Restoring energy security
Government’s most immediate priority is to restore energy security. The country is in the grip of a profound energy crisis, the seeds of which were planted many years ago.
“We cannot undo the mistakes that were made in the past, the capacity that was not built, the damage that was done to our power plants due to a lack of maintenance, or the effects of state capture on our institutions. What we can do is to fix the problem today, to keep the lights on tomorrow and for generations to come.” - President Cyril Ramaphosa, SoNA, 9 February 2023, Cape Town City Hall.
In July last year, President Ramaphosa announced a clear action plan to address the energy crisis. This was to address the electricity shortfall of 4 000 to 6 000 megawatts (MW).
The plan outlined five key interventions to:
- fix Eskom’s coal-fired power stations and improve the availability of existing supply;
- enable and accelerate private investment in generation capacity;
- accelerate procurement of new capacity from renewables, gas and battery storage;
- unleash businesses and households to invest in rooftop solar; and
- fundamentally transform the electricity sector to achieve long- term energy security.
Experts agree that this plan is the most realistic route to end load- shedding. During the last six months, government made important progress in implementing the plan.
Improving the performance of Eskom
The government has taken steps to improve the performance of Eskom’s existing power stations so that the coal-fired power stations that provide 80% of electricity produce the amount of electricity for which they were designed.
Under its new board, Eskom is deploying people and resources to improve the reliability of the six power stations that have contributed the most to load-shedding.
Eskom is urgently fast-tracking construction of a temporary solution to bring back three units at Kusile Power Station following the collapse of a chimney stack last year, whilst simultaneously repairing the permanent structure.
Government is rebuilding the skills that have been lost and have already recruited skilled personnel at senior levels to be deployed at underperforming power stations.
The Engineering Council of South Africa has offered to give as much assistance as required by deploying engineers to work with the management teams at power stations.
“We have deep skills and expertise right here in South Africa – we just need to use them.” - President Cyril Ramaphosa, SoNA, 9 February 2023, Cape Town City Hall.
National Treasury is finalising a solution to Eskom’s R400 billion debt burden in a manner that is equitable and fair to all stakeholders, which will enable the utility to make necessary investments in maintenance and transmission.
Government will support Eskom to secure additional funding to purchase diesel for the rest of the financial year. This should reduce the severity of load-shedding as Eskom will be able to use its diesel- run plants when the system is under strain.
Eskom has launched a programme to buy excess power from private generators and has already secured 300 MW from neighbouring countries.
Dealing with corruption and theft
The South African Police Service (SAPS) has established a dedicated team with senior leadership to deal with the pervasive corruption and theft at several power stations that has contributed to the poor performance of these stations. Intelligence-driven operations at Eskom-related sites have so far resulted in 43 arrests.
Restructuring Eskom
As part of the broader reform process, the restructuring of Eskom that government previously announced is proceeding and the National Transmission Company will be soon operational with an independent board.
Later this year, government will table the Electricity Regulation Amendment Bill to transform the energy sector and establish a competitive electricity market.
Solar power
As indicated in July last year, and with a view to addressing the load- shedding crisis, government is going to proceed with the roll-out of rooftop solar panels.
In his Budget Speech, the Minister of Finance will outline how households will be assisted and how businesses will be able to benefit from a tax incentive.
National Treasury is working on adjustments to the Bounce-back Loan Scheme to help small businesses invest in solar equipment, and to allow banks and development finance institutions to borrow directly from the scheme to facilitate the leasing of solar panels to their customers.
New electricity capacity
One of the potent reforms government has embarked upon is to allow private developers to generate electricity. There are now more than 100 projects, which are expected to provide over 9 000 MW of new capacity over time.
A number of companies that have participated in the renewable energy programme will soon enter construction and deliver a total of 2 800 MW of new capacity. Eskom will procure emergency power that can be deployed within six months to close the immediate gap.
