Page 21 - Energize Issue 1 2023

VIEWS AND OPINION

There is clearly a need for more the current arrangements are fuelling inflation, making electricity unaffordable and
consistent, coherent and well- increasing electricity theft, non-payment and municipal arrear debt.
articulated energy and electricity Despite several years of discussions, NERSA and municipal electricity distributors
policies and strategies in South Africa. have failed to prepare and implement a national municipal wheeling framework and
However, there is an apparent inability associated wheeling tariffs, for transport of electricity across municipal networks from
and/or unwillingness by politicians distributed generators to off-takers embedded with municipal networks.
and government to recognise, take Similarly, Eskom and most municipal distributors still do not have NERSA approved
accountability for and/or confront the feed-in tariffs for domestic, commercial, industrial, mining and agricultural solar
worsening energy and electricity crisis photovoltaic and battery energy storage installations, and do not yet permit generation
head-on. into the network by low-voltage electricity customers.

Electricity regulation Energy and electricity planning
The current electricity regulatory The absence of a comprehensive national integrated energy plan (IEP), an updated
framework in South Africa is no integrated resource plan for electricity (IRP), and coal, liquid fuels and gas roadmap
longer fit-for-purpose in the rapidly plans for South Africa, is a sign that planning in the energy and electricity sectors is far
changing global energy and electricity from adequate.
environment, and there is inadequate There have been execution delays and poor communication of progress made in
policy direction, capacity, regulatory implementing concrete plans and actions to end load shedding fast, by the National
independence and flexibility to adjust Energy Crisis Committee (NECCOM) announced by the President on 26 July 2022.
and adapt the country’s regulatory For example, there is a lack of any visible implementation of the easiest and fastest
framework to something more actions in the emergency plan to end load shedding, namely, to allow, encourage and
appropriate. incentivise domestic, commercial and agricultural electricity customers to supplement
This is evidenced by ongoing their grid electricity needs with embedded solar photovoltaic and battery energy
regulatory failures in the electricity storage systems.
sector as indicated by several court
judgements against NERSA, following New generation capacity
legal action by Eskom challenging The process of ministerial determinations and concurrence by NERSA for new
the regulator’s electricity price generation capacity procurements in accordance with an outdated integrated resource
determinations and methodology. plan for electricity, is slow, bureaucratic and no longer fit-for-purpose.
Ongoing delays in promulgating Unrealistic localisation requirements, changes in local and international energy and
amendments to the Electricity Regulation electricity business environments, and difficulties in obtaining Eskom grid access, have
Act (ERA) that would provide the resulted in failures to reach financial close by many projects of Bid Windows 5 and 6 of
necessary legal, regulatory and planning the Renewable Energy IPP Procurement (REIPPP) programme. This has caused delays in
framework for a restructured electricity the procurement and construction of new generation capacity via the Risk Mitigation
supply industry are also holding back IPP Procurement (RMIPPP) and REIPPP programmes.
reform of the electricity sector. In addition, the gas-to-power, imported hydro, new coal-fired power and battery
energy storage public procurement processes of the DMRE’s IPP Office are yet to
Electricity pricing commence.
Failure by NERSA to implement With 11 GW of aging coal-fired power stations due for decommissioning by 2030,
consistent, predictable and sustainable and inadequate new generation capacity set to come online in the meantime, the
cost-reflective electricity tariffs in South outlook for security of supply in South Africa is bleak.
Africa has significantly damaged Eskom
and the economy. Eskom
Delays in putting in place an The unsustainable financial, operational and environmental position of South Africa’s
amended national electricity pricing national electricity utility, Eskom, has been apparent for years.
policy and methodology for the country Finally, after several years of talk, resolution of Eskom’s debt position by government
are further inhibiting reform and taking over a significant portion of Eskom’s debt is expected be announced by the end
restructuring of the electricity supply and of February 2023. This will strengthen Eskom’s balance sheet and support its financial
distribution industries. sustainability, but it does not address the underlying structural issues.
In the meantime, ongoing Investments in upgrading, strengthening and expanding the national electricity
applications by Eskom and municipal grid and associated transmission and distribution substations to provide adequate grid
distributors to NERSA for extremely access, is now critical to avoid grid congestion in certain areas, and to accommodate the
high electricity price increases under connection of new generation capacity.

energize | Issue 1 2023 | 21