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2 AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020/21
About African Energy Reports
South Africa Power Report – 2020/21
Published April 2020
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Contents
AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020/21 3
TABLE OF CONTENTS
1. EXECUTIVE SUMMARY.......................................................................................13
COUNTRY SNAPSHOT............................................................................................18
2. RISK MANAGEMENT REPORT...........................................................................19
3. POLITICAL OVERVIEW........................................................................................22
3.1 Structure of government ...............................................................................................................22
3.1.1 Political system............................................................................................................................22
3.1.2 Three tiers of government ...........................................................................................................22
3.1.3 Executive authority ......................................................................................................................23
3.1.4 Legislative authority.....................................................................................................................23
Box 1: Cyril Ramaphosa: a multi-faceted career ...............................................................................24
3.1.5 An independent judiciary under heavy stress .............................................................................25
3.2 Stability of political system ...........................................................................................................25
3.2.1 A social contract under pressure.................................................................................................26
3.2.2 Divisions within the African National Congress...........................................................................26
3.2.3 ‘State capture’ and other governance concerns.........................................................................27
3.3 The main political parties ..............................................................................................................27
3.3.1 Governing party: the African National Congress.........................................................................27
Box 2: Profiles of leading ANC actors ................................................................................................28
3.3.1.i Factional divisions .....................................................................................................................29
3.3.2 The official opposition party: Democratic Alliance ......................................................................29
Box 3: Profiles of leading Democratic Alliance figures......................................................................29
3.3.2.i Democratic Alliance splits: Good ..............................................................................................30
3.3.3 Radical opposition: Economic Freedom Fighters .......................................................................30
Box 4: Julius ‘Juju’ Malema and the EFF ...........................................................................................31
3.4 Elections ........................................................................................................................................31
3.4.1 Electoral system ..........................................................................................................................31
3.4.2 Most recent election....................................................................................................................31
3.4.3 Voter disenchantment..................................................................................................................33
3.4.4 Next elections..............................................................................................................................33
3.5 Corruption......................................................................................................................................33
3.5.1 Resistance to change..................................................................................................................34
3.5.2 Foreign courts and ‘state capture ...............................................................................................34
3.5.3 Transparency International rating ................................................................................................34
3.6 Security risk ...................................................................................................................................35
Contents
4 AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020/21
3.6.1 Personal security and criminality.................................................................................................35
3.6.2 Risks of political violence ............................................................................................................35
3.6.3 Risk of terrorism ..........................................................................................................................36
3.6.4 Risk of ethnic/tribal conflict .........................................................................................................36
3.7 Political economy and major policy initiatives.............................................................................36
3.7.1 Downgrades and gridlock in the political system........................................................................37
3.7.2 Economic policy ..........................................................................................................................38
3.7.3 National Development Plan 2013-30...........................................................................................38
3.7.4 Economic stimulus, recovery plans and social uplift ..................................................................39
3.8 Eskom and the ESI crisis ..............................................................................................................40
3.8.1 The politics of private energy investment....................................................................................41
Box 5: Minister of mineral resources and energy Gwede Mantashe ................................................42
Box 6: The 2019 Integrated Resource Plan........................................................................................43
3.8.2 Climate change............................................................................................................................43
4. MACROECONOMICS ..........................................................................................45
4.1 Overview ........................................................................................................................................45
4.1.1 Reform and missed targets .........................................................................................................46
4.1.2 A very difficult outlook.................................................................................................................47
4.2 Economic structure and stunted growth......................................................................................47
4.2.1 Trends/projections.......................................................................................................................47
4.1.2 Breakdown of economy by sector ..............................................................................................48
4.3 Inflation and the central bank .......................................................................................................48
4.4 Fiscal deficit and debt: rising fast under SOE burden.................................................................49
4.4.1 State-owned enterprises .............................................................................................................50
– Eskom................................................................................................................................................50
– South African Airways .......................................................................................................................50
– Denel..................................................................................................................................................50
4.4.2 The 2020 budget .........................................................................................................................51
4.4.3 Risk of debt distress....................................................................................................................51
– Debt-to-GDP......................................................................................................................................52
– Debt service-to-revenue ....................................................................................................................52
4.4.4 Major creditors and future borrowing..........................................................................................52
4.4.5 Potential IMF deal........................................................................................................................53
4.5 Balance of payments.....................................................................................................................53
4.6 Foreign reserves and the rand ......................................................................................................53
4.7 Credit ratings .................................................................................................................................54
Contents
AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020/21 5
4.8 Key lending rates...........................................................................................................................55
4.9 WBG Ease of Doing Business.......................................................................................................55
4.10 Major recent developments ........................................................................................................56
MAP: SOUTH AFRICA’S ELECTRICITY INFRASTRUCTURE................................57
5. POWER SECTOR OVERVIEW .............................................................................60
5.1 Overview ........................................................................................................................................60
5.2 Market structure ............................................................................................................................60
5.2.1 Future developments...................................................................................................................61
5.3 Profiles of institutions....................................................................................................................61
5.3.1 Utilities.........................................................................................................................................61
– Eskom Holdings.................................................................................................................................61
5.3.2 Regulators ...................................................................................................................................62
– National Energy Regulator of South Africa ........................................................................................62
5.2.3 Ministries .....................................................................................................................................62
– Department of Mineral Resources and Energy..................................................................................62
– Department of Public Enterprises......................................................................................................62
– National Treasury ...............................................................................................................................62
– IPP Office...........................................................................................................................................63
5.4 Market operation ...........................................................................................................................63
5.5 Sector history ................................................................................................................................63
5.5.1 Ownership and organisation history............................................................................................63
5.5.2 Role of independent power producers........................................................................................66
5.6 Regional electricity trade ..............................................................................................................66
5.7 Financial challenges......................................................................................................................67
5.8 Main consumers of electricity.......................................................................................................68
6. POWER SECTOR POLICY AND REGULATION..................................................69
6.1 Overview ........................................................................................................................................69
6.2 Major legislation ............................................................................................................................69
– National Energy Act, 2008 .................................................................................................................69
– National Energy Regulator Act, 2004 ................................................................................................70
– Electricity Regulation Act, 2006.........................................................................................................70
– Nuclear Energy Act, 1999 ..................................................................................................................70
– Grid Code ..........................................................................................................................................70
– National Environmental Management Act, 1998 ...............................................................................70
– Public Finance Management Act, 1999.............................................................................................70
Contents
6 AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020/21
