• Editor

Life Beyond Load-shedding

Electricity is the biggest single constraint on the South African economy.

It also demoralises citizens and saps the energy of individuals and corporates , big and small alike. Load-shedding, fights about coal, the odours hanging over Karpowership, the bickering among some ministers and with Eskom management are all destabilising, leaving South Africans perplexed and frustrated.

All this noise obscures a different trend line that has been taking shape over the past few years.


Let’s cast our minds back. South Africa’s highly successful Independent Power Producer Programme (IPP), launched in 2011, was brought to a screeching halt in 2015 by the Eskom CEO at the time, Brian Molefe, when he refused to sign 27 approved IPP contracts. Not only were already-built solar plants not commissioned, but the flow of investment was arrested and industrialisation benefits from developing a solar industry were buried. The stagnation lasted three years.

Then in 2018, seven weeks after Cyril Ramaphosa became president, the 27 contracts were signed, unleasing R56 billion in investment. It didn’t happen without opposition. Coal interests were livid. They blockaded Tshwane more than once and went all the way to the Appeal Court in Bloemfontein to get an interdict to stop the signing of the contracts. Even so, the investments went ahead. The last of those IPPs have been connected to the grid this year.

The signing of the contracts was an early political signal of what we could expect from the Ramaphosa government on energy matters. This signal was reinforced by the Integrated Resource Plan (IRP) and the Eskom road map of October 2019. Everything that is unfolding now, was spelt out then.

Expanding the supply of renewables is now an irrevocable part of government policy. Bid window 5 for 2 600 MW of renewable energy was successfully concluded this year, unlocking R50 billion in investment. In January 2022 bid window 6 for another 2 600 MW of renewables will open. The IRP provides for a further 15 000 MW of renewables to be added to the grid in the nine years to 2030. Eskom is scheduled to decommission 10 000 MW of coal-fired generation by 2030 and considerably more after that. Eskom itself, and with it, South Africa as a whole, is making a decisive shift from coal to renewable and other technologies.

To be clear, South Africa will still use coal for many decades to come. Medupi and Kusile devour coal. Their life cycle is probably 40 years or more. Many of the other coal power stations will also be with us for a while. It is unrealistic to think we will see a dead stop on coal soon. Even so, the shift to renewables is happening. (The regulatory system is cumbersome and too slow for the country’s needs. It will have to change in fundamental ways, but that requires a separate note. Here we deal with what is actually happening, not what should happen.)


The one blot on a generally favourable trend is the Karpowership component of the risk mitigation programme. Karpowership was allocated 1 350 MW of this programme, and renewables 650 MW.

The Karpowership contract is mired in controversy and legal challenges. Whether it will go ahead remains to be seen. In this note we exclude it from all numbers.

The renewable contracts, on the other hand, are forging ahead. Producers must supply power from 05h00 until 21h30. Obviously, the sun doesn’t shine for all those hours, so they must invest in storage technology. In Kenhardt, solar panels and batteries are being installed by a Norwegian company; and in Postmasburg a Saudi-Arabian company installed salt technology. The latter has been supplying power for 24 hours of the day for a year now. Solar and storage can help address the base load issue. Investment is expected at around R29 billion.


Two other important political decisions have been taken since 2018. One was to allow municipalities to procure their own power. Johannesburg Metro was first out of the blocks and is finalising procurement for 220 MW from wind, solar and gas, among others using the roof tops of municipal buildings. The expected investment will be R3,8 billion – all of which is private capital. Eight other municipalities, including Cape Town and eThekwini, are engaged in similar initiatives but are not as far advanced as Joburg. Apart from alleviating load-shedding, it will unlock significant private sector investment.


The second crucial decision came in June. It was actually a three-in-one decision. The exemption from acquiring a National Energy Regulator of South Africa (Nersa) license for generation was lifted from 1 MW to 100 MW, companies are allowed to ‘wheel’ their ‘own-generated’ power on the Eskom grid (at a fee), and they can sell it to third parties. This led to high expectations and much excitement, but to date no projects have been registered yet. Part of the reason lies in the complicated nature of the registration process. It is easier to do than get a licence, but existing laws must still be adhered to. These include environment laws, water and land use regulations, building plan approvals and adherence to municipal bylaws. The Minerals Council has compiled a list of 16 such requirements, involving seven different authorities from municipalities to national departments to Nersa and agreeing the fee for wheeling with Eskom. Simple it ain’t.

Given load-shedding, one can understand the frustration of people who want to generate power immediately and must now jump through hoops, but one can also understand that the laws of the land must be obeyed. (Again, my earlier point about revamping the entire system.)

Despite these difficulties, the projects will be executed simply because the benefits are so overwhelming (cost, energy security, carbon taxes, and environmental, social and governance - ESG - requirements). The Minerals Council has announced that its members are working on installing 3 900 MW at an estimated investment of R60 billion. Data from other industries are not as clear, but a leading real estate investment trust, for example, estimates that it can meet 50% of its power needs from solar and batteries. They are also upset about the regulatory process, but are proceeding nonetheless. It is noticeable how many companies are now reporting on installing renewable power.