Eskom chief executive Andre de Ruyter, in sharp contrast to the previous regime at the utility, has expressed his strong support for independent power producers, saying the best way to increase SA’s energy security is to bring more private producers onto the national grid.
De Ruyter was interviewed on Business Day TV’s Political Currency show with Tim Modise on Wednesday evening.
He said SA needed additional generation capacity and he was pleased to see the National Energy Regulator of SA’s (Nersa) concurrence with a determination by minister of mineral resources and energy Gwede Mantashe to procure about 11.8GW of additional electricity over the next number of years.
Eskom has 45GW of power installed, though it has been struggling to meet demand of 26 to 28GW due to poor plant performance.
“We believe that is absolutely the right step. There is probably more capacity that needs to be added and we think it is a great opportunity to attract additional investment, particularly from foreign investors,” he said.
If we do not sort out the issues of energy security, then we will be choking investment in this economy.
Mantashe gazetted the determination under section 34 of the Electricity Regulation Act at the end of last month following concurrence from Nersa. It includes 6,800MW of renewable energy; 513MW of storage; 3,000MW from gas; and 1,500MW from coal.
Eskom will be the buyer of all the electricity generated.
This comes as Reserve Bank governor Lesetja Kganyago said on Tuesday that load-shedding, which reached its worst levels in 2020 despite the collapse in activity under the lockdown, remained a binding constraint on the economy.
“If we do not sort out the issues of energy security, then we will be choking investment in this economy,” Kganyago said.
The previous regime at Eskom opposed the introduction of independent power producers on the grounds that it was compelled to buy the energy produced whether it was needed or not. The first two rounds of the IPP renewable procurement programme where also comparatively very expensive owing to the newness of the technologies and financing arrangements.
De Ruyter said progress was being made to reduce these costs.
“There are now engagements taking place to decrease the cost of financing of the earlier rounds with a view to decreasing the cost of the energy they generate,” he said.
Eskom was also, as a top priority, undertaking maintenance to improve the reliability of its old fleet.
“We hope that this will deliver tangible results by April next year and that by September we will have significantly reduced the residual risk of load-shedding,” he said.
De Ruyter said the “Eskom war room”, an inter-ministerial committee of the cabinet chaired by deputy president David Mabuza, had proved very useful to Eskom.
“It is now called the Political Task Team and it meets fortnightly to address some of the roadblocks faced by Eskom such as municipal debt and Nersa tariff decisions. It has been very useful to elevate issues to the cabinet and has greatly assisted the progress made at Eskom,” he said.
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