Minister Kgosientsho Ramokgopa: Briefing on Energy Action Plan

Chairperson of the House,
Honourable Members of Parliament,
Members of the Media,
Fellow South Africans,  
 
Thank you for this opportunity to address parliament to appraise the house and, by extension, the nation on the successes of the implementation of the energy action plan and the associated short to medium-term interventions to limit the intensity and frequency of load shedding.

The national energy crisis continues to be the single biggest existential challenge in post-apartheid South Africa, and we must continue to harness all efforts to arrest further haemorrhaging caused by loadshedding to our economy and the degradation of the quality of lives of ordinary South Africans.  

In May 2023, I stood in this august house to deliver an executive statement outlining the transversal interventions we were making to reduce the intensity and frequency of loadshedding and to articulate our plans in relation to the winter plan.
 
Working with the dedicated staff at Eskom and industry experts, we have successfully navigated through the winter season and are beginning to turn the tide. Later in my address, I will excavate the data on the significant improvement we have made on the generation side to demonstrate the magnitude of strides we are making thus far.

House Chair, we gather today just two days shy of the birthday of our stalwart, Oliver Reginald Tambo. To punctuate where we are, I want to summon the words of our Leader OR Tambo, delivered on the occasion of the funeral of Joe Gqabi,09 August 1981, when he said “The future is bright. The end is glorious; it is peaceful. But the intervening period is dark, bitter and finds its glory in the act of struggle.”

These words aptly describe the period we are emerging from — a dark period, literally and figuratively. By any measure, load shedding is an occurrence of significant consequence that South Africans have endured for some time. The President had introduced several bold initiatives to ensure the Country can navigate its way out of this dark hole.

These include setting up a National Energy Crisis Committee (NECOM) and establishing the Ministry I am honoured to lead (Ministry in the Presidency for Electricity) as the focal coordinating point for the multi-disciplinary and whole-of-society response to ending loading shedding.

We are restoring Eskom to higher levels of operational efficiency and looking into transmission financing options to expand and strengthen the grid to support South Africa’s new energy generation sources and guarantee energy security.

Our account here today will default to an evidenced-based assessment of the objective situation we find ourselves in today. For this reason, Generation performance is assessed using May 2023 as a baseline.
 
Generation performance: May 2023 – October 2023
 
Generation performance continues to improve; from the May 2023 base of 27410 MW to 28 883 MW in October month to date, last week, we saw generation breach the 30 000MW mark, largely buoyed by the return to service of Kusile Units 3 and 1 over the past month.
 
Planned Outages & Outage Slips
 
This Improved generation and lower-than-projected demand has allowed for an exponential increase in planned outages or “good maintenance.” The increased planned outage means that we are improving the overall performance capacity of the fleet, improving reliability and efficiency, and steadily ensuring we navigate to an equilibrium between demand and supply, buffered by a healthy reserve margin.
 
The intensification of planned maintenance is expected to be sustained for the remainder of the summer months, with the objective of going into winter 2024 with the fleet in a much healthier and more reliable state, coupled with increases in new generation capacity aimed at putting the Country on a path to sustained energy security.
 
The May baseline saw planned maintenance dip to around 2500 MW – as part of the Winter plan. As we emerged from winter 2023, maintenance has been ramped up to over 5000 MW since mid-August 2023.
 
Outage Slips
 
In addition to the positive trend in planned outages, outage slips have been reduced substantially. This means that, increasingly, units return to service as planned following an outage.
 
Measured against the May 2023 baseline of 3478 MW, a phenomenal improvement has been recorded and speaks to the improved efficiency of outage planning and management. For the past three weeks of October 2023, outage slips accounted for 1108 MW.
 
Peak Demand (evening peak)
 
As we headed out of the winter 2023 season, evening peak  demand began to show a downward trend. By the end of August 2023, evening peak demand tracked at 30 633 MW. The current average month-to-date pegs evening peak demand at 27 758 MW.
 
The dip in demand is also attributed to the successful implementation of increased Demand Side Management interventions following the launch of the National DSM Campaign in July 2023 and the phenomenal growth in rooftop solar and small-scale embedded generation solutions. Rooftop solar capacity in South Africa has more than doubled since July 2022 to over 4,500 MW.
 