– Draft Public Procurement Act, 2020..................................................................................................70
– Carbon Tax, 2019 ..............................................................................................................................70
– Independent Market Operator Bill, 2019 ...........................................................................................71
6.3 Sector plans and policies..............................................................................................................71
– White Paper on Energy Policy, 1998 .................................................................................................71
– Renewable Energy Policy White Paper, 2003....................................................................................71
– Integrated Energy Plan, 2016 ............................................................................................................71
– Integrated Resouce Plan, 2019 .........................................................................................................72
– Gas Utilisation Master Plan ...............................................................................................................74
– Eskom Transmission Plan, 2020-2029 ..............................................................................................74
– Roadmap for Eskom in a Reformed Electricity Supply Industry .......................................................74
Box 7: Key aspects of the Eskom Roadmap......................................................................................77
6.4 Legal requirements........................................................................................................................78
6.4.1 Generation...................................................................................................................................78
6.4.2 Transmission................................................................................................................................79
6.4.3 Distribution ..................................................................................................................................79
6.4.5 Economic empowerment ............................................................................................................79
6.5 Procurement ..................................................................................................................................80
6.5.1 Competitive bidding ....................................................................................................................80
– Renewable Energy Independent Power Producer Procurement (REIPPP) programme....................80
– Small Projects Independent Power Producer Procurement (SPIPPP) programme...........................82
– Coal Baseload IPP procurement programme....................................................................................82
– Battery energy storage systems........................................................................................................83
– LNG-to-power IPP procurement programme....................................................................................83
– Risk Mitigation Power Purchase Programme....................................................................................84
6.5.2 Municipality procurement ............................................................................................................85
6.6 Tariffs..............................................................................................................................................85
6.6.1 Regulatory clearing account........................................................................................................85
6.6.2 Wholesale ....................................................................................................................................86
6.6.3 Retail............................................................................................................................................86
6.6.4 Differences between Nersa and Eskom tariffs ............................................................................86
6.7 Currency risk..................................................................................................................................86
6.8 Major adverse incidents affecting IPPs........................................................................................86
– Eskom refusing to approve REIPPP projects ....................................................................................86
– Budget quote and transmission delays for REIPPPs ........................................................................87
– Sacking of Karén Breytenbach..........................................................................................................87
Contents
AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020/21 7
6.9 Guarantees and mounting government liabilities ........................................................................88
Box 8: Eskom – a failing giant.............................................................................................................89
7. FROM THE NEWSLETTER ..................................................................................90
8. RESOURCE AVAILABILITY .................................................................................91
8.1 Overview ........................................................................................................................................91
8.2 Hydrocarbons market....................................................................................................................91
8.2.1 Overview......................................................................................................................................91
8.2.2 Key agencies ...............................................................................................................................91
– PetroSA..............................................................................................................................................91
– Petroleum Agency of South Africa ....................................................................................................91
– iGas....................................................................................................................................................92
– Transnet .............................................................................................................................................92
8.2.3 Legislation ...................................................................................................................................92
– The draft Upstream Petroleum Resources Development Bill ............................................................92
8.2.4 Licensing .....................................................................................................................................93
8.3 Coal ................................................................................................................................................93
8.4 Crude oil.........................................................................................................................................94
8.5 Natural gas.....................................................................................................................................94
8.6 Liquified natural gas......................................................................................................................94
8.7 Geothermal ....................................................................................................................................95
8.8 Solar ...............................................................................................................................................95
8.9 Wind ...............................................................................................................................................95
8.10 Hydroelectricity ...........................................................................................................................96
8.11 Shale gas .....................................................................................................................................96
8.12 Regional gas ................................................................................................................................96
8.12.1 SADC master plan.....................................................................................................................97
8.12.2 Mozambique: from ‘modest producer’ to global player ............................................................97
– Export LNG projects ..........................................................................................................................97
– Potential pipeline projects .................................................................................................................98
8.12.3 Sasol’s Mozambique play and gas transition strategy..............................................................98
8.12.4 Potentials for indigenous gas production coupled with LNG imports ......................................99
– Other sources of gas .......................................................................................................................100
MAP: SOUTH AFRICA’S OIL AND GAS INFRASTRUCTURE..............................101
9. COMPETITIVE LANDSCAPE.............................................................................102
9.1 Overview ......................................................................................................................................102
Contents
8 AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020/21
9.2 Landmark power projects ...........................................................................................................102
– Largest power plant: Medupi Coal ..................................................................................................102
– Kusile Coal.......................................................................................................................................103
– Largest nuclear: Koeberg Nuclear ...................................................................................................103
– First IPP: Rand Central Electric Works Coal....................................................................................104
– Largest operating IPP: Avon Diesel .................................................................................................105
– First REIPPP: Kalkbuit Solar ............................................................................................................105
– Largest state-owned project: Kendal Coal ......................................................................................105
9.3 First renewable IPP procurement round: REIPPP round 1........................................................106
9.4 Under construction generation projects ....................................................................................106
– Aggeneys Solar PV ..........................................................................................................................106
– Bokamoso Solar PV.........................................................................................................................107
– Copperton Wind ..............................................................................................................................107
– Droogfontein Solar PV II ..................................................................................................................108
– Dyason’s Klip Solar PV I ..................................................................................................................108
– Dyason’s Klip Solar PV II .................................................................................................................108
– Garob Wind......................................................................................................................................109
– Greefspan Solar PV II ......................................................................................................................109
– Kangnas Wind .................................................................................................................................110
– Karusa Wind ....................................................................................................................................110
– Konkoonsies Solar PV II ..................................................................................................................111
– Ngodwana Mill Lignin Expansion ....................................................................................................111
– Nxuba Wind .....................................................................................................................................112
– Oyster Bay Wind..............................................................................................................................112
– Perdekraal East Wind ......................................................................................................................113
– Roggeveld Wind ..............................................................................................................................113
– Sirius Project One Solar PV .............................................................................................................114
– Soetwater Wind ...............................................................................................................................114
– Waterloo Solar PV............................................................................................................................115
9.5 Selected key developers.............................................................................................................115
– Actis.................................................................................................................................................115
– Biotherm Energy ..............................................................................................................................115
– Acwa Power.....................................................................................................................................115
– Juwi Renewable Energies................................................................................................................116
– Mulilo Renewable Energy ................................................................................................................116
– Sasol ................................................................................................................................................116
Contents
AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020/21 9
– SolarReserve South Africa...............................................................................................................116
9.6 Selected key financiers ...............................................................................................................116
– Absa Bank Ltd .................................................................................................................................116
– Nedbank and Nedbank New Energy Finance..................................................................................116
– Phakwe Group .................................................................................................................................116
– Old Mutual Investment Group South Africa Ltd ..............................................................................116
10. TRANSMISSION AND DISTRIBUTION ...........................................................117
10.1 Overview ....................................................................................................................................117
10.2 T&D losses .................................................................................................................................118
10.3 Critical issues facing the network.............................................................................................118
10.4 Sector reforms ...........................................................................................................................118
10.5 Planned grid improvements......................................................................................................118
10.5.1 Strategic Grid Plan 2040 .........................................................................................................118
10.5.2 Transmission Development Plan (2020-2029) .........................................................................119
10.6 Regional trade ...........................................................................................................................120
10.6.1 Southern African Power Pool ..................................................................................................120
– Bilateral contracts............................................................................................................................121
– Competitive market .........................................................................................................................121
10.6.2 Existing interconnections ........................................................................................................123
10.6.3 Planned interconnections........................................................................................................123
– Botswana-South Africa (BoSa) ........................................................................................................123
– Mozambique-Zimbabwe–South Africa (MoZiSa).............................................................................123
10.7 Electricity imports/exports........................................................................................................124
10.7.1 Imports ....................................................................................................................................124
10.7.2 Exports ....................................................................................................................................124
11. OFF-GRID .........................................................................................................125
11.1 Overview ....................................................................................................................................125
11.2 Off-grid legislation and strategies ............................................................................................125
10.2.1 Integrated National Electrification Programme .......................................................................125
10.2.2 New Household Electrification Strategy..................................................................................126
11.3 Electrification and access rates................................................................................................126
– National............................................................................................................................................126
– Urban ...............................................................................................................................................126
– Rural ................................................................................................................................................126
11.4 Initiatives and programmes.......................................................................................................126
11.4.1 Off-grid Solar Home System Programme South Africa...........................................................126
Contents
11.5 Off-grid regulation .....................................................................................................................127
11.5.1 Electricity Regulation Act of 2006 ...........................................................................................127
11.5.2 Solar Home Systems...............................................................................................................127
11.6 Selected off-grid players...........................................................................................................127
11.6 Embedded generation...............................................................................................................128
11.6.1 Mines .......................................................................................................................................128
12. DEMAND AND SUPPLY OUTLOOK................................................................129
12.1 Overview ....................................................................................................................................129
12.2 Demand......................................................................................................................................130
12.2.1 Projections...............................................................................................................................130
12.2.2 Factors influencing growth ......................................................................................................130
12.3 Generation .................................................................................................................................130
12.3.1 Government projections..........................................................................................................131
– Medium-term system adequacy (2019-2024) .................................................................................131
– Integrated Resource Plan 2019 (2019-2030)...................................................................................132
12.3.2 African Energy pipeline 2020-2024 .........................................................................................133
12.4 Demand and supply outlook, 2020-2030 .................................................................................134
12.5 The cost of cleaner coal............................................................................................................135
13. DATA TABLES...................................................................................................137
– Methodology....................................................................................................................................137
– Installed capacity, RE vs non-RE, 2010-2024 (MW & %) ................................................................137
– Installed capacity by fuel type, 2010-2024 (MW) ............................................................................138
– Installed capacity by fuel type, 2010-2024 (%) ...............................................................................138
– Installed capacity, liquid fuels breakdown, 2010-2024 (MW) ..........................................................139
– Installed capacity, liquid fuels breakdown, 2010-2024 (%) .............................................................139
– Installed capacity by technology type, 2010-2024 (MW) ................................................................140
– Installed capacity by technology type, 2010-2024 (%) ...................................................................141
– Installed capacity by ownership type, 2010-2024 (MW) .................................................................142
– Installed capacity by ownership type, 2010-2024 (%) ....................................................................142
– Installed capacity by provinces, 2010-2024 (MW)...........................................................................143
– Installed capacity by provinces, 2010-2024 (%) .............................................................................144
– Installed capacity by fuel, Eastern Cape, 2010-2024 (MW) ............................................................145
– Installed capacity by fuel, Free State, 2010-2024 (MW)..................................................................145
– Installed capacity by fuel, Gauteng, 2010-2024 (MW).....................................................................145
– Installed capacity by fuel, KwaZulu Natal, 2010-2024 (MW)...........................................................145
– Installed capacity by fuel, Limpopo, 2010-2024 (MW) ....................................................................145
10 AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020/21
Contents
– Installed capacity by fuel, Mpumalanga, 2010-2024 (MW) .............................................................145
– Installed capacity by fuel, North West, 2010-2024 (MW) ................................................................145
– Installed capacity by fuel, Northern Cape, 2010-2024 (MW)...........................................................146
– Installed capacity by fuel, Western Cape, 2010-2024 (MW)............................................................146
Project listings ...................................................................................................................................147
– Operating.........................................................................................................................................147
– Under construction..........................................................................................................................150
– In development ................................................................................................................................151
AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020/21 11
Section
12 AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020/21
1. Executive summary
In some contexts, the South African electricity supply industry (ESI) has been viewed as an attractive
destination for investment due to its stable government, economy and policy direction. This was
especially the case as the government rolled out its ground-breaking Renewable Energy Independent
Power Producer Procurement (REIPPP) programme in 2011.
However, for all South Africa’s strengths – which include a robust judiciary and banking sector – a
number of underlying tensions and challenges mean that long-term investments are far from being risk-
free. The South Africa Power Report 2020/21 outlines the market’s attractions and downsides for power
developers, financiers and other industry stakeholders.
A changing of the political guard
The South African political landscape appears, in many ways, a picture of stability. The ruling African
National Congress (ANC) has been victorious in every election of the post-apartheid era, which began
with the abolition of white rule in 1994. This masks a more unpredictable reality, however. While the
ANC won 57.7% of the popular vote in the 2019 election, it is torn by rampant factionalism. Meanwhile,
the recent rise of opposition parties – such as the Economic Freedom Fighters (EFF), led by political
firebrand Julius Malema, and the rebranded Democratic Alliance – points to a shifting political
landscape, providing plenty of political intrigue and fuelling crony relationships that have had a
significantly negative impact on business.
Within the ANC, battle lines have been drawn across ideological and pragmatic lines. Those loyal to
ex-president Jacob Zuma, who resigned in disgrace in 2018, rally around a cry for “radical economic
transformation”. New leader President Cyril Ramaphosa promises to deliver foreign investment, revive
the economy and restore the South African government’s domestic and international reputation by
rooting out corruption.
The impact and consequences of apartheid-era politics are deeply felt to this day, as high levels of
inequality and unemployment remain embedded in society. Broader anti-government frustrations have
brewed since the ANC to power in 1994, caused by sometimes alarmingly poor levels of governance,
widespread corruption and statist politics. While the legacy of apartheid looms over these issues, history
will likely judge that many of these abuses were eminently avoidable.
The jury is out on whether he will succeed, but Ramaphosa seems almost uniquely placed to begin
repairing the social contract. The president, a close ally of national icon Nelson Mandela, was the first
general secretary of the influential National Union of Mineworkers (NUM). Ramaphosa remade himself
as a leading entrepreneur – and has thus been promoted as a financially sensible and trustworthy
candidate, in stark contrast to Zuma – and enjoys broad support among the general populace.
Ramaphosa scored an approval rating of 62% in a February 2020 poll, which outstrips the approval of
the party he represents by around seven percentage points. However, balancing much-needed reform
with the support of key policy-makers is a political tightrope, and there is a palpable impatience resulting
from the government’s sluggishness in addressing key issues.
Section
AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020/21 13
Executive summary
Tackling corruption and state capture
Since Ramaphosa assumed office, there have been some tangible improvements in pushing back the
frontiers of kleptocracy that were normalised under Zuma. Under the previous administration over
R500bn ($34bn) is alleged to have been stolen from state companies and government departments.
Milestones include the arrest in November 2019 of Zuma ally, former minister Bongani Bongo. Zuma
and his cronies have been put on trial in a system where the courts proved sufficiently robust to
withstand ‘state capture’ even if some judges and police bodies were caught (and literally bought) in
the Zuma web.