Government is investing in new transmission lines and substations, especially in areas such as the Eastern Cape, Northern Cape and Western Cape. All of these measures will result in a massive increase in power to the grid over the next 12 to 18 months, and beyond.
This power will be in line with the diverse mix of energy sources, including the current coal-fired power stations, solar, wind, gas, nuclear, hydro and battery storage. To fully implement this plan, government needs strong central coordination and decisive action.
“In a time of crisis, we need a single point of command and a single line of march. Just as we address the cause of the crisis, we also need to address its impact. The crisis has progressively evolved to affect every part of society. We must act to lessen the impact of the crisis on farmers, on small businesses, on our water infrastructure and our transport network.” – President Cyril Ramaphosa, SoNA, 9 February 2023, Cape Town City Hall.
National State of Disaster
The National Disaster Management Centre has consequently classified the energy crisis and its impact as a disaster.
Government is, therefore, declaring a National State of Disaster to respond to the electricity crisis and its effects. The Minister of Cooperative Governance and Traditional Affairs has just gazetted the declaration of the state of disaster, which will begin with immediate effect.
The state of disaster will enable government to provide practical measures that it needs to take to support businesses in the food production, storage and retail supply chain, including for the roll-out of generators, solar panels and uninterrupted power supply.
Where technically possible, it will enable government to exempt critical infrastructure such as hospitals and water treatment plants from load-shedding.
And it will enable government to accelerate energy projects and limit regulatory requirements while maintaining rigorous environmental protections, procurement principles and technical standards.
The Auditor-General will be brought in to ensure continuous monitoring of expenditure, in order to guard against any abuses of the funds needed to attend to this disaster.
Minister of Electricity in The Presidency
“The process of restructuring government will give us an opportunity to determine the positioning of various areas of responsibilities and how best the various ministries and departments can best serve our national objectives. We are focusing our attention on the energy crisis right now and will address the restructuring of government in due course.” – President Cyril Ramaphosa, SoNA, 9 February 2023, Cape Town City Hall. – President Cyril Ramaphosa, SoNA, 9 February 2023, Cape Town City Hall.
This is necessary because an effective response to this crisis involves several different departments and entities that require coordination from the centre of government.
Government will be including other social partners in an effective structure similar to the one it set up to drive the vaccine rollout. Extraordinary circumstances call for extraordinary measures.
The energy crisis is an existential threat to the economy and social fabric. Government must spare no effort, and it must allow no delay, in implementing these measures. As it takes these actions to resolve the energy crisis, government is mindful of the risks that climate change poses to society.
Climate Change
Extreme weather events in the form of drought, floods and wild fires increasingly pose a risk to the health, well-being and safety of people. Government will continue its just transition to a low carbon economy at a pace the country can afford and in a manner that ensures energy security.
Government will undertake its just transition in a way that opens up the possibility of new investments, new industrialisation and that, above all, creates new jobs.
The Presidential Climate Commission is guiding much of this work, and, in doing so, building a new model for inclusive and collective decision-making, incorporating the individuals, workers and communities that are most affected in the transition.
Just Energy Transition Investment Plan (JET-IP)
Through the JET-IP, R1.5 trillion will be invested in the economy over the next five years in new frontiers such as renewable energy, green hydrogen and electric vehicles. Several new sectors are emerging in the economy, such as major green hydrogen, electric vehicles and fuel cells.
A number of projects are already underway, including the development of a new facility by Sasol at Boegoebaai in the Northern Cape, the Prieska Power Reserve in the Free State, and the Hydrogen Valley initiative in Limpopo, Gauteng and KwaZulu-Natal.
The Northern Cape has already attracted well over R100 billion in investments in renewable energy projects. These and other massive investments in renewable energy will create jobs and stimulate local economies not only in the Northern Cape, but also in the Eastern Cape, Western Cape and Mpumalanga, turning even the most arid desert into a giant energy source.
Above all, the just transition will prioritise workers and communities in vulnerable industries to ensure that no one is left behind.
Related links
Source: State of the Nation Address Highlights [PDF]