Unplanned Capacity Loss Factor (UCLF)
 
The Unplanned Capacity Loss Factor (UCLF) represents breakdowns of Units, either where a full unit is taken out of service or Partial Load Losses (PLL) where a Unit is not operating at its full design output.
 
Benchmarked against the May 2023 figures for UCLF, negative growth is observed, which is a positive indicator, implying fewer unplanned outages are recorded. This is a function of the increased planned maintenance and improved reliability of Units.
 
Following a period of increased planned maintenance between mid-August 2023 and mid-October 2023, UCLF has dropped to 13527 MW from the May 2023 baseline of 17369 MW. This represents an improvement in the available capacity of 3841 MW, amounting to over three stages of loadshedding.
 
Recovery of Generating Units: Return to Service: Kusile Units 1-5 (4000MW)

Madam Speaker,
 
Units 1-3 of Kusile have been out of service since October 2022. In January 2023, a decision was made to proceed with constructing temporary stacks due to the anticipated prolonged delay in remedial works on the Permanent Stacks.
 
Initial planning anticipated the temporary stacks would be completed and allow for the return to service of the 3 Kusile units from 28 November 2023 to 24 December 2023.
 
Following various engagements with the Station Management and Project teams to fast-track the return to service of the 3 Kusile Units, we successfully returned Units 3 and 1 earlier than planned.  The early return of the two units is a result of judicious and smart engineering. We anticipate returning Unit 2 by the third week of November 2023.
 
Additionally, Kusile Unit 4, taken out of service for planned maintenance on 29 August 2023, was returned to service on 17 September 2023, 3 days ahead of the planned date.
 
Kusile Unit 5 was originally planned for completion on 28 October 2023 but was rescheduled to later in order to prioritise the return of the three commercial Kusile units. Unit 5 is now scheduled to be synchronised by December 2023.
 
House Chair,
 
We have always been firm that Kusile Power Station would anchor the drive for generation capacity to get ahead of the demand curve. The two units returned have injected an additional 1600 MW over the past month, whilst Units 2 and 5 will add another 1600 MW. This means the 4 Kusile Units will provide a total of 3200 MW of base load by December 2023. The last remaining Kusile unit, Unit 6, is planned to be synchronised in August 2024.
 
House Chair, I am happy to report that an interim solution has been found to expedite the return of Medupi Unit 4 from August 2024 to April 2024; this will add another 800MW of baseload to the grid.
 
Honourable Members, in addition to the work to strengthen base-load through the existing fleet, work continues to increase the national footprint of renewable energy, in this regard:

• 1338 MW is expected to connect to the grid in 2023 and 3081 MW in 2024.
• One project from RMIPPPP is on track to reach legal close by the end of October 2023, and two further projects by December 2023. These projects will contribute an additional 424 MW once completed.
• Three more projects from Bid Window 5 are on track to reach commercial close by the end of November 2023, representing 300 MW.
   

Madam Speaker,
 
Through the social compact established between Government, Business and Labour, we have activated a partnership with the Energy Council and developed support programmes that include:

• Strengthening the OCGT diesel supply chain logistics planning and efficiency and optimising load factors at peaking stations of Ankerlig and Gourikwa;  
• Overseeing and supporting the Eskom team with the Kusile duct recovery and power station support; and,
• The deployment of support teams to priority Power Stations namely: Matla, Kriel, Majuba, Kusile, Kendal, and Tutuka.

Madam Speaker, Honourable members,

Whilst some have chosen to use the challenges we face to play petty politics, even to the extent of mounting a legal challenge to the establishment of the Ministry, and yet others – making every effort to frustrate the work we have been able to register at Kusile, we remain committed to sparing no effort, to build an energy complex that is the backbone of our energy security and economic growth and development objectives.
 
Transmission Infrastructure Planning
 
Whereas our immediate focus has been on short-term efforts to reduce the intensity and regularity of load shedding, we have not been oblivious to the longer-term policy directives and infrastructure investment funding decisions required to grow and modernise our transmission infrastructure.
 
It is estimated that more than R390 billion will be required over the next decade to meet the demand for grid capacity, largely due to the increase in generation capacity through renewable energy projects following the various Bid Windows.
 
