/ 19 September 2023

Eskom’s newly licenced NTCSA expected to boost energy security

Eskom Repairs
Workers carry out repairs at the Tutuka coal-fired power station in Mpumalanga. File photo: Waldo Swiegers/Bloomberg

The National Energy Regulator of South Africa’s (Nersa) decision to approve licences for Eskom’s transmission company gives the utility an opportunity to boost the security of power supply in the country.

Nersa on Monday approved two licences that were outstanding for the establishment of the National Transmission Company of South Africa (NTCSA). This was after the energy regulator in July gave the nod to the application for a licence application which gave the company the power to act as the transmission operator for the national grid.

The establishment of the NTCSA will enable the company to enter into import/export agreements with countries in the Southern African Development Community, “thereby increasing security of supply especially from Mozambique who have excess capacity to sell”, analyst Lungile Mashele said.

She said that this would also give an incentive for private players to participate in the energy market, although they will still be subject to regulations which power producers must follow when applying for electricity tenders to offer services to Eskom.

“The NTCSA can buy and sell electricity from Eskom power stations, independent power producers (as well as doing) cross border imports,” Mashele said.

She said the regulations were put in place to ensure healthy competition between parties that will be providing services to the NTCSA.

Public Enterprises Minister Pravin Gordhan welcomed the approval of the licences, which he said meant that South Africa now had in place “all the critical elements for creating a more dynamic, a more responsive and a competitive electricity industry”.

“This is a significant milestone as it also paves the way for the procurement of power from across the region,” Gordhan said.

Nersa’s approval of the transmission licence application in July was a key milestone in Eskom’s unbundling process, which will see the power utility restructured into three separate units dealing with the generation, transmission and distribution of electricity.

The NTCSA, which is a wholly owned subsidiary of Eskom, was established in alignment with the department of public enterprises’ “Roadmap for Eskom in a Reformed Electricity Supply Industry” which was issued in October 2019. 

The NTCSA will operate the transmission system and perform integrated roles to ensure the integrity of the power system. This entails performing the role of transmission network service provider, system operator, transmission system planner and grid code secretariat.

On Monday, Nersa said NTCSA would be active for five years “to allow for transition from the exclusive trading arrangement and incorporation of changes that may emanate from the Electricity Regulation Act amendment and price review processes”.

Eskom said for the company to start operating, it was in the process of getting consent from its existing lenders and appointing an independent board that will oversee its day-to-day functions.

“There are ongoing engagements between lenders and Eskom to address lender concerns,” Eskom spokesperson Daphne Mokwena said.