South Africa to open power generation to tackle energy crisis

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The South African government has enlisted the private sector in a contingency plan to deal with the worst blackouts in Africa’s most industrialized economy, removing controls on companies producing their own electricity outside the Eskom’s broken monopoly.

President Cyril Ramaphosa said monday that a wave of new private generation was needed to save the country’s grid after recent power cuts of unprecedented intensity “disrupted all our lives and caused immense damage to our economy”.

A cascade of blackouts and illegal strikes at Eskom’s aging coal-fired power plant fleet has plunged South Africans into darkness for up to 12 hours a day this winter, accelerating the long decline of public service and adding to the pressure on the ruling African National Congress.

South Africa will also double its renewable energy purchases this year to more than 5,000 megawatts and create incentives for those with rooftop solar panels to sell power to Eskom, under fast-track policies. aimed at mitigating what is known as load shedding.

After a decade of unstable power supplies, “South Africans are rightly frustrated, and they are also angry,” Ramaphosa said. “The shortage of electricity is a huge constraint for economic growth and job creation.”

Removing limits for generation licenses will make it easier for mines and other companies to set up their own projects, such as solar farms, and sell excess electricity to Eskom.

The license threshold was already raised from 1MW to 100MW last year, a barometer of Ramaphosa’s growing reliance on private sector supplies as Eskom’s decline accelerated.

“South Africa has not even begun to exhaust its renewable energy potential, and this is a big step towards that end,” Greenpeace Africa said.

But even without the need for a license, investors have warned that the paperwork for setting up production is still too wrapped up in bureaucracy and they say projects will take years to come online.

Ramaphosa is dealing with the legacy of years of failure to invest in new supplies, forcing Eskom to maintain decades-old factories without proper maintenance in order to keep the lights on.

This left Eskom with as little as 26,000 MW of capacity to meet national demand which peaks at 32,000 MW in winter, forcing it to cut up to 6,000 MW from the grid at a time.

Despite the crisis, the ANC, whose core includes the coal-producing regions that supply Eskom, has been internally divided over removing power generation from state hands. South Africa’s last full purchase of independent renewable energy was in 2016.

Opposition-controlled South African towns like Cape Town are already scrambling to get their own electricity away from Eskom.

The government will also draw up a plan by October to deal with Eskom’s debt of nearly 400 billion rand ($24 billion), Ramaphosa said.

“These actions aim to fundamentally transform the electricity sector and position it for future sustainability,” he added.


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