SA’s energy challenge: A R390bn grid upgrade

SOUTH Africa is facing a monumental challenge as it seeks to end years of rolling electricity outages that have hobbled the economy: It needs to build and fund a R390 billion expansion of the national grid so it can connect more power plants.

The transmission system is owned, managed and maintained by Eskom, which supplies more than 80 percent of the country’s electricity and has failed to properly maintain its plants or expedite the process of building enough new ones to avert energy shortages.

The state utility plans to build 14 218 kilometres (8 835 miles) of power lines over the next decade, more than three times what it has installed over the past 10 years. It will also have to increase its transformer capacity six-fold and build other infrastructure.

The power cuts, known locally as load shedding, have curbed output, stoked unemployment and limited the annual economic growth rate to an average of less than 1 percent over the past decade — key campaign issues heading into May 29 elections.

In its election manifesto, the ruling African National Congress said it would “prioritise investment in expanding the transmission grid so that more energy, including from renewable sources, can be supplied,” a pledge echoed by its main rivals.

Funding the expansion appears beyond Eskom’s reach. It carried a R400 billion in debt before the National Treasury stepped in with a conditional bailout that severely constrained the loss-making utility from taking on additional loans.

The failure to invest adequately in the grid has created “a real emergency,” said Brian Day, chairman of the South African Independent Power Producers Association. The construction of new lines and substations is proceeding too slowly and needs to be ramped up, he said. — Bloomberg