Transforming Transmission in South Africa

Structural challenges persist in most African nations’ power sectors. Electrification levels remain low, and the expansion of access risks being outpaced by the continent’s population growth. Blackouts, brownouts, and load shedding are frequent and come at an immense socio-economic cost, putting additional pressure on already limited national budgets.??

The root causes of service quality issues are inadequacies related to the capacity and quality of electricity infrastructure and its management. Insufficient generation or an inability to scale generation up and down to meet demand peaks, inadequate capacity or flexibility in transmission and distribution networks, and/or breakdowns at power stations, transformers, or other equipment due to poor maintenance all contribute to the inefficiency and unreliability of electricity provision.??Infrastructural inadequacies are the result of a chronic lack of investments from financially strained public utilities. This severely limits utilities’ capacity to invest both in new equipment and in maintaining existing assets.??

This became evident in South Africa, particularly over the last couple of years. The transmission grid has had difficulty keeping up with the country’s impressive RE generation roll-out thus limiting the ability to bridge the gap caused by the decreasing efficiency of its coal plants. The result was a record year of load shedding in 2023 with over 330 days, costing the country an estimated $51m per day.??The issues of service quality, underinvestment, and financial sustainability create a vicious cycle for utilities. Low financial sustainability of utilities results in underinvestment in grid infrastructure, leading to poor service quality, which gives rise to a non-payment culture and pushes consumers to resort to self-generation. To compensate the financial shortfall of a smaller consumer base, utilities are faced with a need to increase tariffs, but higher tariffs (in combination with continued low service quality) lead to yet more consumers opting out of the grid, eventually resulting in the collapse of utilities.??Breaking this vicious cycle is a difficult task.??

However, South Africa seems to have bounced back in 2024 thanks to Eskom’s Generation Operational Recovery Plan. The plan has resulted in over 200 days of uninterrupted energy supply in 2024 in stark contrast to the previous year.??Now, with greater stability in grid management, Eskom’s newly launched TSO – The National Transmission Company of South Africa (NTCSA) – can focus on expanding and upgrading the transmission grid to accommodate the growing number of publicly and privately procured RE projects.??

A major focus of NTCSA’s strategy is the Transmission Development Plan (TDP), which is vital for accommodating South Africa’s growing renewable energy capacity. NTCSA anticipates that 30 GW of utility-scale renewables will be connected to the grid by 2029.

This requires a step-change in how transmission infrastructure is developed and executed, particularly in areas where grid bottlenecks have historically hindered renewable energy projects.?One such “step-change” is the pilot project for an Independent Power Transmission (IPT) project in South Africa. Working closely with the National Treasury and the International Finance Corporation (IFC), the Ministry of Electricity has refined the IPT procurement model, settling on a build, operate, own, and transfer (BOOT) approach. This model includes capacity payments linked to the availability of transmission lines, ensuring that IPT projects are sustainable and financially viable over the long term.?One of the key features of this procurement strategy is the competitive auction model, where bidders will submit their revenue requirements to cover capital, operational, and maintenance costs, along with equity returns and debt repayments. The contracts are likely to be awarded for a period of 25 to 35 years, similar to international practices.?

The first IPT projects are expected to be rolled out in key transmission corridors in the Northern and Western Cape, where the demand for renewable energy integration is highest. These projects will be overseen by a new office, potentially housed within the Development Bank of Southern Africa (DBSA), with a bidding process designed similarly to the Independent Power Producer (IPP) office’s auction model.?

Transmission will remain fundamental to South Africa’s transition efforts and central to RES4Africa’s work in the country. The Southern Africa programme has tackled various topics related to integration of RE in to the grid such as on Storage, Wheeling, and Grid Access mechanisms as well as a multi-year collaboration with Eskom for the management of RE installations and their integration in to the grid.???

The multi-year collaboration, called “Integration of Non-Programmable Renewable Energy in the National Electric System of South Africa” has also produced a series of collaborative studies with CESI and consists of 3 phases. The first phase was a geo-spatial analysis of the solar and wind resource availability in the country, matching the data with grid availability to identify ideal areas for the localisation of RE projects. Phase 2 built upon the previous study but took in to consideration the updated TDP as well as applications for BESS. Phase 3 is currently underway and assesses the potential for Solar PV installations, their potential impact on the grid and their management. The third phase will be presented at the upcoming RES4Africa’s South Africa Annual Conference Transforming Transmission in collaboration with Nedbank CIB. The event will take place on the 8th of November in Johannesburg at Nedbank Auditorium and will cover a number of issues related to growing and improving the transmission network. Be part of this essential dialogue and join us to discuss the future of South Africa’s energy transition and share insights on enhancing the nation’s transmission network.