Energy at the heart of Ramaphosa’s budget vote

President Cyril Ramaphosa on Wednesday presented the presidency budget vote at the National Assembly in Cape Town.

At the heart of his presentation was South Africa's electricity energy crisis. Ramaphosa said “as we face some of the most difficult and severe challenges” since the dawn of democracy, everyone must join in to make a difference.  

“This time of crisis, difficulties and challenges will be no different. South Africa faces a very difficult time but this is not the first time that, we have walked this road before.”  

He said over the last few weeks he and his deputy Paul Mashatile met with their ministers to identify specific tasks that they and their departments must focus on over the next year. These tasks, he said, include responding to load-shedding, unemployment, poverty and the rising cost of living. 

In July last year, Ramaphosa announced a detailed plan to deal with the energy crisis, establishment of the national energy crisis committee (Necom) and later appointed Kgosientso Ramokgopa as electricity minister.  

“Over the past nine months, we have made progress in implementing the measures that we outlined in the Energy Action Plan. First, in line with our economic reforms in network industries, we have allowed the private sector to invest in electricity generation projects of any size.  

“Following that, more than 100 projects are now at various stages of development, representing over 10,000MW of new generation capacity and over R200bn of investment.” 

The exponential growth of private sector investment in electricity generation is proof that this reform is having a major impact, he said, adding that the investments will significantly close the shortfall in electricity supply.  

Ramaphosa said the Northern Cape has attracted no less than R100bn in investments in renewable energy.  

 The government has also accelerated the procurement of new generation capacity.  

“Three projects from the risk mitigation programme have entered construction, with a further five projects expected to reach financial close during this quarter.  

“Project agreements have been signed for 25 preferred bidders from Bid Window 5 and 6 amounting to approximately 2,800MW, of which 784MW is already in construction.” 

In the coming months, Ramaphosa said government will initiate the procurement of more than 10,000MW of additional generation capacity from wind, solar, gas and battery storage, which will further contribute to closing the shortfall in energy supply.  

He said government has also enabled municipalities to procure power independently.  

“Since we implemented this reform, a number of municipalities have embarked on processes to procure additional power of up to 1,500MW.

"Fourth, we are driving progress on the unbundling of Eskom into separate entities for generation, transmission and distribution.”

Progress has also been made in the unbundling of Eskom, he said, adding that progress had been made in the establishment of the national transmission company of South Africa as an independent subsidiary of Eskom. 

Ramaphosa said public enterprises minister Pravin Gordhan has been tasked with ensuring that an independent board is appointed for the new transmission company by the end of June, so that it can be fully operational as soon as possible.  

On Eskom’s debt burden, he said the 2023 budget introduced R254bn in debt relief to Eskom.  

Ramaphosa said this will relieve the pressure on the utility’s balance sheet, enabling it to conduct necessary maintenance and supporting the restructuring of the electricity market. 

He said the government is also pursuing sweeping legislative reform to end the energy crisis once and for all, with the help of this house.  

“We have already introduced the Electricity Regulation Amendment Bill, which seeks to establish a competitive electricity market and support the unbundling of Eskom.  

“This will fundamentally transform the electricity sector, as we know it, and will create a level playing field for multiple generators to participate in producing the energy that we need. We will soon introduce another key piece of legislation, the Energy Security Bill, to streamline the regulatory framework and accelerate the construction of renewable energy projects.” 

Ramaphosa called on members of the house to pass the critical legislation in record time, while adhering to required parliamentary processes.  

“We face a difficult winter ahead, as demand increases and several units at Medupi, Kusile and Koeberg power stations are currently under repair and remain offline. These six units alone represent approximately 4,500MW of capacity, or between four and five stages of load-shedding." 

Ramaphosa said: “The situation will improve as we return these units to service towards the end of this year. Until then, our best hope of limiting the severity of load-shedding is to reduce demand on the grid.” 

"We can all make a difference by switching off lights and appliances when not in use, reducing the temperature setting on geysers to 60 degrees, installing a geyser blanket or geyser timer to save energy and reduce your electricity bill, and turn off unnecessary equipment like pool pumps. By taking these simple actions we can reduce demand by up to 1,000MW, or one full stage of load-shedding.

Safeguards against grid collapse

"We must reiterate that the risk of a national blackout remains extremely low.  

"There are many safeguards in place to prevent such an incident from occurring. Load-shedding allows Eskom to keep the system in balance at all times.

He said where necessary, it may be necessary to delay the decommissioning coal-fired power stations temporarily to address the electricity supply shortfall. Any decision will be informed by a detailed technical assessment of the feasibility of continuing to operate older plants and the cost of doing so relative to alternative energy sources.  

“It will also be informed by the timeframe in which we can expect new generation capacity and the impact on our decarbonisation trajectory.

"At the same time, we will further accelerate the pace of investment in new renewable electricity generation as an important part of the plan to overcome load-shedding.”  

"The work we are doing to urgently resolve the current electricity shortfall does not diminish our commitment to a just energy transition.  

"We will stick to our commitment to reduce our carbon emissions by 2030 to within a target range, which, at its upper level, is compatible with limiting global temperature increase to 1.5ºC."  

The Energy Action Plan is a springboard to a just energy transition, boosting the roll out of renewable energy sources, mobilising significant investment and creating new jobs in sectors from electric vehicles to solar installation. 

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