While this represents progress, critics argue that the pace of reform – reviving both the public’s and
international partners’ confidence in the South Africa state – has been far too slow. Zuma’s protracted
trial, a steady drip of revelations and crises in institutions crippled by poor governance, led by state
utility Eskom, mean the crisis of governance has not strayed far from the forefront of public
consciousness.
Overly cautious economic policies have proven too little, too late
The long-held hope of a post-apartheid transformation, which would blend social equity with economic
opportunity (and accelerated growth), has been undermined by a decade of disappointing growth. As
South Africa Power Report 2020/21 went to press, South Africa was alarmingly close to losing its last
remaining investment-grade credit rating (assigned by Moody’s Investors Service, which was widely
seen by markets as being too understanding towards the South African sovereign, unlike Standard &
Poor’s and other agencies).
Promises of reform by the incoming president have been welcomed by international investors but have
often seemed too sluggish or half-hearted in delivery to overcome the legacy issues that went
unchecked by previous administrations. South Africa remains confronted by unsustainably high
unemployment, a moribund economy (which in late 2019/early 2020 was reflected in successive
quarters of negative growth) and flailing state-owned enterprises (SOEs).
SOEs continue to siphon money from public coffers, rather than contributing positively to the national
economy. These shortfalls are exemplified by Eskom, which has become symbolic of national economic
malaise, as the state power utility struggles with over-employment, dependency on coal for power
generation and responsibility for the ever unpopular need for load-shedding. Prescriptions for reversing
Eskom’s decline go to the heart of many of country’s most pressing debates.
While South Africa has a vibrant financial services sector, and its market is sufficiently large and open
to attract entrepreneurs and innovators, opportunities for private investors may be constrained by the
continued dominance of the state and ‘statist’ perceptions; these perceptions continue to play a major
role in ANC, EFF and other policy prescriptions offered to a majority of voters who have hardly benefitted
from the fruits of a globalised, liberal economy. It could be argued these benefits would have been much
greater if South Africa had been truly liberalised and liberated. But that is a matter of great debate within
the ‘rainbow nation’, with consequences for those investing in the country potentially for decades to
come.
A power sector in crisis
The electricity supply industry’s struggles are well documented, and the government’s broken promise
to prevent load shedding has developed into a serious political and economic issue. The sector’s
14 AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020/21
Executive summary
institutions have been seriously undermined, as highlighted by the resignation of Eskom chair Jabu
Mabuza in January 2020. Reliable power supply is critical to economic activity; its absence is particularly
ruinous to the mining sector, a key source of income and jobs. The problems are well-known and their
resolution is urgent, but such is the depth of South Africa’s crisis that deeply unpopular and value-
destructive load-shedding looks certain to be an unfortunate reality for the foreseeable future, as the
government itself admitted in early 2020.
Despite once being heralded as a world-leading model for state-led power management, years of
financial mismanagement have resulted in chronic failures of state utility Eskom, which now requires
significant structural reform. The government published the Roadmap for Eskom in a Reformed
Electricity Supply Industry in late-2019; this outlined plans to legally separate generation, transmission
and distribution (in structures reminiscent of the forward looking, but not properly implemented Energy
White Paper of 1998). Despite promising ‘bold actions’ to put Eskom on a track to financial sustainability,
many of the more difficult decisions were shirked on distribution, private participation and labour issues
in particular.
A decade of renewables, but coal remains the dominant fuel
Despite the power sector’s struggles in recent years, the Renewable Energy Independent Power
Producer Procurement (REIPPP) programme has had a profound impact on the energy mix and investor
landscape. Remarkably, between 2011 and end-2020, both renewable energy and IPP capacity as
percentages of the energy mix will have increased by more than threefold. The programme has been
implemented via four rounds of bidding, plus an additional concentrated solar power round. A fifth
REIPPP round is planned.
The on-grid energy mix remains dominated by coal, which accounts for 73% of total capacity and has
been prioritised in energy planning. Coal remains of real political significance as a source of employment
– suggesting that projects driven by ‘clean coal’ will remain an important element in the energy mix
despite efforts for South Africa to accelerate its carbon transition.
In 2019, following a highly protracted and politicised process, which exposed competing interests from
within the coal and nuclear lobby, a new Integrated Resource Plan (IRP) was published; this key
document for energy sector planning had not been updated since 2010. The latest version included
priority procurement of 2GW-3GW to help minimise load-shedding and expenditure on diesel, including
a substantially increased capacity for renewable energies but also, controversially, maintaining a
commitment to coal.
Bold reform plans face many challenges
However, the successful implementation of the new IRP is already being called into question. While
African Energy Live Data’s pipeline of in-development generation projects suggest that installed capacity
will reach the IRP’s medium-term target of 63,914MW in 2024, longer-term aspirations will hinge on the
ability to reform the debt-laden and loss-making Eskom. The ‘junking’ of South Africa’s credit rating is
expected to result in slower economic and electricity demand growth. The consequences may be a
reduction in Eskom’s ability to both cover its operating costs and to administer the necessary reforms
that will make the sector competitive; this is likely to make meeting the IRP’s long-term supply targets
more challenging. Beyond new capacity additions, improving availability levels at existing power plants
will be crucial in ending rolling blackouts. Even with lower demand growth, the current availability levels
of 60% will result in the supply deficit growing from -4.4% in 2019 to -6.3% in 2024.
AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020/21 15
Country snapshot
Republic of South Africa
CapitalPretoria (executive), Bloemfontein(judicial), Cape Town (legislative)
Population 58.78m (est. 2019)
Area 1,221,037km2
Official languages
English, Afrikaans, Zulu, Xhosa,Northern Sotho, Tswana, Southern Sotho, Tsonga, Swazi, Venda, Southern Ndebele
Head of government President Cyril Ramaphosa
Economy
Currency
South African rand (subunit: 1/100 cents)$1=R16.6 as of 17 March 2020
GDP (nominal) $368.135bn (2018)
GDP growth rate 0.78% (2018)
Inflation (y-o-y) 4.9% (2018)
Power sector
Installed generation capacity 56,392MW (December 2019)
Installed IPP capacity 5,492MW (December 2019)
Peak load 34,256MW (2018/19)
Section
16 AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020/21
2. Risk Management Report
Overview
• For all of the problems that emerged during
Jacob Zuma’s failed presidency, which at times
seemed to have submerge the economy and
political system, African Energy has maintained
Republic of South Africa ’s political risk rating of
‘B’. This classifies South Africa as still having
among the most investment-positive rankings for
any sub-Saharan African (SSA) nation.
• Arguments can be made that this rating is over-
optimistic, but African Energy’s judgement is
underpinned by South Africa’s strong scores in
the fields of ‘democratic accountability’ and
‘stability and violence’, when judged over more
than two and a half decades of democratic rule.
• Following the Zuma years and the apparent
limits on President Cyril Ramaphosa’s ability to
reverse negative trends after two years in office,
South Africa scores lower in ‘governance’ and
‘investment risk’. However, even these indices
may still be considered relatively positive when
compared to its SSA peers.
• The strength of the judiciary and other South
African institutions ensure that continuity and
contract sanctity are still generally well respected,
despite the presence of worrying negative trends
over the past decade, as Zuma and his cronies
sought to degrade the separation of powers.
