the current uncertain energy environment and associated developments both globally and locally.

In light of the urgency and increased load shedding that will result from the short and medium-term holes in IRP 2019, and the time needed to prepare and promulgate a new IRP, it is suggested that the prescriptive aspects of IRP 2019, Section 34 determinations, ministerial authorisation to deviate from the IRP and the 100 MW generation licence threshold, should be suspended, at least while the current emergency is being addressed.

Stakeholder engagement challenges

A significant challenge will be the stakeholder engagement needed to achieve the green light for the proposed national priority project quickly, as well as ongoing stakeholder engagement, management and coordination to ensure all parties are aligned and working together with a common vision in a solution-oriented approach.

In particular, the challenge of obtaining the necessary buy-in and commitment from government, Eskom, municipalities, financiers and customers of electricity should not be underestimated, as these stakeholders are often pulling in different directions, resulting in endless discussions and talk, without coming up with the necessary specific deliverables and actions.

Engineering and logistical challenges

This national priority project also represents a significant engineering, procurement, logistic and execution challenge, requiring coordination and commitment from a number of stakeholders (government, NERSA, Eskom, municipal metros, financiers and customers).

However, past experience has shown that with the necessary national commitment and support by stakeholders, such challenges can be overcome in a solution orientated approach.

For example, one of the significant challenges will be to ensure grid access to Eskom and municipal networks for the 15 GW of new capacity proposed.

However, Eskom has confirmed that despite grid access constraints in some geographic areas of South Africa (such as Northern Cape), there is at this time some 32 GW of grid access capacity available across South Africa for distributed, embedded generation, which, with the necessary coordination, is more than adequate.

Role of government

The envisaged role of government (or a National Command Council empowered by government) would be to use its executive authority and powers to remove any policy, regulatory, planning and execution issues arising in the course of the national priority project that would otherwise impede the progress to end loadshedding in two years.

It is further envisaged that the role of government (or a National Command Council, or a government agency such as the CSIR) will be to monitor the progress and performance of the various customer categories in securing the new capacity deliverables of the national priority project, as well as monitoring the reduction in load shedding so achieved.

Finally, government (or a national Command Council empowered by government) should not only enable this national priority project by moving any inhibiting policy, regulatory, planning and execution issues arising out of the way, but should actively encourage and incentivize customers of electricity to be part of the solution through appropriate messaging, tax breaks, feed-in tariffs, and other innovative incentives.

Role of Eskom

Firstly, it will be the task of Eskom to procure its specific allocation of additional wind, solar PV and energy storage capacity (see above) in terms of this national priority project.

In addition, Eskom will be required to coordinate across the country to ensure and provide network access for that portion of the total of 10 GW of wind and solar PV and 5 GW of energy storage capacity envisaged to be connected to the Eskom network by IPPs and Eskom’s direct customers of electricity.

Finally, the role of Eskom would be to facilitate and enable wheeling of power across its network in bilateral and trading arrangements between embedded generators and customers of electricity.

Role of municipal metros

Similarly, it will be the task of municipal metros to procure their specific allocations of additional wind, solar PV and energy storage capacity (see above) in terms of this national priority project.

In addition, municipal metros will be required ensure and provide network access for that portion of the total of 10 GW of wind and solar PV and 5 GW of energy storage capacity envisaged to be connected to municipal metro networks by IPPs and municipal metro direct customers of electricity.

Finally, the role of municipal metros would be to facilitate and enable wheeling of power within their networks, and across municipal/Eskom boundaries, in bilateral and trading arrangements between embedded generators and customers of electricity.

Role of the private sector

It is envisaged that 100% of the national priority project will be designed, engineered, financed, procured, constructed, built and installed by private sector developers, IPPs, OEMs, EPCs, contractors and installers.

The breakdown of the 10 GW of wind and solar PV and 5 GW of energy storage capacity in two years to end loadshedding as detailed is a customer sectorial breakdown.

In this sense, Eskom and municipal metros are also customers of the electricity so produced, as are the domestic, commercial, industrial, mining and agricultural customer sectors.

Role of the Energy Council (ECSA), Minerals Council (MCSA) and Energy Intensive User Group (EIUG)

ECSA, MCSA and EIUG and their members are prominent, high-profile participants in the South African economy and energy sector. As such, ECSA, MCSA and EIUG and their members are deeply affected by load shedding,

ECSA, MCSA and EIUG and their members are therefore uniquely positioned to act as a catalyst and to play a vanguard role in supporting and engaging with government and other key stakeholders to establish this national priority project to end load shedding fast.

ECSA, MCSA and EIUG are in a position to raise this national priority project to the attention of government at the highest level, to promote and drive the necessary action by its members and likeminded business and industry associations, and to coordinate the necessary actions by heavyweight energy customers and companies in the private sector.

Finance

It is envisaged that all the individual installations within this national priority project would be self-generation, embedded generation or distributed generation facilities built by private sector developers, IPPs and customers of electricity, and financed by private and development finance institutions.

The allocations of new capacity to Eskom and municipal metros would be met by generation facilities built and financed by IPPs to supply the energy to Eskom or the municipal metros through power purchase agreements.

Thus, the major capital and finance costs for all the individual installations making up the national priority project would not require finance from government, municipalities or the fiscus.

Financial support by government and the fiscus would to a great extent be short term incentives such as tax breaks, feed-in tariffs and other innovative incentives identified.

Conclusion

With the necessary will and commitment by government, Eskom, municipal metros, financiers and customers of electricity – big, medium and small – loadshedding can be ended within two years from the green light to proceed.

The starting point should be a simple, clear statement of national intent by government, Eskom, metro municipalities and customers of electricity, namely: to end load shedding fast.

But the plan has to be more than only words – it must contain specific actions to be delivered upon.

The national priority project should be an undivided mission of government, Eskom, municipal metros, domestic, commercial, industrial, mining and agricultural customers of electricity, the Energy Council of South Africa, the Minerals Council of South Africa, the Energy Intensive User Group, Business Unity South Africa and heavy weight electricity customers such as Sasol, South32, Arcelor Mittal, Anglo American, and others, to end loadshedding fast.

This will not be an easy task, but it is most definitely achievable if stakeholders are committed and determined.

No naysayers or problem raisers should be tolerated – only problem solvers and solution providers.

This article has proposed short- and medium-term solutions to South Africa’s electricity challenges. For longer-term solutions addressing South Africa’s electricity future, see here.

 

For further reading

• Dr Adam Dorr and Tony Seba: “Rethinking Energy 2020-2030: 100% Solar, Wind, and Batteries is Just the Beginning”, a RethinkX Disruption Report, October 2020
• Chris Yelland: “SA needs a ‘Marshall Plan’ to solve its load shedding crisis, or face a national disaster”, Daily Maverick, 9 May 2022
• Prof. Mark Swilling: “The long and short of load shedding solutions – time to call disaster and harness the power of wind and solar energy”, Daily Maverick, 29 May 2022
• Clyde Mallinson: “Here’s one idea for ending load-shedding within two years”, Engineering News, 9 June 2022
• Meridian Economics: “Resolving the power crisis, Part A: Insights from 2021 - South Africa's worst loadshedding year so far”, 13 June 2022
• Meridian Economics: “Resolving the power crisis, Part B: An achievable game plan to end loadshedding” 13 June 2022
• Meridian Economics “Hot air about gas: An economic analysis of the scope and role for gas-fired power generation in South Africa”, 20 June 2022
• Prof. Mark Swilling: ‘Imagine no load shedding, it’s easy if you try — no hell below us, above us only sky” Daily Maverick, 20 June 2022

Send your comments to rogerl@nowmedia.co.za