The crisis facing Eskom continues to be compounded by weekly accusations of corruption and controversy. Tariffs are rising rapidly, and South Africa is on track to experience the worst year of load shedding on record. Despite the frequent waves of rolling blackouts, Eskom chief executive André de Ruyter has enjoyed steady praise from mainstream media and a network of private industry lobby groups. De Ruyter’s praise has stemmed from his enthusiasm for market reforms in the energy sector, along with his attempts to reduce Eskom’s debt burden by forcefully recouping outstanding funds from municipalities. To mitigate the looming supply shortfall, the government initiated two new market reforms to enable additional private energy generation under the Risk Mitigation Independent Power Producers Procurement Programme (RMIPPPP). The eight preferred bidders, comprising solar, wind, battery and gas projects with a combined capacity of 1 845.76MW.
Latest reforms increasing the level of privatisation in the sector are advanced with the backing of the National Treasury, which underwrites the power purchase agreements. This reduces the risk for independent power producers and ensures secure profits for private capital, while benefits trickle-down benefits to workers and communities remain but vague promises. Power availability has dropped from 66.93% in 2019 to 65.04% in 2020, and to 61.24% until mid-June in 2021. The rate of unplanned outages has climbed rapidly this year, increasing to its highest levels of 25% to 28%. With the increased introduction of variable energy sources, Nersa will need to play an enhanced regulatory role to ensure fairness. Ramaphosa’s exemption may also mean that the energy regulator, which is partly financed by the levies collected from electricity generators, will need to source additional funds to match the increased unlicensed activity in the sector. This trend has two consequences: plants in the grid must ramp up and down daily to match the demand, and power needs to be reserved in evening peaks for users who benefit from cheap solar power during the day. Plants that are fully dispatchable to compensate for the ramping are expensive and typically include open-cycle gas turbines at R4/kWh or closed-cycle gas turbines at R2/kWh.