South Africa’s transmission infrastructure is obsolete and in urgent need of expansion. Grid facilities are currently unable to meet the country’s growing electricity demands, provide reliable power and further integrate new sustainable energy options. In light of this, the country’s state-owned power utility, Eskom Holdings SOC Limited, recently published its Transmission Development Plan, 2021-30, laying out the targets and capital expenditure needed to meet the future grid network requirements of the country. The TDP, which is updated annually, focuses on attaining grid code compliance by resolving both substation and line violations (N-1) to ensure network sustainability, expanding infrastructure to meet future demand growth, establishing the transmission network to integrate upcoming planned generation capacity, and undertaking asset replacement to ensure reliability of supply and network optimisation.
As per the Ministry of Mineral Resources and Energy’s Integrated Resource Plan (IRP) 2019, which caters to the addition of new generation capacity in the country, around 30 GW of capacity (of which 50 per cent is renewables based) will be added over the next decade. This, in turn, will require the acceleration of transmission projects already identified in the 10-year network development plan, development of new corridors and substations, and strengthening of existing substations. Therefore, to meet the increasing electricity demand, evacuate power from the upcoming generation capacity and increase grid stability, the power utility has announced an investment of around ZAR 118 billion under its TDP 2021-30 for the addition of around 5,650 km of transmission lines and 41,595 MVA of transformer capacity to South Africa’s grid network.
South Africa’s industry structure
South Africa’s electricity sector is dominated by Eskom. It operates 90 per cent of the country’s installed generation capacity, and also holds a monopoly over the transmission, distribution and trade of electricity. The Department of Energy (DoE) is responsible for policymaking, while the National Energy Regulator of South Africa (NERSA) is responsible for regulating the energy sector and granting licences.
To promote private participation in generation, NERSA developed the Renewable Energy Feed-In Tariffs in 2009. In 2011, the DoE replaced these with a competitive bidding process for renewable energy – Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) – consisting mostly of solar and wind power generation. Independent power producers (IPPs) were, therefore, introduced into South Africa’s electricity supply industry (ESI) through the highly successful REIPPPP.
Eskom’s poor financial health and restructuring
As per Eskom’s previous and current TDPs, the power utility intended to spend around ZAR 10 billion on average each year for the development of the country’s transmission sector. However, over the past five to six years, the utility has been able to spend only ZAR 0.8 billion-ZAR 1.2 billion each year on the expansion of the transmission segment. The utility has been facing a deep financial crisis for years, hence the underinvestment in the sector. Further, due to a low cash reserve margin, Eskom is now finding it challenging to undertake high-level maintenance of its ailing infrastructure.
The government has now proposed to unbundle the power utility to overcome the bottlenecks in the sector. In October 2019, the South African government published a road map to restructure Eskom into separate subsidiaries (under Eskom Holdings) aimed at improving efficiency, creating greater transparency around performance, providing greater protection against corruption, and providing confidence to capital providers, resulting in greater investment comfort. There is speculation, however, that due to the lengthy legal processes, Eskom might not be able to meet its unbundling timeline, which is scheduled to be completed by the end of 2022.
South Africa’s existing power infrastructure
As of March 2020, South Africa had an installed capacity of about 50.3 GW, which increased at a compound annual growth rate of only 2 per cent from 2016 to 2020. Of the total generation capacity, 90 per cent or 45.1 GW is owned by Eskom, and the remaining 10 per cent or 5.2 GW is owned by IPPs. South Africa’s generation mix comprises 81 per cent or 40.8 GW of thermal-based capacity, while 7 per cent or 3.3 GW is hydro based, 4 per cent or 1.9 GW is nuclear based and the remaining 8 per cent or 4.2 GW is renewable energy based (mainly wind and solar). Although the majority of the existing generation capacity is thermal based, renewable energy-based capacity is now being gradually added to the generation mix. The majority of this addition is through IPPs via the REIPPPP.
As of March 2020, Eskom’s transmission network comprised 33,027 km of high voltage transmission lines and 153,135 MVA of transformer capacity ranging from 132 kV to 765 kV. The majority of South Africa’s high voltage network is at the 400 kV level and is based on alternating current technology, with the exception of the 1,032 km long, 533 kV high voltage direct current monopolar line that links the Cahora Bassa hydroelectric power plant in Mozambique to Johannesburg. South Africa’s electricity network is interconnected with the grids of Botswana, Mozambique, Namibia, Zimbabwe, Lesotho, Swaziland and Zambia.
