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Language of incumbency

17th November 2023

By: Terence Creamer

Creamer Media Editor

     

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Two recent Eskom publications are heavily laden with the language of incumbency, which continues to go unchecked by a policymaker distracted by realpolitik rather than real solutions.

The first is the Medium-Term System Adequacy Outlook, which Eskom is required to publish yearly to provide a view on whether South Africa has the generation available to meet demand under various scenarios – something it has failed to do for more than 15 years and counting.

The disappointment does not lie so much in the weak demand outlook, which Eskom has played a large part in ensuring with its inability to provide investors with any supply or tariff certainty. Instead, it lies in the report’s unsurprising confirmation that the Integrated Resource Plan-derived coal retirements assumed in previous forecasts are under review “in light of the current capacity constraints”.

These constraints are mainly attributable to a failure of government to ensure that its new-build policy was implemented effectively, particularly during the years of extreme State capture. They can also be partly attributed to the way Eskom has managed new connections, however. Not only has the utility been extremely conservative in its approach to integrating variable renewable electricity, but its processes have been cumbersome, resulting in delays and uncertainty regarding the issuance of grid-connection Budget Quotations.

This conservative approach to renewables is reflected in the second Eskom document, the Generation Connection Capacity Assessment (GCCA), its latest statement on the connection capacity for independent power producers (IPPs). The document concludes that there is only 19.9 GW of grid connection capacity currently available across the country, with zero remaining capacity in the renewables-potent Eastern Cape, Northern Cape and Western Cape provinces.

While the GCCA concludes by confirming that curtailment studies have been conducted to “provide IPP developers with an alternate option if they are still keen to connect in these constrained areas”, it does not embed the outcomes. This, despite public confirmation that 10% curtailment could unlock significant capacity immediately and is economically sensible, an economic case that is amplified further by the country’s chronic supply deficit.

It is estimated, for instance, that 4 GW of capacity would be unlocked in the Western Cape alone, where several wind projects could already be under construction had Eskom taken a less conservative approach during the most recent procurement round when none of the 23 wind projects were selected to proceed on the basis of grid “depletion”.

The response of the GCCA? “Governance within Eskom has been approved to a large extent; it will now follow a regulatory approval process before any of the curtailment results and opportunities can be shared, most likely in the next release of the GCCA or possibly sooner in an addendum, pending the outcome from the regulator.”

Is this not the language of unchecked incumbency? Surely, the policymaker needs to step up and step in. Instead, the policymaker is consumed by a desire to capture shareholder authority at Eskom and to entrench its incumbency rather than tackling its obvious perils.

Edited by Terence Creamer
Creamer Media Editor

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