Eskom Set to Become Key Player in South Africa’s Transition to Renewable Energy

Image: HedgeNews Africa

As renewable energy becomes cheaper, South African cities aim to find their own energy sources and lessen their reliance on the country’s undependable electricity grid. State-owned utility Eskom relies on ageing coal-fired power stations, and used more than 90 million tons of coal in 2019. South Africa’s power utility has been marred by poor maintenance, ailing power stations and corruption which has led to rolling blackouts – known as load shedding – that has plagued the country since 2014.

In light of Eskom’s inability to provide a stable source of electricity to the country, the government is looking at transitional energy as a solution to its power woes. A new report entitled Power by All: Alternatives to a Privately Owned Future for Renewable Energy in South Africa from the International Institute for Sustainable Development (IISD), suggests that certain policy shifts may help South Africa move faster toward transitioning away from fossil fuels. The report examines four international case studies including Germany, Denmark, Morocco and the United Kingdom, which are shifting away from fossil fuel operations to using renewable energy.

According to the report, the Ørsted, Denmark case study demonstrates that committed leadership and support from the government has the potential to transform the energy sector of a country and transition from fossil fuels to renewables.

The report states that although the energy scenario in South Africa is different to that of other countries, Eskom is the key enabler for the rollout of renewable energy across the country. Eskom spokesperson Sikonathi Mantshantsha notes that the company agrees with the IISD report – that it should be leading the transition away from fossil fuels.

“Our aim is to have net zero emissions as Eskom by 2050; we want to significantly reduce our reliance on coal. However, we want to do this with the assistance of communities and investors, to balance social and economic sustainability,” Mantshantsha says.

A report published in March by the Council for Scientific and Industrial Research illustrates that South Africa experienced 859 hours of load shedding in 2020 – equivalent to 9.8% of the year. Strict regulations prevented companies from setting up their own generation facilities to curb their reliance on Eskom.

South African Minister of Resources and Energy H.E. Gwede Mantashe published a notice in the government gazette last month that effectively lifts the licensing threshold for small-scale generation projects from 1MW to 10MW. This move is expected to provide businesses more room to build their own electricity supply, away from Eskom’s grid, and thus limiting the impact of regularly scheduled blackouts in the country.

According to the notice, ‘embedded generation’ projects of up to 10 MW will be exempt from requiring a license but will require registration with the National Energy Regulator of South Africa. The license also stipulates that surplus power may be sold back to Eskom.

South African President, H.E. Cyril Ramaphosa said in his February 2021 state of the nation address that, “Recent analysis suggests that easing the licensing requirements for embedded generation projects could unlock up to 5,000 MW of additional capacity.”

The notice was signed by Mantashe, who invited the public to comment on the proposed change to the regulations with some local experts suggesting the threshold be lifted to 50 MW, due to the power shortfall in the country.

As part of reforms aimed at ending the country’s power crisis and regular outages due to faults at Eskom’s coal-fired power stations, this notice comes after a promise by the president to allow businesses and individuals the ability to set up their own power generation facilities.

The IISD report shows that with the right strategy and support, it is possible for Eskom to pivot from fossil fuels and explore more sustainable and cost-effect energy sources, reducing their reliance on coal. Eskom has highlighted that it aims to do this with the assistance of communities and investors to balance social and economic sustainability.

Africa Oil & Power Transforms into Energy Capital & Power

The transition represents the company’s commitment to the future of energy investment, sustainability, inclusiveness and diversification.

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Africa Oil & Power Transforms into Energy Capital & Power

The transition represents the company’s commitment to the future of energy investment, sustainability, inclusiveness and diversification.
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