• While recent efforts to improve governance
have been noted, many of the issues confronting
the South African polity, its business environment
and society are systemic. In tackling this huge
range of issues, Ramaphosa is limited by factional
politics within the ruling ANC and the party’s
historic governing ‘tripartite coalition’ with the
South African Communist Party (SACP) and the
Congress of South African Trade Unions (Cosatu).
Methodology
African Energy’s political risk rating is based on ananalysis of four categories relating to risk: 1. Democraticaccountability; 2. Stability and violence; 3. Governance;and 4. Investment risk.
For each category, a country is awarded a grade of A-F,with A being lowest risk (most positive) and F thehighest risk (the most negative). Any trends are displayedin an upwards (h) or downwards (i) arrow.
Each of the four categories are weighted equally, with acountry being given an overall grade of A-F and a scoreof 1-100 (with 1 being lowest risk and 100 the highestrisk). These ratings are based on global standards.
The four categories are scored based on the followingcriteria:
1. Democratic accountability
a. Threat of military intervention in government
b. Press and other freedom of expression
c. Electoral fairness at national and local level
2. Stability and violence
a. Threats to government stability through civil unrest or political violence
b. Presence of internal conflicts
c. Threat of terrorism
3. Governance
a. Corruption
b. Independence of the judiciary
c. Government effectiveness
4. Investment risk
a. Expropriation/breach of contract risk
b. Transfer and convertibility risk
c. Commercial risk
Political risk rating
Risk gradeB
31/100Democratic accountability A
Stability and violence B
Governance C
Investment risk C
Section
AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020/21 17
3. Political overview
3.1 Structure of government
3.1.1 Political system: A complex constitutional democratic republic
The Republic of South Africa (RSA) is a constitutional democracy, which from the end of apartheid in
1994 was structured with what was supposed to be a clear separation of executive, legislative and
judicial powers. While the Parliament of the Republic of South Africa has a sometimes vibrant opposition
– led by the official opposition Democratic Alliance (DA) and the populist firebrand Julius Malema’s
Economic Freedom Fighters (EFF) – the African National Congress (ANC) controls the executive and
has a majority in the legislature. A critical long-term question for South Africa is whether its political
system can evolve beyond quasi-automatic ANC domination at a national level (and, indeed, whether
the ANC itself can evolve).
During the last decade the polity’s tripartite structures have come under especially heavy pressure, after
the system reached near breaking point under President Jacob Gedleyihlekisa Zuma, who was elected
in 2009 and finally resigned on 14 February 2018 following a long standoff over governance abuses
involving his inner circle. It is notable that the system survived what came to be called ‘state capture’.
This says much for the influences of a robust judiciary, and also of the media and other civil society
elements. However, these pressures have left the political system in recovery mode. Zuma’s successor,
Matamela Cyril Ramaphosa (head of state since 2018 and before that an uneasy deputy president from
2014), has marked a welcome change from the worst ‘state capture’ years. This is very good news
when it comes to preserving the legitimacy of the political system, but the ruling ANC remains riven by
factional divisions which have undermined Cyril Ramaphosa’s authority.
• The current constitution is South Africa’s fifth. It came into effect on 4 February 1997 during the term
of the late president (1994-1999) Nelson Rolihlahla Mandela (‘Madiba’ – 18 July 1918-5 December 2013),
the nation’s first leader to be elected via representative democracy. It replaced an interim constitution,
which was introduced as the apartheid system was phased out in 1993.
3.1.2 Three tiers of government: national, provincial and local structure
RSA’s is a very complex political structure in which the government operates through three tiers:
national, provincial and local. This accentuates geographical differences. For example, Zuma and his
faction remain a force to be reckoned with in the ex-president’s native KwaZulu-Natal (KZN), while
despite rebranding itself, the opposition DA remains identified with its white liberal core based in Cape
Town. In both cases their support is greater than one heartland: Zuma’s persistently resilient power
base rests on ANC grandees in several provinces while the DA is undoubtedly a national party – as is
Julius Malema’s Economic Freedom Fighters.
Officially, the central government’s Department of Co-operative Governance and Traditional Affairs
(COGTA) is “responsible for supporting provinces and local government in fulfilling their constitutional
and legal obligations”. In practise, provincial and local government can have a high degree of autonomy
– often depending on the degree of political control from the centre.
Section
18 AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020/21
Politics
Neither at provincial nor local levels is there consistency in structures and policy creation or
implementation. The eight urban metropolitan municipalities, 44 first tier district municipalities and 226
second-tier local municipalities may not be co-ordinated, even within the same province. This has had
a marked impact on the electricity supply industry (ESI), where there may be very different structures
dealing with, say, power distribution within the same region. This reality has undermined several past
attempts by national government at ESI reform.
• Chapter 12 of the 1997 Constitution recognises the status and authority of traditional leaders and
customary law; it allows for the creation of provincial houses and a national council of traditional leaders.
Depending on the situation and personal politics, these leaders may exert real influence. Even such
apparently ‘technocratic’ leaders as Thabo Mbeki (president from June 1999 to September 2008) have
been known to consult sangomas (traditional healers) and other pre-colonial influencers.
3.1.3 Executive authority
The executive branch is made up of the president (currently Cyril Ramaphosa), deputy president (David
Dabede Mabuza) and ministers. As this report was compiled, there were 28 ministers in total – of whom
24 were sourced from the ANC – and 33 deputy ministers. The official list of ‘government leaders’ also
includes nine provincial premiers.
3.1.4 Legislative authority
Legislative authority rests within the Parliament of
the Republic of South Africa, a bicameral
legislature comprising a 400-seat National
Assembly (lower house) and the National Council
of Provinces (NCOP), an upper house which seats
90 representatives consisting of ten for each of the
nine provinces and another ten ‘national’ seats.
• National Assembly members are elected under
a complex system, from national party lists and
provincial party lists via a closed list system of
proportional representation. Seats are first
allocated according to a Droop quota (as used in
most single transferable vote systems) and then
up to five seats are allocated using the largest
remainder method and then any additional seats
are allocated via the highest average method among those parties who by then already have seats. Half
of the 400 National Assembly members are assigned from national lists and the rest from regional lists.
• Overseeing the electoral process is the Independent Electoral Commission (IEC). One of its roles is
to allocate the 200 regional list seats to each province by population.
• Each of the nine provincial governments consist of 30-80 members who are elected via proportional
representation. They have jurisdiction over a range of issues, including planning, trade and health
services.
• Women are well represented in parliament, holding around 46% of seats in the National Assembly.
The constitution is also protective of LGBT rights.
