Private sector eating Eskom’s lunch

Energy wheeling through private companies plays a major role in helping South Africa avoid load-shedding, with around 13% of Eskom’s grid taken up by Independent Power Producers (IPPs) wheeling energy.

This is according to Fibon Energy’s senior commercial manager, Scott Havemann, who told SABC News that while the government supports electricity wheeling, more can be done to expand its accessibility.

“We are currently sitting on about 13% of Eskom’s grid being taken by wheeled energy IPPs, and I think that is the reason why we’re not seeing a lot of the load-shedding we’re accustomed to,” said Havemann.

“I think Eskom is trying to facilitate this wheeling concept and trying to facilitate that municipalities also adopt this process.”

However, he noted that while the regulatory environment supports the growth of energy wheeling, more can be done to expand the supply method to municipal end-users.

“We are seeing that government is coming to the fore in terms of putting in place certain conditions for IPPs like ourselves to start wheeling,” said Havemann.

“There’s a few boxes that need to be ticked in order for us to really get this going.”

“From a municipality point of view, municipalities are really crucial in this as a lot of the end consumers are sitting in municipal lines,” he added.

He said municipalities now need to take the lead in allowing IPPs to engage end-consumers and providing the framework required to deliver energy to them.

Electricity wheeling enabled businesses and consumers to buy electricity directly from IPPs, which generate power through utility-scale solar, wind, or hydro projects, making energy available through the national grid.

This is particularly beneficial for large businesses where an on-site solar power system isn’t sufficient.

The benefits include massive cost savings, with wheeling tariffs being up to 50% cheaper than utility power.

SolarAfrica says a day-time business operating over an eight-hour period can replace between 70% and 90% of its utility power consumption with wheeled electricity.

This, combined with on-site energy generation, helps businesses significantly reduce their reliance on Eskom and utilities.

Multiple factors to thank for no load-shedding

While Havemann said that 13% of Eskom’s grid being taken up by energy-wheeling IPPs is responsible for the current load-shedding break, others have a different view.

Lower demand from the mining sector, reduced demand from households and businesses with rooftop solar, and Eskom’s improved Energy Availability Factor (EAF) have also been credited for the improvement.

According to Former Reserve Bank deputy governor Kuben Naidoo, low commodity demand combined with higher input costs have reduced production and energy consumption in the mining sector.

“My personal view is that half of the reason we don’t have load shedding is because the mining sector is in a deep recession,” said Naidoo.

Naidoo said he believes load-shedding will return if South Africa “switches on” the mining sector.

Meanwhile, South Africa’s rooftop solar generation capacity has grown significantly in recent years, removing a large portion of demand from the national grid.

Rooftop solar generation has increased from just under 2,265MW in July 2022 to nearly 5,800MW in June 2024.

In the face of intense load-shedding in recent years, the government and Eskom embarked on a project to address the unreliability of the utility’s coal-fired generation fleet.

This has done wonders for Eskom’s EAF, which averaged 54.69% in 2023. Its average EAF for 2024 has risen to 58.47%, and Eskom’s average weekly EAF reached 70.87% in the week ended 28 July 2024.

Eskom’s head of generation, Bheki Nxumalo, said the decision to fix the power utility’s fleet rather than focussing on building new capacity was the right move and far more cost-effective.

He said Eskom had clawed back over 7,000MW of capacity losses by August 2024.

Nuxmalo estimated that the investment required to add 7,000MW of new capacity to the grid would be about R100 billion. Fixing the existing fleet was much cheaper.

“If you look at the amount of money that was spent, this was a cheaper option from where I’m sitting and where we are at Eskom, to say lets fix the current fleet,” he stated.