Eskom

De Ruyter in ‘call to arms’ appeal for cutting of red tape binds on new and existing capacity

19TH APRIL 2022

BY: TERENCE CREAMER

original article here

Eskom CEO André de Ruyter has appealed for an immediate easing of regulatory impediments to the introduction of both immediately available capacity of about 500 MW and the accelerated procurement, or introduction, of the generation capacity required to ease the now constant risk of load-shedding.

De Ruyter made this “call to arms” after the utility declared Stage 4 load-shedding at short notice on Tuesday morning and indicated that the rotational cuts would continue until 5:00 on Friday morning, owing to high levels of unplanned breakdowns of more than 15 600 MW.

“There are a number of steps that can be taken on an urgent basis by a number of parties [and] clearly Stage 4 load-shedding is a call to arms to address these issues,” he said during a briefing.

One of these actions included receiving authorisation for a so-called ‘standard offer’, through which Eskom would seek bids from small private generators to sell their surplus electricity into the grid under three-year contracts.

“The idea is for us to enter into these standard-offer agreements and fund these through the normal cost-recovery arrangements,” De Ruyter said, reporting that the Eskom board had approved the instrument in August.

For the standard offer to be activated, however, Eskom required a Section 34 determination under the Electricity Regulation Act to enable it to buy the electricity, as well as an exemption from some of the requirements of the Preferential Procurement Policy Framework Act.

In addition, the utility would require the concurrence of the National Energy Regulator of South Africa (Nersa), as well as the regulator’s assurance that it could recover the costs through the tariff.

“We are waiting for a variety of approvals from the National Treasury, Nersa, as well as from the Department of Mineral Resources and Energy (DMRE) to bring this online.

“This could yield about 500 MW to 600 MW – so not huge in the bigger scheme of things, but if you add up all of the other initiatives that we are proposing, we are looking at [reducing] one or two stages of load-shedding.”

The other initiatives referred to included making amendments, through the Independent Power Producer (IPP) Office, to the contracts in place with existing IPPs to unlock a further 200 MW that these generators are currently contractually disallowed from injecting into the grid.

In addition, there is potential, also through the IPP Office, to facilitate IPP plant improvements that could add a further 200 MW in the near term.

In parallel, Eskom was working to debottleneck the evacuation infrastructure servicing those IPPs to potentially unlock a further 200 MW to 300 MW.

Asked by Engineering News whether these proposals had been made formally to both the Department of Public Enterprises (DPE) and the DMRE, De Ruyter stressed that all its communications with government was being channeled through the DPE, including those that required action from either the National Treasury or the DMRE.

“So, I think that the steps that are required to resolve the crisis are known, they have been communicated and we have emphasised the need for urgency.”

In the longer-term, however, new generation capacity was required to close a prevailing supply gap of between 4 000 MW and 6 000 MW.

“We need more capacity to be added to the grid as soon as possible, and we should remove all roadblocks that stand in the way of adding that capacity as quickly as possible.”

In the process, South Africa could “pivot from our historical coal-fired base, which is not as reliable and as available as it should be, to low- and no-carbon forms of electricity generation”.

Such a transition, De Ruyter added, could be partly funded through concessional finance being made available in the wake of the COP26 climate talks in Glasgow, Scotland.

South Africa has received an $8.5-billion transition offer, which is currently the subject of government-to-government negotiations with the European Union, Germany, France, the UK, and the US. 

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