Government will in 2021 continue to work closely with Eskom on proposals to improve the energy utility’s financial position, manage its debt and reduce its dependence on the fiscus.
This was on Thursday revealed by President Cyril Ramaphosa during his hybrid 2021 State of the Nation Address in Parliament.
To achieve this goal, a review of the tariff path is required to ensure that it reflects all reasonable costs and measures to resolve the problem of municipal debt.
The intervention is the fourth priority intervention of the Recovery Plan and aims to rapidly expand energy generation capacity.
“Restoring Eskom to operational and financial health and accelerating its restructuring process is central to this objective,” said the President.
Eskom has been restructured into three separate entities for generation, transmission and distribution.
President Ramaphosa said this would lay the foundations for an efficient, modern and competitive energy system.
The power utility, he said, is making substantial progress with its intensive maintenance and operational excellence programmes to improve the reliability of its coal fleet.
“In December 2020, government and its social partners signed the historic Eskom Social Compact, which outlines the necessary actions we must take, collectively and as individual constituencies, to meet the country’s energy needs now and into the future.”
Over the last year, government has taken action to urgently and substantially increase generation capacity in addition to what Eskom generates.
The President said the Department of Mineral Resources and Energy will soon be announcing the successful bids for 2000 megawatts of emergency power.
“The necessary regulations have been amended and the requirements clarified for municipalities to buy power from independent power producers. Systems are being put in place to support qualifying municipalities,” said President Ramaphosa.
Government will soon initiate the procurement of an additional 11 800 megawatts of power from renewable energy, natural gas, battery storage and coal, in line with the Integrated Resource Plan 2019.
Despite this work, he said Eskom estimates that, without additional capacity, there will be an electricity supply shortfall of between 4 000 and 6 000 megawatts over the next five years, as old coal-fired power stations reach their end of life.
As part of the measures to address this shortfall, President Ramaphosa said government would in the coming weeks issue a request for proposals for 2 600 megawatts from wind and solar energy as part of Bid Window 5.
This will be followed by another bid window in August 2021.
“A recent analysis suggests that easing the licensing requirements for new embedded generation projects could unlock up to 5 000 megawatts of additional capacity and help to ease the impact of load shedding,” he said.
In this regard, government will amend Schedule 2 of the Electricity Regulation Act within the next three months to increase the licensing threshold for embedded generation.
“This will include consultation among key stakeholders on the level at which the new threshold should be set and the finalisation of the necessary enabling frameworks,” he said.
Eskom has already started work to expedite its commercial and technical processes to allow this additional capacity onto the grid without undue delay.
“As we mobilise all of the resources at our disposal to support economic recovery, we cannot lose sight of the threat that climate change poses to our environmental health, socio-economic development and economic growth,” the President said.