African NationalCongress (ANC)
230
Democratic Alliance(DA) 84
Economic FreedomFighters (EFF) 44
Inkatha Freedom Party(IFP) 14
Freedom Front Plus (FF+) 10
African Christian Democratic Party(ACDP) 4
United Democratic Movement (UDM) 2African Transformation Movement (ATM) 2
Good 2National Freedom Party (NFP) 2
African Independent Congress (AIC) 2Congress of the People (COPE) 2Pan Africanist Congress (PAC) 1
Al Jama-ah 1
National Assemblyof South AfricaNumber of seats
Source: South African parliament website© African Energy 2020(www.africa-energy.com)
AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020/21 19
Section
4. Macroeconomics
4.1 Overview
An under-performing economy replete with
contradictions
The South African economy is highly developed;
it possesses advanced economic infrastructure
and has been, in some sectors, the trailblazer for
development in sub-Saharan Africa (SSA). Around
75% of the largest African companies are based
in RSA. However, the distribution of wealth is
extremely unequal – a legacy of apartheid and
subsequent governments’ inability to level up
inequalities. Critical to RSA’s failure to achieve
accelerated ‘trickle-down’ has been the
underwhelming economic growth recorded since
the end of apartheid in 1994 and especially in the
last decade. This reality has largely disappointed
predictions that new prosperity would come with
majority rule to inspire Southern Africa’s
economic transformation.
These problems are equally pressing today as
they were when Nelson Mandela entered
government. The International Monetary Fund
(IMF) in its latest Article IV report, published on 30
January 2020, observed that “South Africa
remains an extremely unequal society, with high
and rising unemployment (29%), particularly
among the youth”. Failures to tackle deep
economic and social cleavages have had a
sapping effect of massive inequality and high
levels of joblessness; structures inherited from
apartheid-era politics have been resistant to
radical change, despite the changing racial
balance of management and decision-making.
Persistently poor levels of growth, discussed
below, have caught RSA in a vicious cycle of
economic under-performance and raised social
pressures. The official unemployment level rose
to 29.1% in Q3 2019, which was the highest rate
in decades, with further rises projected even
Table 2: Macroeconomic indicators
GDP growth 0.79% (2018)
Inflation (y-on-y) 4.9% (2018)
Current account balance
Current account (% of GDP) -3.5% (2019)
Current account ($bn) -$13bn (2019)
Balance of payments
(% of GDP)-3% (2019)
Debt
Risk of debt distressStable, but
vulnerable
Debt-to-GDP 53% (2017/18)
Debt service as % of
revenue15% est. (2019/20)
Other indicators
Credit rating
Non-investment
grade speculative
(junk)
Exchange rate$1=R16.6
(Mar 2020)
Interest rate 6.25% (Jan 2020)
Foreign reserves $55.1bn (2019)
WBG Doing Business rating 84/190 (2020)
Section
20 AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020/21
5. Power sector overview
5.1 Overview
• At present, South Africa’s electricity supply
industry (ESI) is vertically integrated with utility
Eskom having a role in generation, transmission
and distribution. While the utility is solely
responsible for transmission, distribution is
conducted by Eskom as well as municipal
governments. Electricity generation is provided by
Eskom and independent power producers (IPPs).
• The ESI has suffered from extensive load
shedding, growing costs, chronic financial
mismanagement and operational ineffectiveness
that has led to huge debt in the sector.
• Eskom finds itself trapped in a financial vicious
circle as it seeks to service its debt through higher
electricity tariffs. This threatens to drive down
demand, and Eskom’s income with it, leading to
greater losses and higher debts.
• A major reform programme is in place to
unbundle Eskom into separate generation,
transmission and distribution subsidiary entities.
It is expected that the process will not be
completed until at least the end of 2022.
• South Africa’s national electrification rate has
steadily increased from 80.7% in 2006 to 84.4%
in 2016. However, rural electrification rates have
dropped from 69.4% in 2006 to 66.8% in 2016,
according to the World Bank. Off-grid solar
electrification has yet to take off in the country.
5.2 Market Structure
• The ESI is vertically integrated with Eskom
having a role in generation, transmission and
distribution. Eskom is responsible for transmission
and is the single buyer except in the case of small
trader PowerX. The utility is also the system
operator. IPPs can bid in procurement rounds run
by the country’s IPP Office following a ministerial
Department of Minerals and Energy
Department ofPublic Enterprises National Energy
Regulator ofSouth Africa
TransmissionEskom
transmissionPowerX
Distribution/offtakerEskom
distributionMunicipal
governments
ConsumersResidential and
commercialLarge
power usersExports
IPP office
ImportsIPPsGeneration
Eskomgeneration
Power sector structure
Key sector statistics
Installed capacity: 56,392MW (December
2019)
of which IPPs: 5,492MW (December 2019)
Peak load: 34,256MW (2018/19)
Supply: 234,407GWh (est. 2019/20)
No. of customers: 6.5m (Eskom – March
2019)
Network losses: 9.7% (2019)
Market structure: Public-private structure
with vertically integrated utility
Average cost of production: $0.06-
$0.066/kWh (Eskom baseload coal) and
$0.035/kWh (solar PV and wind) (2016)
Average consumer tariff: 10.6¢/kWh (2019)
Section
AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020/21 21
6. Power sector policy & regulation
6.1 Overview
South Africa has a clear regulatory framework and relatively strong economy that makes the power
sector an attractive prospect for international power developers. However, entrenched domestic politics
has failed to deliver the reform necessary for the sector to be financially sustainable and has contributed
to the mismanagement of Eskom and the wider sector. Policy indecision coupled with Eskom’s financial
situation, governance challenges, and frequent hostility to IPPs have caused significant frustration and
delay for investors.
Key aspects of South Africa’s policy and regulatory approach are:
• The National Development Plan (NDP) 2030 forms the basis for South Africa’s long-term vision. For
the power sector, the focus is a ‘just transition’ to a low carbon economy, whilst ensuring jobs and
livelihoods are retained.
• From the NDP, the Integrated Resource Plan 2019 was published to set out the investment plan for
generation. It sets out the generation mix up to 2030 with a priority procurement of 2,000-3,000MW.
• Renewable energy procurement is set to continue with regular additions up to 2030, comprising
14.4GW of wind and 5GW of solar.
• In 2019, the Roadmap for Eskom in a Reformed Electricity Supply Industry was published and
proposed an unbundling of Eskom and wider reform of the power sector to improve competitiveness,
financial management and accountability.
• Black economic empowerment is a key component of private power procurement and receives
strong political backing.
6.2 Major Legislation
National Energy Act, 2008
Devised by the Department of Energy and enacted in 2008, the National Energy Act sets out the
provisions which govern electricity generation. The act outlines the roles of private participation and
renewable energy in the sector, as well as rules surrounding energy efficiency. It prioritises the
environmental impact of such actions and aims to promote sustainable development within the
economy.
Gener
ation
National Environmental Management Act 1998Public Finance Management Act 1999Nuclear Energy Act 1999Grid CodeNational Energy Regulator Act 2004Electricity Regulation Act 2006National Energy Act 2008Carbon Tax 2019Draft Energy Procurement Act 2020
IPPs
Off-gr
id
Renew
able
ene
rgy
Energ
y
effic
iency
Nuclea
r
Tarif
fs
Regula
tion
Trans
miss
ion
Distrib
ution
Enviro
nmen
t
Procu
rem
ent
Legislation
Section
22 AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020/21
8. Resource availability
8.1 Overview
South Africa is well positioned to harness energy from a variety of natural resources. It is a continent-
leader in the production and consumption of coal – which is the primary source of energy in the
country – and has healthy reserves of untapped oil and gas. In addition to hydrocarbons, South Africa
also possesses huge potential for renewable energy, which has increased dramatically in recent years
through the world-leading REIPPP programme and, under the Integrated Resource Plan, is expected
to rise to almost 25% of total energy production by 2030. In the 1.8GW Koeberg facility, South Africa
boasts the only commercially operating nuclear plant in sub-Saharan Africa.
