Staff Writer

14 hours ago

South Africa could get its first dedicated power transmission company separated from Eskom by the end of the year, Business Times reports.

The publication said the Department of Public Enterprises estimates that the entity could be up and running from December 2023, allowing independent power producers (IPPs) to compete directly with Eskom.

President Cyril Ramaphosa first announced the unbundling of Eskom into three separate entities in his 2019 State of the Nation address.

The splitting of Eskom into its three main operating divisions — generation, transmission, and distribution — aims to make the utility more manageable.

It also seeks to liberalize the energy market by encouraging greater private sector participation, believed to be another critical lever in reducing load-shedding.

Spokesperson for the department Ellis Mnyandu said the entity would function as a single-buyer purchasing power from Eskom generation and IPPs that sell to Eskom distribution, municipalities, and large power users.

“The national transmission entity’s core functions will include balancing electricity supply and demand in real-time, dispatching the generators according to least-cost merit order principles, providing open access in a fair and equitable manner to the transmission network and acting as an unbiased electricity market broker,” said Mnyandu.

The entity will be called the National Transmission Company South Africa (NTSCA).

It is expected to buy 218,000GWh of power annually, 77% of which will come from Eskom power plants, 19% from IPPs and 4% from electricity importers.

In turn, NTSCA will transmit 5% of the 212,000 GWh it expects to sell, and the rest will be sold within South Africa.

By 2021, Eskom had 33,158 kilometres of transmission lines and 154,500 megavolt amperes of transformer capacity.

Eskom has estimated that around R150 billion must be invested to improve the grid and allow for much-needed capacity to be added to address the country’s power crisis.

In the Northern Cape, the power utility has no more capacity to add generation from IPPs.

The province is ideal for solar power plants, with copious amounts of sunshine, and is generally less overcast than the rest of the country. It is also home to several wind farms.

Drag in unbundling

It is unclear why the unbundling process has taken so long.

While South African Independent Power Producers Association chair Thomas Garner welcomed the move, he told Business Times it should have happened long ago. “They should have made it last December or the December before that,” Garner said.

The first step in raising the funding necessary for the entity to carry out its mandate is getting a licence from the National Energy Regulator of South Africa (Nersa).

On several occasions since February 2023, the department has promised that the NTSCA was on the brink of getting the licence.

Venture capitalist and Bank Zero chairman Michael Jordaan previously told MyBroadband that the split had taken excessively long.

Jordaan said he believed there was no reason this could not be done within about 100 days.

He also said that generation should be split further so that large power stations could become standalone business entities.

“New generation capacity can then be added by the private sector and local/provincial/central government as needed,” Jordaan said.

“Done correctly, we could have an investment boom in power generation capacity.”

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