But the plan itself? It is effectively a five-point plan:
1. Improving the performance of Eskom’s existing fleet of power stations: This will be achieved by increasing the budget that Eskom has to perform much-needed maintenance as well as procurement of skills from the private sector. This is a key requirement – although new private sector generation will replace Eskom’s ageing coal fire powerplant over a 15-to-25-year time horizon, the country is still very much dependent on the output from the Eskom fleet.
2. Accelerate the procurement of new generation capacity: By doubling Bid Window 5 of the Renewable Energy Independent Power Producer’s Programme, an additional 2,600 MW can be connected to the grid within the next 18 to 24 months. Also, by reviewing the mix of energy sources, timing and volume as outlined in the current version Integrated Resource Plan, new procurement can be expedited substantially.
3. Increase private investment in generation capacity: About a year ago, Ramaphosa announced that the licensing requirement for independent power producers would be lifted from 1 MW to 100 MW. This was seen as a big step forward, but many market commentators asked why the 100 MW cap was even needed. If the private sector could put a large-scale project together and raise the funding for it, why not allow more than 100 MW? And that is exactly what was announced – there would be no licensing requirement, regardless of the size of the project. Although projects will still need a host of permits, it was also announced that these permitting requirements will be streamlined in order to reduce waiting times.
4. Enable businesses and households to invest in rooftop solar: This is quite a substantial change. Effectively, Eskom will establish a ‘Feed-in-Tariff’ scheme so that individuals or entities that have installed solar panels or other energy generation facilities, would be able to sell excess energy into the national grid. This should incentivise many small-scale private solar projects to be completed. This will reduce the strain on the Eskom grid and provide additional energy to the grid.
5. Finally, fundamentally transforming the electricity sector and positioning it for future sustainability: Here, the president alluded to the restructure of Eskom into three separate legal entities and the fact that a solution for Eskom’s balance sheet woes would be announced at the mid-term Budget Speech in October. After many decades of Eskom being the sole producer, transmission entity and distributor of energy, we will see a fundamental transformation of these role players, with more private sector participation and a competitive energy market.