8.2 Hydrocarbons
8.2.1 Overview
• Upstream oil and gas production is in decline having fallen by over half since 2010, largely due to a
lower oil price and lack of exploration. However, a new major discovery in 2019 has brought new hope
for a recovery within the sector.
• With vast reserves, coal looks certain to remain South Africa’s primary energy source for the
foreseeable future – as outlined in the 2019 Integrated Resource Plan.
8.2.2 Key Agencies
PetroSA
The government-owned oil and gas company has been given the mandate by cabinet to lead
developments in gas infrastructure in the Western Cape.
Petroleum Agency of South Africa
Has the responsibility to promote the exploration and exploitation of natural oil and gas, both onshore
and offshore, in South Africa and to undertake the necessary marketing, promotion and monitoring of
operations. Widely respected within the industry, the Petroleum Agency was at one stage threatened
with closure under proposals to treat oil and gas the same as mining under controversial proposed
amendments to the Mineral and Petroleum Resources Development Act (MPRDA). Mineral resources
and energy minister Gwede Mantashe said in November 2019 that the new petroleum bill established
oil and gas “as a sector of the economy standing alone, not as an appendage of mining”
Key resources statistics
Oil: 136,000b/d (production), 15m bbl (reserves)
Gas: 32 bcf (production, 2016)
Geothermal potential: unknown
Hydro potential: 14,000GWh/yr
Wind potential: 7.73m/s (100 metres)
Solar potential: 2,500kWh/m2/yr
Section
AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020/21 23
9. Competitive landscape
9.1 Overview
Although the vast majority of national power generation comes from state utility Eskom, the
transformational REIPPP programme has seen private participation in South Africa’s energy space
expand dramatically: in the years 2010 to end-2020, the contribution from IPPs to total installed capacity
is expected to have increased by over threefold, from 4.6% to 14.7%, (a change from 2.1GW to 8.9GW).
In line with the progress of the REIPPP, renewable energy also made significant gains during this period,
and by end-2020 is expected to have risen to 9.5GW from 2.3GW in 2010.
9.2 Landmark power projects
Largest power plant: Medupi Coal
Location: Lephalale
Capacity: 4,764MW
Fuel: Coal
Technology: Pulverised coal
Ownership: State-owned Connection type: On-grid
Commercial operations date: Unit VI online 23 August 2015, unit V online 3 April 2017, unit IV online28 November 2017, unit III online 28 June 2019, unit II online 26 November 2019, Unit I expected June
2020.
Long delayed project comprising six dry-cooled supercritical 794MW boilers with turbo-generators
covering a 700ha site, with a further 1,000ha required for ancillary services. Units II-VI are currently
operating, although performance has been well below expectations. Medupi was designed to produce
around 3,200GWh/yr of electricity but it is uncertain whether this will be achieved.
The project has suffered major delays due to technical errors and industrial action. A combined $5.6bn
contract to supply 12 boilers to Medupi and Kusile was won by Hitachi following a controversial tender
in 2007, before being transferred to Mitsubishi Hitachi Power Systems Africa Ltd, a joint venture with
Mitsubishi Heavy Industries. GE’s Steam Power Systems provided EPC services for turbine islands and
air-cooled condensers. Coal is supplied by Exxaro Coal’s Grootegeluk coal mine, which also supplies
Eskom’s Matimba power plant, through agreements signed in 2008.
The plant was expected to achieve thermal efficiencies of up to 37.5%, however, technical design flaws
have been blamed for chronic under-performance. The New Development Bank approved a $480m
loan in April 2019 to support a $2.75bn project to retrofit the plant with flue gas desulphurisation units
to reduce sulphur dioxide emissions from 3,500 mg/m3 to 500 mg/m3.
Several incidents of coal conveyor-belt malfunctions have resulted in Eskom looking to redesign the
coal-handling system. Design modifications at the power plant have already faced significant delay due
to the poor performance of the fleet as a whole. Eskom chief operating officer Jan Oberholzer said on
Section
24 AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020/21
10. Transmission and distribution
10.1 Overview
• South Africa’s transmission and distribution
infrastructure is well developed by sub-Saharan
African standards, with the overall network
covering the vast majority of the country. It boasts
the largest power line system on the continent
and has over 23,000km of transmission lines with
a voltage of 400kV or above.
• Eskom accounts for about 40% of electricity
distribution throughout South Africa, while
municipalities account for the balance, some
80% of which is distributed by 12 metros and the
largest municipalities.
• Electricity access rates are high at around
85%, although access rate growth has stagnated
since 2011.
• There are around 2.2m South African
households lacking electricity. Electricity access
is substantially lower in rural areas, which have an
average rate of approximately 66%, compared to
an urban access rate of 93%.
• Network losses of 9.7% in 2019 are relatively
low compared to South Africa’s regional peers.
• A key member of the Southern African Power
Pool (SAPP), there are cross-border
interconnections running to eSwatini and
Lesotho, as well as neighbouring Botswana,
Namibia and Mozambique.
• Two key cross-border projects are in
development: the Mozambique-Zimbabwe-South
Africa (MoZiSa) and Botswana-South Africa
(BoSa) projects. Once completed – planned for
2022 – these will allow greater trading within the
SAPP.
• Despite suffering from load-shedding and a
supply deficit, South Africa exports more
electricity within Southern Africa than it imports.
Transmission and distribution
infrastructure statistics
Network length: 387,633km
Network voltage: Transmission:
765kV (2,784km)
533kV (1,035km)
400kV (19,421km)
275kV (7,218km)
220kV (1,351km)
132kV (889km)
Distribution:
>132kV (24,666km)
44-88kV (20,735km)
Substation capacity: 297,521MVA
Existing
interconnections: Botswana: (3x132kV
& 1x400kV)
Namibia: (2x220kV
& 1x400kV)
Mozambique:
(1x110kV, 1x275kV,
1x400kV & 1x533kV
DC)
eSwatini: (2x132kV
& 2x400kV)
Lesotho: (1x132kV)
Planned
interconnections: Botswana (BoSa):
(400kV)
Zimbabwe/
Mozambique
(MoZiSa): (400kV)
Section
AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020/21 25
12. Demand and supply outlook
12.1 Overview
According to African Energy Live Data, South Africa had an on-grid installed capacity of 56,392MW as
of end-2019.
However, the performance of Eskom’s fleet of coal power plants has deteriorated due to poor
maintenance, accidents and fuel supply challenges. In 2019, the availability levels of the fleet stood at
just 69%, far below the 80% target. This has resulted in widespread load shedding. Eskom’s grid system
evaluation report – the Medium-term System Adequacy Outlook (MSAO) – recommends that the current
generation output must stay above 73% availability to adequately service peak demand. Any significant
increase in demand, continued fuel supply issues or plant deterioration will result in peak demand being
unmet.
