RFP for private transmission investment to be launched in July

The South African government will release a request for proposals (RFP) in the coming months seeking private sector investment into a pilot electricity grid infrastructure project.

The National Treasury confirms that government has been working in partnership with the International Finance Corporation on the short-term options for “off-balance-sheet financing to accelerate private-sector investment in transmission, without negatively affecting Eskom’s balance sheet and the fiscus”.

“A pilot project will be implemented to test the market appetite for the proposed option, with an RFP expected to be issued by end-July 2024,” the Budget Review states.

Electricity Minister Kgosientsho Ramokgopa has announced previously that government plans to establish an independent transmission project office, located either at the Development Bank of Southern Africa or the Industrial Development Corporation, to procure new transmission capacity using some form of build, operate and transfer model.

He has argued that Eskom requires support to accelerate the implementation of its Transmission Development Plan, which envisages the building of 14 000 km of new powerlines by 2032, alongside 170 transformers, with a capacity of 105 865 MVA, as well as 40 capacitors and 52 reactors.

Much of the investment is planned for construction only after 2027, however, with only 3 400 km of powerlines projected to be installed between the current financial year and 2028.

The back-end nature of the investment profile has been heavily criticised by powerline and substation suppliers, which have warned that they may not survive the current downturn to participate in the future investment surge and with some key suppliers and construction companies having already entered business rescue.

COAL STATION REPORT TO BE RELEASED

Meanwhile, Godongwana also highlighted the reforms under way in the broader electricity supply industry, as well as the initiatives launched to tackle loadshedding, which he said continued to disrupts production, operations and livelihoods.  

"Reforming the sector will result in long term energy security. We took the necessary decisions in the past five years and these are bearing fruit.  

"To promote further investments in renewable energy, this budget proposes an increase in the limit for renewable energy projects that can qualify for the carbon offsets regime, from 15 megawatts to 30 megawatts." 

He also promised that the report on the independent review of Eskom’s coal-fired power stations, which was undertaken by a Vgbe-led consortium last year, would be released in the coming week.

Much attention will be given to the content of the report given moves to extend the life of some coal-fired power stations beyond their current retirement dates, as outlined in the Integrated Resource Plan of 2019.