Eskom needed better planning

ESKOM will have to fork out millions to independent power producers whose renewable energy plants are ready to generate electricity but which the utility has not been able to connect to the national grid in time.

Eskom expects these companies, which built the power stations at their own cost in response to a call from government, to claim a total of R96 million for problems surrounding the independent power producers’ programme.

Private power companies have invested between R120 billion and R140bn in renewable energy projects in South Africa, but industry sources say if the country cannot sort out problems with grid connections, future private investment in electricity is likely to move elsewhere.

It appears the private power companies have moved too fast for Eskom. Each private company was given a deadline by the Department of Energy to start generating power, but Eskom told Parliament this week that “independent power producers timelines are not consistent with Eskom delivery time frames”.

Eskom has allocated R2.34bn to upgrade grid networks but said the long time this project would take meant that there would be delays. It also said it had not been given enough money in the last budget to pay for upgrading the grid.

Eskom told Parliament the geographical distribution of renewable energy plants was a problem, particularly solar power plants which were in the desert areas of the Northern Cape where Eskom had no existing infrastructure.

The utility conceded that its project processes and governance procedures needed to improve.

Mike Levington, vice-chairman of the SA Photovoltaic Industry Association, said

Private power companies have moved too fast for utility

Eskom’s parliamentary presentation raised two issues: that Eskom was “not totally on board” with the independent power producers’ process, and that there was an urgent need for better planning.

“Someone should have sat down and worked these things out at the start. We need more megawatts on the grid yesterday, and here we’ve got power projects ready to put electricity on the grid now, but because of governance issues, they are being delayed. It really looks silly if Eskom has to pay for electricity that is not being used.”

Levington believes the private renewable energy industry has been a “victim of our own success”. When government called for tenders from private companies, no one anticipated the huge response.

“The response has shocked the Department of Energy, Eskom and Nersa. The South African renewable energy programme is one of the most successful, one of the fastest developing industries in the world. The question now is to make sure we sustain it. The procurement process had to be adapted, because the billions invested in South Africa can quickly disappear if we don’t get it right.”

Eskom said yesterday the earmarked capital had not been re-allocated, but when Eskom’s financial constraints had become evident, some work had been put on hold. This had caused a delay to one of the IPP projects.

It said the money for upgrading the grid was for independent producers and for customers so had affected both.