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Electricity Regulation Act amendment to light the way for electricity supply!

President Cyril Ramaphosa said government is embarking on a strategy to implement “fundamental changes” to electricity supply in the country.

The President was delivering the State of the Nation Address in Cape Town on Thursday evening.

State power utility Eskom continues to battle with challenges at power stations across the country leading to load shedding.

The President said the strategy is contained in amendments to the Electricity Regulation Act which was approved by Cabinet but is still out for public comment.

In part, amendments to the Act seek to allow private electricity producers to sell electricity and gives way for Eskom to establish its own transmission business.

“These far-reaching amendments will enable a competitive market for electricity generation and the establishment of an independent state-owned transmission company,” the President said.

President Ramaphosa lamented the current “electricity crisis” that has befallen the country as a result of Eskom’s challenges and an energy shortfall of at least 4000MW needed to maintain a stable grid.

“The electricity crisis is one of the greatest threats to economic and social progress. In the last few days, we have once again been reminded of the fragility of our electricity system. Load shedding continues to have a huge impact on the lives of all South Africans, disrupting business activities, and placing additional strains on families and communities,” the President said.

He assured South Africans that plans are already in motion to mitigate the impact of these challenges with several new energy projects expected to serve the power grid in the next few years.

“During the past year, we have taken firm steps to bring additional generation capacity online as quickly as possible to close the shortfall. As a result, several new energy generation projects will be coming online over the next few years,” he said.

These projects include:

  • Over 500 MW from the remaining projects in Bid Window 4 of the renewable energy programme, which are at advanced stages of construction,
  • 2600 MW from Bid Window 5 of the renewable energy programme, for which the preferred bidders were announced last year,
  • up to 800 MW from those risk mitigation power projects that are ready to proceed,
  • 2600 MW from Bid Window 6 of the renewal energy programme, which will soon be opened,
  • 3000 MW of gas power and 500 MW of battery storage, for which requests for proposals will be released later this year,
  • an estimated 4000 MW from embedded generation projects in the mining sector and
  • approximately 1400 MW currently in the process of being secured by various municipalities.

He reflected that Eskom itself is also working to ensure that power stations are continuously maintained.

“Due to our aging power stations, poor maintenance, policy miss-steps and the ruinous effects of state capture, our country has a shortfall of around 4000 MW of electricity.

“The utility has continued with its intensive maintenance programme, to reverse many years of neglected maintenance and underperformance of existing plants,” he said.

Renewable energy

President Ramaphosa said South Africa’s potential in renewable energy is expected to create opportunities to better the country’s economy and create a more stable power grid.

“Renewable energy production will make electricity cheaper and more dependable, and will allow our industries to remain globally competitive. Investments in electric vehicles and hydrogen will equip South Africa to meet the global clean energy future,” he said.

President Ramaphosa added that with South Africa’s rich mineral resources, mining is also expected to benefit from a move towards cleaner energy.

“We will be able to expand our mining industry in strategic minerals that are crucial for clean energy, like platinum, vanadium, cobalt, copper, manganese and lithium. We also have a unique opportunity in green hydrogen, given our world-class solar and wind resources and local technology and expertise,” he said.

The President highlighted that government’s work in positioning the country as a world leader in the Green Hydrogen space is gathering momentum.

“Over the past year, government has built on its successful Hydrogen SA strategy to make major strides in positioning South Africa as a global leader in this new market.

“This includes the development of a Hydrogen Society Roadmap for the next ten years as well as a Green Hydrogen Strategy for the Northern Cape, supporting the development of a green hydrogen pipeline worth around R270 billion,” President Ramaphosa said.