Investment gap

15th April 2022

By: Terence Creamer

Creamer Media Editor


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South Africans have rightfully paid detailed attention to the state of the country’s generation assets over the past decade and a bit as load-shedding has progressively intensified, precipitated by the undermaintained coal fleet beginning to decommission itself.

Despite this, progress has been wholly insufficient. Eskom has dismally failed to effectively manage its two mega-coal builds, which also became sites of corruption, and the procurement of electricity from independent power producers was actively disrupted between 2014 and 2018 and remains under-sized.

As worrying, however, are the backlogs that have developed in the lower-profile, yet equally critical, parts of the electricity value chain, namely transmission and distribution.

Many towns and suburbs are already subjected to regular outages, owing to a combination of insufficient investment and maintenance in distribution networks and the scourge of electricity or cable theft. To be sure, past warnings of the distribution sector being the “weakest link” have become a lived reality for too many.

While South Africa’s electricity problems are amplified relative to many other parts of the world by ongoing policy uncertainty, operational inefficiencies, and corruption, they find common ground with many other jurisdictions in one vital area: the lack of investment in transmission infrastructure.

This point was raised again this month by the Global Wind Energy Council, when releasing its ‘Global Wind Report 2022’. The document highlights the fact that insufficient grid capacity in the Eastern, Northern and Western Cape provinces of South Africa is already constraining new renewables project development.

However, it also points to chronic deficits elsewhere: “2021 was a dark year for grid infrastructure,” the report reads. “Power blackouts and brownouts occurred across the US, Mexico, Central America, Puerto Rico, Pakistan, the Philippines and China, not to mention interconnection mismatches and near-misses affecting nearly every region in the world.”

The report also notes that, while grid expansions are crucial for enabling renewable energy in every country and for meeting net-zero targets, the topic was largely overlooked in the run-up to the COP26 climate conference in Glasgow. “More than 80% of countries have indicated they plan to increase the deployment of renewables, yet only 24% refer to grid improvements in their Nationally Determined Contributions.”

A recent International Energy Agency report charting the investments required to meet net zero by 2050 calculates that yearly transmission investment will have to treble from current levels to $820-billion by 2030 and rise to $1-trillion by 2040.

In South Africa, Eskom estimates that R178-billion will be required over the coming ten years to enable the integration of 30 GW of new, mostly renewables, generation capacity. It would involve the building of 8 406 km of new lines and the introduction of 119 large transformers, to create 58 970 MVA of transformer capacity.

This implies a step change in the pace of grid deployment and underlines the urgency of creating an independent entity with the balance sheet and skills needed to implement what would be an unprecedented expansion of the transmission system.


Edited by Creamer Media Reporter


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