Government to approve Eskom unbundling - 2 months ago

Johannesburg – A new electricity proposal which has independent transmission unbundled from Eskom at its heart will come into being in three months and be approved by cabinet by September.

It is expected that over the next 20 years the transmission operator will become as large as Eskom with private electricity producers selling as much electricity to the operator as currently generated by Eskom.

These plans were mooted in Pretoria last week as part of proposals for an integrated resource plan under the auspices of the new department of energy.

The legal and institutional framework for this plan still needs to be created, but it looks as if it will be realised, the strategic head of one of the country’s largest energy companies told Sake24.

This would make it possible to build a private power station and sell electricity to a bulk consumer, such as a mining company, hundreds of kilometres away.

Failed attempts

The unbundling of Eskom’s transmission and distribution roles has been envisaged for more than 10 years, with several attempts to do so having failed.

The R140bn shortfall in Eskom’s funding plans for the next 15 years has seen government realise a private electricity industry needs to be urgently established because this is the only way to build new power stations.

Within this period, 40 000 megawatts (MW) needs to be added to the country’s existing generating capacity of 37 000MW.

This cannot come about without an independent system operator: a model adopted in many successful industrial countries such as in large parts of the US, Canada, Australia and South Korea.

But players in the electricity industry last week expressed reservations, pointing out deficiencies such as that existing plans give inadequate attention to issues like the provision of water to prospective stations in private hands.

Immediate questions requiring decisive answers include the tariffs at which electricity will be charged by the independent network operator and how to invigorate the electricity-conservation campaign, also known as demand-side management, so as to prevent another power crisis in 18 months.

Plans to establish private power stations for the major mining companies are already well advanced. This would greatly relieve the country’s generation problems, but the uncertainty about the network, which is currently still in Eskom’s hands, is the only reason why construction of the power stations has not yet begun.

Cohesion needed

The Energy Intensive Users Group, a pressure group representing 134 of Eskom’s largest electricity consumers, told Sake24 attempts to install demand-side management have failed because the initiative is owned by disparate government institutions and the private sector. Government now realises greater cohesion is required in this respect.

Workable proposals have been made.

This time they come from ground level, but one will have to ensure that they can be properly applied.

Department of energy executives have given their assurance that these concerns will receive attention at the highest level.

During the submissions Nelisiwe Magubane, the director-general of the new department, said the point in history has been reached where critical decisions need to be taken about the extent and nature of the country’s current and future electricity infrastructure.
- Sake24

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