South Africa’s on-grid energy mix is heavily reliant towards coal (73%) given the country’s wealth of the
resource and its prioritisation in energy policy. Renewable generation has grown in recent years through
the REIPPP, with solar (3.6%), wind (3.8%) and hydro (6.4%) all becoming more established. Nuclear
power (3.2%) has had significant backing from Eskom and the government in recent years and new
nuclear capacity remains on the agenda despite the sector’s parlous financial situation. Liquid fuels
such as diesel (6.1%) are utilised as peaking plants, available to balance the grid in times of high
demand.
Private participation in South Africa has been slow to materialise, with the first IPPs, Avon and Dedisa
diesel plants, procured in 2010. Government policy around private involvement in the power sector has
been ambiguous post-apartheid, with ambitious plans frustrated by limited implementation, hesitant
decision making and resistance from Eskom and other interest groups, notably the unions and coal
miners. The government has initiated numerous IPP procurement rounds for renewables and coal since
2011. However, as of end-2019, IPPs only account for 9.6% of total on-grid generation.
Demand has stagnated in recent years with poor economic growth, the threat of load shedding, the
flight of customers off the grid to distributed generation – which is likely to grow – and the lack of energy
intensive industries particularly in the mining sector.
According to the 2019 Integrated Resource Plan, South Africa’s short-term energy mix is unlikely to
change dramatically. Coal will continue to dominate generation up to 2024. Renewables are expected
to play a larger role in the sector as the country prepares the fifth REIPPP round. Nuclear energy
generation has been extended beyond 2024 and diesel is to be replaced by natural gas.
The government’s immediate focus will be to procure an additional 2-3GW of power through the risk
mitigation procurement programme to reduce load-shedding and diesel expenditure. A government
request for information about the programme in December 2019 stated power should be procured from
projects with short lead-in times of between 3-6 months or 6-12 months. Priority will be given to projects
that are currently under development and are baseload, mid-merit or peaking.
Supply side performance will hinge on the current reform efforts at Eskom and timely and effective IPP
procurement. An unbundled utility will help to facilitate competition and provide the sector with a more
Section
26 AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020/21
13. Data tables
Methodology
The following data tables show historical and
forward-looking data on installed, on-grid
capacity from 2010 through to 2024. The figures
are produced using data sourced from African
Energy Live Data, a platform containing over
6,500 operating, under construction and
planned generation projects across the
continent.
The pipeline (2020-2024) displays installed on-
grid capacity at years-end, and only includes
those generation projects which are in
development and are considered to have a
realistic prospect of reaching commercial
operations within the announced timeframe. A
full listing of projects on which these aggregated
figures are based is also included.
Renewables vs non-renewables(MW) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Hybrid 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Non-renewable 43,116 43,116 43,116 43,116 42,816 43,945 44,615 47,003 47,003 48,591 51,785 52,585 54,285 54,285 54,285
Renewable 2,268 2,268 2,271 2,353 3,835 4,444 6,338 7,542 7,661 7,801 9,290 10,065 10,165 10,165 10,165
(%) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Hybrid 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Non-renewable 95.0 95.0 95.0 94.8 91.8 90.8 87.6 86.2 86.0 86.2 84.8 83.9 84.2 84.2 84.2
Renewable 5.0 5.0 5.0 5.2 8.2 9.2 12.4 13.8 14.0 13.8 15.2 16.1 15.8 15.8 15.8
Non-renewableRenewable
20242010 2018
Section
AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020/21 27
Power plants: Operating (as of March 2020)
Project nameInstalledcapacity(MW)
Fuels TechnologiesCommercialoperationsdate
Acacia Diesel 171.00 Diesel Open cycle gas turbine (OCGT) 1976
Adams Solar PV II 75.00 Solar Photovoltaic (PV) 2017
Amakhala Emoyeni Wind Phase I 134.40 Wind Wind 2016
Ankerlig Diesel 1,338.30 Diesel Open cycle gas turbine (OCGT) 2007, 2009
Aries Solar PV 10.00 Solar Photovoltaic (PV) 2014
Arnot Coal 2,100.00 Coal Pulverised coal (PCF) 1971-1975
Athlone Jet Fuel 36.00 Other fuel oils Open cycle gas turbine (OCGT) 1973
Atlantic Centre and Park-a-Lot Rooftop Solar PV 0.49 Solar Photovoltaic (PV) 2015
Aurora Rietvlei Solar PV 10.35 Solar Photovoltaic (PV) 2014
Avon Diesel 670.00 Diesel Open cycle gas turbine (OCGT) 2016
Bethlehem Hydro 7.00 Hydro Conventional hydro 2007-2010
Bokpoort CSP 50.00 Solar Parabolic trough 2016
Boshof Solar PV 60.00 Solar Photovoltaic (PV) 2014
Camden Coal 1,561.00 Coal Pulverised coal (PCF)1967-1969,2005-2007
Chaba Wind 21.53 Wind Wind 2015
Clanwilliam Hydro 1.50 Hydro Conventional hydro 2014
Coega IDZ Wind 1.80 Wind Wind 2010
Collywobbles Hydro 42.00 Hydro Conventional hydro 1985
Cookhouse Wind 138.60 Wind Wind 2014
Darling Wind 5.20 Wind Wind 2008
Dassiesklip-Klipheuwel Wind 27.00 Wind Wind 2014
De Aar Solar PV 50.00 Solar Photovoltaic (PV) 2014
Dedisa Diesel 335.00 Diesel Open cycle gas turbine (OCGT) 2015
Diepsloot Wastewater Methane 1.10 Methane Undecided or unknown 2012
Dorper Wind 100.00 Wind Wind 2014
Drakensberg Pumped Storage 1,000.00 Hydro Pumped storage 1981-1982
Dreunberg Solar PV 75.00 Solar Photovoltaic (PV) 2014
Droogfontein Solar PV 50.00 Solar Photovoltaic (PV) 2014
Durban eThekwini Landfill Gas 8.00 Biomass Open cycle gas turbine (OCGT) 2006-2009
Duvha Coal 3,600.00 Coal Pulverised coal (PCF) 1980-1984
Dyason's Klip Solar PV I 75.00 Solar Photovoltaic (PV) 2020
First Falls Hydro 6.00 Hydro Conventional hydro 1990
Gariep Hydro 360.00 Hydro Conventional hydro 1971, 1976
Gibson Bay Wind 111.00 Wind Wind 2017
Gouda Wind 135.10 Wind Wind 2015
Gourikwa Diesel 746.00 Diesel Open cycle gas turbine (OCGT) 2007-2008
Grassridge Wind 60.00 Wind Wind 2015
Greefspan Solar PV 10.00 Solar Photovoltaic (PV) 2014
Grootvlei Coal 1,180.00 Coal Pulverised coal (PCF)1969, 1977,2007-2011
Hendrina Coal 1,893.00 Coal Pulverised coal (PCF) 1970-1976
Section
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