The Generation of Electricity in South Africa 2024

Challenges

Continued theft and corruption at Eskom. Eskom’s continued poor financial and operational performance. Installing sufficient renewable energy and gas generation supply to reduce dependence on coal. The national grid is at capacity.

Introduction

South Africa’s electricity crisis intensified in 2023 due to extensive breakdowns at the debt-laden Eskom’s aging power stations. This comes at a time when the renewable energy independent power procurement programme has slowed considerably. Recent regulatory changes have unlocked new avenues of private and municipal investment in electricity generation. Eskom’s unbundling into separate generation, transmission, and distribution companies, was targeted to be complete by the middle of 2024. Eskom planned to reduce loadshedding in 2024 with the return of large amounts of capacity to operation after long periods of maintenance. Eskom continues to be beset by corruption, theft and sabotage. The electricity grid is at capacity with limited opportunity to receive new supply.

Opportunities

Electricity trading providing remote markets for independent power producers. Private supply of distributed electricity generation capacity for large companies. Solar panel prices have dropped considerably, making embedded solutions more affordable.

Outlook

The electricity crisis has caused significant losses to the economy. Private renewable energy generation companies face challenges as the grid is at full capacity. The outlook for the electricity generation industry is poor. Government anticipates the supply deficit to last until 2027. There could be some relief from the removal of regulatory hurdles to private sector participation and direct municipal procurement of electricity. Embedded rooftop solar generation and self-generation investment continue to grow. The unbundling of Eskom will enable the private sector to supply utility-scale electricity. Treasury has implemented a plan to relieve Eskom debt, and Eskom has implemented a plan to tackle municipal debt.

Report Coverage

This report on the generation of electricity in South Africa provides comprehensive information on Eskom and independent power producers, energy sources including renewables, and changes to the energy mix, the new draft Integrated Resource Plan, the Eskom crisis, smallscale generation, notable players and regulatory developments. It also covers influencing factors such as input costs, and the changing competitive landscape. There are profiles of 31 companies including Eskom, the Avon and Dedisa peaking power plants, emergency energy provider Karpowership and renewable companies such as Mulilo Energy, EDF, ACWA Power, Oya Energy, African Rainbow and Energy Projects, Sola Group, Globaleq, Enel Green Power, Scatec, Cennergi, Seriti Green and Pele Green Energy.

Trends

Eskom’s municipal debt continues to be very high. Eskom’s poor financial and operational performance continues. Loadshedding continues to escalate. Regulatory moves to separate Eskom into three companies and to introduce competition in electricity generation gained pace in 2023. Renewable energy companies have taken advantage of new commercial and industrial self-generation projects. Small-scale embedded solar generation, predominantly residential, rapidly increased in 2023. The contribution of coal-sourced electricity to total generation has been declining. The introduction of new utility-scale independent renewable energy power supply to Eskom is being constrained by the lack of capacity on the national grid.