It has been over a year since Dr. Kgosientsho Ramokgopa, the previous minister of electricity, convened an investor conference designed to promote private sector participation in the enhancement of the South African electricity grid. On Wednesday (11 December), a Request for Information (RFI) was issued.

This represents the first step towards procurement, which is anticipated to begin in the first quarter of the next year.

Nevertheless, the closing date for the RFI is scheduled for February, which raises questions regarding the adherence to the timeline for the Request for Proposals (RFP).

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The South African Independent Power Producer Association (Saippa) has voiced its support for the RFI, recognizing it as a crucial first step in attracting private investment to strengthen essential grid infrastructure.

Enhancing and restructuring the grid has emerged as a primary focus to support the expansion of multiple renewable energy projects spearheaded by government and private sector stakeholders.

Grid congestion

In areas such as the Eastern, Western, and Northern Cape, where optimal wind and solar potential exists, the grid is reaching its capacity limits, hindering the integration of additional projects. Eskom has initiated a curtailment program to relieve some of the strain, but energy regulator Nersa still needs to determine the relevant tariffs.

The National Transmission Company of South Africa (NTCSA), established as an independent subsidiary within the Eskom group in July of this year, has unveiled an ambitious Transmission Development Plan (TDP) aimed at incorporating 56,000 MW of new generating capability into the grid over the next decade.

Read:
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“To meet this demand, we will require 14,500 km of new transmission lines and 210 transformers, yielding a total capacity of 133,000 MVA,” stated NTCSA interim CEO Segomoco Scheppers during the TDP launch.

“This signifies a fivefold increase in delivery over the next decade compared to the past ten years. R112 billion has been earmarked for the TDP program over the next five years.”

Eskom does not possess the necessary resources and capital to execute this independently, highlighting the need for private sector participation.

RFI

The RFI contains an online questionnaire that seeks market input on the duration and structure of contracts – including build, own, operate, and transfer – along with financing and security options, risk allocation, and regulatory factors.

It requests information about potential offtakers and investigates the possibility of creating contracts without government guarantees.

Following the investor conference in September last year, Ramokgopa conveyed optimism about progressing with the Independent Transmission Projects (ITP) initiative, promising an announcement regarding the rollout in a matter of weeks.

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Shortly thereafter, the late Pravin Gordhan, then minister of public enterprises, announced the establishment of the NTCSA board, effectively removing the matter from Ramokgopa’s oversight.

After the May elections, the public enterprises department was dissolved, and Ramokgopa shifted to lead the energy portfolio, which encompasses regulatory oversight for Eskom. The Independent Power Producers (IPP) Office, tasked with managing the RFI and likely the procurement process, operates within the energy department under Ramokgopa’s jurisdiction.

He had previously indicated that the ITP pilot project would be rolled out in early 2025.

Be ‘realistic’ about timelines

Saippa chair Brian Day expresses doubt regarding the feasibility of this timeline.

“We must maintain a realistic perspective on the timelines necessary for this entire process,” he remarks.

“The RFI closes at the end of February 2025, after which the proposals will require assessment, and the insights gained will inform the pilot initiative.

“I expect the pilot scheme RfP to be released around September 2025, setting the stage for future bidding,” Day adds.

“The full timeline is still unclear, as we need to address the adjudication process, select preferred bidders, negotiate commercial contracts, and secure financial closure before we can start construction on the pilot project.

“This suggests at least a 3 to 5 year timeframe before the pilot project becomes operational. Only then can a more extensive program be initiated.”

Consequently, Saippa now underscores the significance of concentrating equally, if not more, on immediate and medium-term solutions, including the formalization of the curtailment regime by Nersa and the acceleration of grid project construction by the NTCSA, as highlighted by Day.

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