The TDP provides an outline of the future power system of South Africa. Eskom’s TDP is driven by two goals – integration of new/upcoming generation capacity, mainly renewable (from both Eskom and IPPs); and refurbishment of the existing aged infrastructure.
Over the next decade, South Africa’s power demand is expected to increase from 37,726 MW in 2020 to 46,175 MW in 2029, representing an average annual growth rate of 2.27 per cent. To meet this electricity demand, as per the targets given under the IRP 2019, the country plans to add around 30 GW of new generation capacity by 2030. Of the total, 9.8 GW of new capacity is expected to be connected by 2025, and the remaining
15 GW is planned to be connected between 2026 and 2030. Out of the 30 GW, around 51 per cent or 15.7 GW will be solar and wind based, 26 per cent or 8.1 GW will be gas/diesel based, another 15 per cent or 4.5 GW will be coal based, and the remaining 8 per cent or 2.5 GW will be hydro based.
As per the TDP 2021-30, Eskom has envisaged an investment of around ZAR 118 billion over the next decade for the addition of 5,650 km of transmission lines, 41,595 MVA of transformer capacity, and 83 transformers at the 275 kV, 400 kV and 765 kV voltage levels. Of the planned ZAR 118 billion, ZAR 87 billion (74 per cent) will be spent on capital expansion projects in all the provinces, with the remaining going into the refurbishment of existing infrastructure, production equipment, environmental impact assessment and servitude, telecom and strategic spares.
The utility will also work on strengthening its cross-border links, which will, in the long term, form a transmission backbone connecting all the SAPP member countries, with the aim of creating a regional power corridor. SAPP comprises 12 southern African countries: Angola, Botswana, the Democratic Republic of Congo (DRC), Eswatini, Lesotho, Malawi, Mozambique, Namibia, South Africa, Tanzania, Zambia and Zimbabwe.
Currently, Eskom, along with other SAPP counterparts, is implementing the Botswana-South Africa (BOSA) interconnector and the Mozambique-Zimbabwe-South Africa (MOZISA) transmission project, which are part of the 11 priority transmission projects being implemented in the SAPP region. BOSA will help enhance electricity trade between South Africa and Botswana, as well as other SAPP members. The project is planned for commissioning in 2024. MOZISA proposes to link three Southern African Development Community (SADC) countries – Mozambique, Zimbabwe and South Africa – and is expected to be commissioned by 2022.
Battery energy storage systems can become a key component of South Africa’s effort to meet its long-term renewable energy goals. To this end, in August 2020, Eskom invited bids for the design, engineering, supply, construction, erection, testing and commissioning of a battery energy storage systems, with a minimum of 80 MW/320 MWh usable capacity, at the Skaapvlei substation in Western Cape province of the country. The contract is being financially supported by the World Bank, the African Development Bank, and the New Development Bank under the Eskom Investment Support Project (EISP) and the Eskom Renewables Support Project (ERSP). The EISP aims to enhance Eskom’s power supply and energy security so as to support economic growth objectives. The ERSP aims to facilitate development of large-scale renewable energy capacity in the country.
Smart Grid Vision 2030
South Africa’s electricity infrastructure has aged and requires renovation and expansion in order to meet its growing electricity demands. To respond to the increasing energy demand in an efficient manner, the South African National Energy Development Institute drafted the Smart Grid Vision 2030 as part of the South African Smart Grid Initiative in 2013. The objective of the vision is to bring together all parties involved in the smart grid industry in order to build a focused, integrated, optimal smart grid network across the country. Hence, it is crucial for Eskom to meet its target under the TDP 2021-30, as the ambitious smart grid plan must be backed by an efficient and reliable transmission system.
The way forward
South Africa plans to add 30 GW of new generation capacity by 2030, but as the country’s grid network is in critical need of refurbishment, strengthening and expanding the transmission network is crucial for industry stakeholders. Therefore, the power utility is now focusing its efforts on ensuring the timely and efficient execution of projects under the ZAR 118 billion transmission plan, which aims to increase the reliability of the grid network, meet future demand growth and integrate the upcoming generation capacity.