Electricity Minister Dr Kgosientsho Ramokgopa has announced a significant shift in the funding strategy for the expansion of South Africa’s transmission grid, ensuring increased involvement from private sector players and investors. The initial stage of operationalising the National Transmission Company of South Africa (NTCSA) has been given the green light, marking progress towards the complete unbundling of Eskom into three separate units.
During a recent media briefing, Minister Ramokgopa revealed that an estimated R100 billion would be required for the 2025 financial year to facilitate the grid’s expansion, with a projected increase to R170 billion by 2029. To finance this rollout, discussions are underway with various stakeholders to identify the most viable options.
According to IOL, Ramokgopa acknowledged that the current scale and speed of investment needed for the transmission network are beyond Eskom’s and the national focus capabilities. However, there is strong interest and substantial liquidity in the private sector, which could potentially fill the funding gap.
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To expedite the expansion of the grid, the government has already identified 22 renewable energy projects in three provinces, expected to supply 24 000 MW to the national grid by 2033. Work on these projects is slated to commence by 2026.
The minister emphasised the importance of providing certainty to the market, enabling it to play a pivotal role in resolving the funding shortfall for grid expansion.
Recently, the National Energy Regulator of South Africa (NERSA) granted the NTCSA a licence to operate a transmission system within the country’s borders. The NTCSA aims to serve as an independent transmission system operator, encompassing functions such as network provision, system operation and system planning that were previously non-licensable.
NERSA’s chairperson, Thembani Bukula, hailed this decision as a milestone in Eskom’s unbundling process.
‘This is a milestone decision by the Energy Regulator and will immensely contribute to Eskom’s unbundling trajectory,’ Bukula said.
Another significant development resulting from the licencing is that the NTCSA’s focus extends beyond Eskom alone. It will be responsible for developing transmission infrastructure for the entire country as well as facilitating imports and exports from external sources. This expanded role is expected to keep the NTCSA busy over the next decade as it prepares the grid for various new generators beyond the traditional areas.
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Saul Musker, director at the private office in the Presidency, clarified that NERSA’s approval of the transmission licence is just the first step. The NTCSA still requires two additional licences for trading and importing and exporting, ultimately leading to its role as the system operator of the national grid. This independent national grid operator will foster a level playing field for both public and private energy generators, a crucial aspect of the ongoing market reform process.
While NERSA has not yet made a decision regarding the other two licences, there is concern that the NTCSA requires all three in order to operate at its best, including the capacity to serve as the buyer for historical Independent Power Producer (IPP) contracts, a function that Eskom currently performs. The trading licence would permit the NTCSA to fulfil this vital function.
‘Nersa has not made a decision on the other two licences. We are very concerned about that because the NTCSA needs all three licences in order to operate, including, for example, being able to be the buyer for Iegacy IPP contracts, which Eskom is currently. That is what the trading licence would allow,’ explained Musker.
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