Eskom’s current financial position places significant limitations on its ability to attract sufficient capital towards expanding the transmission grid, with the delivery of transmission infrastructure taking, on average, between 7 to 10 years. It is estimated this delivery rate needs to be scaled-up by eight times to connect the energy generation required for energy security by 2030.
 
It is anticipated that the transmission grid build rate needs to increase from 300km to 2300km per year with a greater rate of investment and delivery required through to 2050 (Centre for Sustainability Transitions, 2023).
 
The Ministry in the Presidency for Electricity co-hosted a Transmission Financing Seminar with the Johannesburg Stock Exchange and is currently finalising a cabinet submission on transmission financing pathways aimed at fast-tracking transmission infrastructure investments to support the anticipated growth in generation capacity and secure long-term energy security.
 
Electricity Distribution Industry
 
House Chair,
 
The recent crisis of a six-week outage in Ditsobotla Local Municipality is emblematic of the structural weaknesses in the electricity distribution industry.
 
This crisis manifests in both the ability of Municipalities to service their Eskom Bills and the compounded impact of years of under-expenditure in new distribution infrastructure assets and neglect of maintenance of existing infrastructure. Coupled with non-technical losses or illegal connections to distribution grids, there is a growing failure of infrastructure due to higher demand than capacity availability on networks.
 
In addition to these failures, theft and vandalism of distribution assets are occurring at an alarmingly increased frequency, resulting in lengthy power outages and increases in reactive maintenance expenditure. Working with the Security Work stream of NECOM, SALGA, and ESKOM, along with other stakeholders in the distribution value chain, we are developing an aggressive response plan that incorporates technology-driven surveillance and protection of assets and reaction to incidents, as well as intelligence operations to weed out syndicates responsible for these acts.
 
Municipal Debt
 
House Chair, Eskom provides electricity services to 238 municipalities, including 158 bulk, 72 non-bulk, and eight metros. It has become apparent that a significant number of municipalities are currently in a state of paralysis and cannot perform their mandated duties. As of July 2023, the total overdue municipal Debt to Eskom stood at R63.2 bn, with the Top 20 defaulters amounting to R48.9 bn (77%), with a current year-to-date growth of R4.7 bn.
 
The Electricity Distribution Industry (EDI) Reform
 
House Chair, these conditions have highlighted the threat to energy security and warrant similar attention on the scale and intensity the generation industry has seen in the recent past.  Among the key strategic policy considerations that are receiving urgent attention are the following :

• The future of municipal revenue in the context of revenue migration due to increased behind-the-meter, small-scale embedded generation project uptake;
• Funding and project management of investments required to strengthen, expand and modernise the distribution infrastructure to support growth and, linked to this, the future architecture of electricity distribution given the current constitutional directives; and,
• Policy and regulatory certainty regarding feed-in tariffs and wheeling agreements.

 
These discussions are at various stages, and members of this house, particularly the Finance and COGTA Portfolio Committees, must take a keen and robust interest in the discourse.
 
Industrialisation

House Chair,

There is an opportunity in every crisis and we have chosen to seize the opportunity within the life of the energy crisis. To this end, we seek to broaden our industrial base, create new skills and attain technology transfer.

We are working with relevant ministries and stakeholders to create quality jobs by localising manufacturing of key equipment associated with the renewable energy complex. Working with private sector players, we are pursuing opportunities presented by new energy frontiers, such as green hydrogen, to position South Africa as a major global renewable energy player.
 
Honourable Members, amid the immediate challenges we have been through, it is plausible to lose sight of the massive strides we have made to secure universal access to energy, particularly for poor and rural communities.

The recently released censors statistics indicate that access to electricity has increased significantly from 58.1% in 1996 to 94.7% in 2022. As we continue the work of ending load shedding, we must also focus on closing the gap for the remaining 6 per cent, for whom the load shedding stage has no meaning.
 
As I conclude, I wish to thank the critical mass of Eskom's committed, competent and patriotic men and women who do all they can to restore the credibility and integrity of our power utility.

I would like to thank the NECOM team, industry stakeholders, organised business and the labour movement, all of whom have offered their constructive inputs and continue to play a part in ending load-shedding and achieving South Africa’s energy security. Indeed, to restate the words of O R Tambo,
 
“The future is bright. The end is glorious; it is peaceful!

Thank you.