The CEO of the Energy Council of South Africa, James Mackay, believes that the expedited promulgation of the Electricity Regulation Amendment (ERA) Bill, along with the unbundling of Eskom, will demonstrate the country’s commitment to placing the electricity sector on a sustainable path.
- South Africa’s current market structure, dominated by a single vertically integrated utility (Eskom), is seen as an obstacle to much-needed investment in generation, transmission, and distribution. Mackay argues that South Africa lags behind other developed and developing economies in terms of energy market reform.
- The ERA legislation is considered an important market signal and a sign of political will for energy sector reform. However, without the political will to push the ERA through, plans for energy reform may remain stagnant.
- Business representatives recently met with President Cyril Ramaphosa and other government ministers to appeal for the approval of the ERA Bill during the current parliamentary term. They argue that the ERA Bill is crucial for ending load shedding, expediting energy development, establishing a competitive electricity market, and attracting investment.
- Mackay acknowledges the challenges of getting the legislation approved before the 2024 elections, but he remains optimistic about making progress. The unbundling of Eskom is seen as essential for expanding the grid and providing assurance to investors that the playing field is level.
- The National Energy Regulator of South Africa has granted the National Transmission Company South Africa (NTCSA) a transmission facilities license, and the transfer of trading and import/export licenses from Eskom to NTCSA is expected in the future.
- Workstreams established under the National Energy Crisis Committee (Necom) are addressing immediate industry problems, such as the poor performance of Eskom’s coal fleet and the slow progress in adding new generation capacity. These workstreams aim to reduce and eliminate load shedding and involve private sector support and investment.
- Efforts are underway to turn around four mid-tier coal power plants (Matla, Kendal, Kriel, and Majuba) and unlock private investment in generation and the grid. Mackay is optimistic that load shedding may be close to ending by the end of next year.