He named expanded energy generation as his fourth key priority for the year, but President Cyril Ramaphosa’s announcements on new procurement and legislative amendments on Thursday night read as a to-do list left over from last year — and earlier still.
In his fifth state of nation address, Ramaphosa said 2 600 megawatts of wind and solar energy would finally be procured as part of the government’s bid window five in the next few weeks, followed by another round in August.
The bid window allows independent power producers to pitch price offers for electricity to the government. Mineral Resources and Energy Minister Gwede Mantashe has been under fire for delays in this round, after Ramaphosa promised action on it in his state of the nation address a year ago.
Anton Eberhard, who heads the Power Futures Lab at the University of Cape Town Graduate School of Business, noted that the Integrated Resource Plan envisioned that the fifth bid window would follow immediately after the fourth, which was launched in 2014 but delayed by the machinations of Brian Molefe and Matshela Koko at Eskom.
Ramaphosa unlocked that process in 2018. Power-purchase agreements were signed and most of these projects are now connecting to the grid.
With dire power shortages plunging the country back into load-shedding this past week, bid window five remains yet to be launched, despite promises from Mantashe to do so in December.
Eberhard termed the seven-year hiatus between the two bid windows “disastrous” and welcomed the launch of round five in the next month or two. “[But] the IPP [independent power producers] office in the meantime has its hands full adjudicating the current emergency 2 000MW risk-mitigation IPP round,” he noted.
Ramaphosa referred to this process, saying the department of energy would soon announce the successful bids and would, when needed, amend regulations to allow municipalities to purchase power directly from independent producers.
Ramaphosa also promised that the government would move at speed to procure an additional 11 800MW in total.
Eberhard said he took the August round to be the launch of bid window six.
This figure of 11 813MW was, in fact, gazetted in October last year, and includes 6 800MW of wind and solar, 3 000MW of gas and diesel and 1 500MW of new coal power.
The urgent need to procure energy speedily was made stark by a warning from Eskom, relayed by the president, that even with new generation coming online, the country would battle shortages of between 4 000MW and 6 000MWs for the next five years as its ageing coal plants reach retirement age.
To alleviate this shortfall, Ramaphosa promised an amendment to the Electricity Regulation Act in the next 90 days to ease licensing requirements for new embedded generation projects.
This could unlock up to 5 000MW of additional capacity and ease the blow of rolling blackouts, Ramaphosa said, adding that Eskom has started putting in place the logistics to bring electricity sourced in this manner online.
He also again pointed to the need to reduce the reliance of the debt-ridden utility — its liabilities now stand at R488-billion — on state handouts, and said this would mean reviewing tariffs to ensure that Eskom recovers generation costs from municipalities.
Ramaphosa promised a full review of the country’s costly, inefficient state-owned enterprises, saying that “overarching legislation for state-owned companies will be tabled in cabinet this financial year and parliament in the next financial year”.
“A centralised SOE model is being implemented this financial year, which will ensure a standardised governance, financial management and operational performance framework for all SOEs,” the president added.