With the recent changes to the licensing threshold in the Electricity Act, it is pretty clear that privately-owned IPPs will fill the gap where Eskom failed.
Though South Africa’s energy crisis is getting worse by the day, the amendments that have been made to the Electricity Act will enable several independent power producers (IPPs) to close the gap.
The race to replace Eskom: Who will lead the charge?
As South Africa enters the winter season, the sad realisation has dawned on most households and business that we have already surpassed the amount of loadshedding in 2023 that the country had experienced in all of last year.
Though this can feel like a hopeless battle, some recent changes have opened a small gap in the race to replace Eskom.
On 17 January 2023, the Department of Mineral Resources and Energy raised the generation licence threshold, from 1 MW to 100 MW, which has opened the door not only for independent power producers to stake their claim, but also for more local municipalities to take power production into their own hands.
Since this new license threshold was announced, South Africa has already seen an increase in energy produced through various IPPs. This proves that there is real potential for the country’s energy to be more reliable and more sustainable in the future.
How has privately-owned power increased since the license threshold was increased?
Before Schedule 2 of the Electricity Act was amended in January 2023, any privately-owned power producers had to be licensed to produce more than 10 MW.
However, now that this threshold has been increased to 100 MW of power, the privately-owned power companies have come out to play.
Since January, the private renewable energy programs have registered a total of about 1,073 MW of power. This is astonishing when compared to the total 1,646 MW that were registered over the course of the entire previous year.
Which municipalities have already moved away from Eskom?
Many municipalities across the country, including eThekwini, Ekurhuleni and City of Cape Town, have all started awarding tenders to IPPs.
Though this transition will likely take a while, and is not always possible for smaller municipalities, it will enable these municipalities to start producing their own power instead of relying on Eskom.
There is still a long way to go
With all of these players gearing up for their chance to take on South Africa’s state-owned power supplier, it is important to keep in mind that power generation is only half of the battle when it comes to dethroning Eskom.
Eskom still has an incredible advantage when it comes to controlling the infrastructure needed to distribute this power to the country, and this aspect could take even longer to resolve.
