More than a year has elapsed since Dr. Kgosientsho Ramokgopa, the previous minister of electricity, conducted an investor conference to promote private sector participation in the advancement of the South African electricity grid. On Wednesday (11 December), a Request for Information (RFI) was issued.
This signifies the first step towards procurement, anticipated to begin in the first quarter of the forthcoming year.
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Nevertheless, the RFI’s deadline is scheduled for February, which raises concerns regarding compliance with the timeline for the Request for Proposals (RFP).
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The South African Independent Power Producer Association (Saippa) has voiced its support for the RFI, considering it a crucial first step in attracting private investment to improve essential grid infrastructure.
Enhancing and reconfiguring the grid has become a primary focus to support the expansion of various renewable energy projects initiated by both government and private organizations.
Grid congestion
In areas like the Eastern, Western, and Northern Cape, which are rich in wind and solar resources, the grid is approaching capacity limits, hindering the inclusion of additional projects. Eskom has initiated a curtailment program to reduce some of the strain; however, energy regulator Nersa still needs to establish the necessary tariffs.
The National Transmission Company of South Africa (NTCSA), which was established as an independent subsidiary within the Eskom group in July this year, has unveiled an ambitious Transmission Development Plan (TDP) intended to add 56,000 MW of new generating capacity to the grid over the next ten years.
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“To meet this demand, we will require 14,500 km of new transmission lines and 210 transformers, offering a total capacity of 133,000 MVA,” stated NTCSA interim CEO Segomoco Scheppers during the TDP launch.
“This indicates a fivefold increase in delivery over the next ten years compared to the last decade. R112 billion has been allocated for the TDP program over the next five years.”
Eskom does not possess the necessary resources and capital to accomplish this independently, making private sector involvement essential.
RFI
The RFI consists of an online questionnaire seeking market feedback on contract duration and structure – including build, own, operate, and transfer – as well as financing and security options, risk allocation, and regulatory aspects.
It asks about potential offtakers and investigates opportunities for forming contracts without government guarantees.
After the investor conference in September last year, Ramokgopa expressed eagerness to progress with the Independent Transmission Projects (ITP) initiative, promising an announcement about the rollout within a few weeks.
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Soon after, the late Pravin Gordhan, who was then the minister of public enterprises, announced the establishment of the NTCSA board, effectively removing the matter from Ramokgopa’s jurisdiction.
Following the May elections, the public enterprises department was dissolved, and Ramokgopa transitioned to overseeing the energy portfolio, which includes regulations for Eskom. The Independent Power Producers (IPP) Office, responsible for managing the RFI and likely the procurement process, is housed within the energy department under Ramokgopa’s direction.
He previously mentioned that the ITP pilot project is expected to launch in early 2025.
Be ‘realistic’ about timelines
Saippa chair Brian Day expresses doubt regarding the feasibility of this timeline.
“We need to be realistic about the timelines required for this overall process,” he remarks.
“The RFI’s closing date is stipulated for the end of February 2025, after which proposals will require evaluation and the insights collected will shape the pilot initiative.
“I foresee that the pilot scheme RfP will be issued around September 2025, setting the stage for subsequent bidding,” Day adds.
“The entire timeline remains uncertain, as we must navigate judgments, selection of preferred bidders, commercial contracts, and financial closure before construction on the pilot project can commence.
“This indicates a minimum of 3 to 5 years before the pilot project becomes operational. Only then can a broader program be initiated.”
Consequently, Saippa now highlights the critical importance of placing equal, if not greater, focus on immediate and intermediate solutions, such as formalizing the curtailment regime by Nersa and accelerating grid project construction by the NTCSA, according to Day.
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