Electricity Minister Kgosientsho Ramokgopa. (GCIS)
Electricity and Energy Minister Kgosientsho Ramokgopa on Tuesday outlined plans for the private sector to invest towards building 1164 kilometres of electricity transmission lines as part of the government’s broader strategy to address inadequate electricity infrastructure and expand South Africa’s energy grid.
The Independent Transmission Providers programme, to be implemented through power utility Eskom’s wholly owned subsidiary the National Transmission Company of South Africa (NTCSA), aims to add 400 kilovolts (kv) of transmission lines with associated transformer infrastructure into the national grid.
“Today represents a significant milestone. It’s about ensuring that we are able to achieve energy security, ensure that the transformational elements of the energy sector gets to be realised and our ability to mobilise a significant amount of resources coming from the private sector is achieved,” Ramokgopa said.
“We want to create a dispensation where we are going to accommodate the investments by private sector players on the transmission side. We have accepted that the transmission is a natural monopoly, it will remain in the hands of the state, the NTCSA … but what we know is that our renewable energy assets are not fully exploited as a result of the constraints on the transmission side.”
With a 2029 deadline, the Independent Transmission Providers programme is expected to add 3 222 megawatts of power to the grid.
On Friday, the department of electricity and energy published a determination on plans to procure transmission infrastructure from private developers, including an update on seven planned transmission corridors in the Northern Cape, North West and Gauteng, designed to enhance grid access for renewable energy sources.
A market-sounding exercise conducted by the department in December found strong private sector interest in build-operate-transfer or build-operate-own-transfer agreements.
“When we went to the market we asked the question: How best must we configure the call for proposals? And they were making the point [that we must] do the build operate transfer or build operate own and transfer,” Ramokgopa said on Tuesday.
“That’s the most popular outcome of this exercise and that’s how we’re going to do it when we go out into the market: build operate transfer or build operate own and transfer that is going to be the basis of how we’re going to go out into the market.”
Ramokgopa acknowledged that “structural constraints in electricity and logistics” remain key barriers to economic growth.
“The economy is not growing at the right scale and part of the problem is the constraints on the electricity side and our view is that there’s a need for us to ensure that we are able to accelerate and support transmission infrastructure development,” he said.
“We’ll need to modernise and expand the transmission by about 14 000km and then for us to be able to do this we need about R440 billion. The Eskom balance sheet [and] the sovereign balance sheet is not sufficient to carry the kind of investments that are required in this space … so today we are introducing the independent transmission programme
He said the country needed new lines to be able to unlock capacity especially in the Northern Cape, Eastern Cape and Western Cape, “where we have the most efficient and reliable renewable energy assets in the form of solar and wind, but we have exhausted all of the transmission that allows us to evacuate the electrons so that the economy can benefit from those assets.”
Ramokgopa said the authorities had undertaken a “request for information” exercise from November until February this year which had given “a sense of what is the market appetite”.
“Now we’re going to do a request for qualification and then we’ll go out in July for request for qualification for those that think they’ve got the right credentials to participate and there are many across the length and breadth of the globe who have expressed an intention to participate,” he said.
“They will participate and then by the end of the year we’ll have done the request for proposal in November and then we’ll then get to go into evaluation and then we get to contract and then we turn South Africa into a major construction site.”
“The last thing we want is to put together a programme that is not successful because the market does not have an appetite to participate because they think it is designed in a manner that is not going to facilitate their participation,” Ramokgopa added.
The department will, on Thursday, gazette the procurement and regulatory framework that will guide the pilot project. From there Ramokgopa will present key findings from the market-share study at the South African Infrastructure Investment Forum on Friday, where he plans to discuss lessons learned from the electricity generation sector.