Eskom struggles to generate and supply a stable flow of electricity to meet demand in South Africa. In 2023, there were times when households and businesses had no power for up to 11 hours a day. Eskom has warned that load shedding will be worse in 2024.

The result is that many South Africans are choosing to end or reduce their dependence on the national electricity grid. The approaches people are taking are still evolving. Some are choosing to cut off their reliance on local government, which is responsible for local electricity distribution and reticulation. Others are opting to add solar and battery power while retaining municipal power for backup.

The move away from reliance on the grid points to a pressing need for clarity and support in the legal and regulatory environment. The shift raises complex legal and regulatory challenges, which we dealt with in a recent paper.

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We examined whether South Africa’s law allows individual households to generate their own power and disconnect their properties from the grid. And, if so, whether the regulatory framework is tailored to enable and empower them to do so.

Our paper also sought to address whether off-grid technological advances can coexist with – or are hindered by – existing regulations.

We found that there’s no national legislation that deals with delinking from the national grid. Instead, local ordinances and zoning regulations indirectly accommodate and facilitate the off-grid transition.

In South Africa, municipalities play an important role in delivering basic services, including electricity. The financial stability of these municipalities hinges, in large part, on the revenue they generate from selling electricity to consumers. Without it, most would collapse.

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Eskom will be replaced by the private sector in the coming years, with the utility being left behind by the rapid uptake of alternative energy sources by private capital.

This is feedback from former Eskom CEO André de Ruyter, who told the Business Day Spotlight podcast that since lifting the cap on private generation capacity, investors have ploughed money into renewable energy projects.

De Ruyter estimated that there are 66,000 MW of renewable projects in the pipeline being developed by the private sector.

This is roughly 25% larger than Eskom’s entire installed capacity. “That is enormous. That is a gob-smacking number.” De Ruyter said.

“In the absence of engagement with these political issues, with these complicated and challenging conundrums related to the energy transition and load-shedding, the private sector will do its own thing and effectively privatise the electricity industry.”

“That is what seems to be happening now, and Eskom is going to be left behind in that process,” De Ruyter said.

He explained that if you extrapolate from current trends, Eskom will be left with a customer base of “people who cannot afford electricity and therefore will not pay for it”.

Many of Eskom’s biggest paying customers will be the first to go off-grid and reduce their reliance on the ailing utility as they can.

De Ruyter warned that if this continues and is undirected by a Just Energy Transition framework that creates safety nets and attractive investments in local communities, it will be difficult to offset job losses in the country’s coal heartlands.

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The former Eskom CEO’s claims are supported by data collected by RMB chief economist Isaah Mhlanga.

Despite the difficulty in calculating the impact of load-shedding, Mhlanga is sure that the effect will be reduced over time and be negligible by 2025 as the private sector ramps up energy production.

Following the deregulation of electricity generation, households and private corporations have aggressively embraced rooftop solar.

South Africa is experiencing a boom in solar installations, with over 4,400 MW of rooftop solar installed outside of the government-procured solar. This is expected to increase by 420% in the coming years.

This surge in investment is further bolstered by a promising pipeline of corporate solar projects, suggesting enhanced resilience against load-shedding.

From the beginning of 2023 to the end of 2025, RMB estimates that the private sector will add over 6,000 MW to the grid. From 2025 to 2030, it will add a further 19,300 MW.

This will help to offset Eskom’s declining supply of energy and thus will most likely reduce to a maximum of stage 3 by mid-2025.

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Renewable energy developer Mulilo Energy has chosen Jan Jurie Fourie, former Scatec executive VP, to take over as CEO from the departing Johnny Cullum in May.

Cullum, who has been CEO since Mulilo’s inception in 2008, attributes the company’s success to its dedicated team. While stepping down as CEO, Cullum will continue as a board member and retain his shareholding.

Mulilo Energy, specializing in onshore wind, solar PV, and battery energy storage systems, aims to offer cost-effective energy solutions for local economic development and social upliftment in South Africa.

The company has completed 420 MW of solar PV and onshore wind projects, with an additional 1,087 MW in progress. In July, Copenhagen Infrastructure Partners (CIP) acquired Mulilo, and Cullum expressed confidence in Jan Fourie’s ability to lead the company toward its ambitious five-year growth target of 5 GW of renewables.

Jan Fourie expressed enthusiasm for the role, emphasizing the importance of clean, reliable energy for millions. Under Johnny’s guidance since 2009, Mulilo has evolved into a significant player in delivering sustainable electricity to South Africa.

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Jan Oberholzer, Mulilo’s chairperson, extended gratitude to Johnny for his dedication and leadership, expressing confidence that Jan Fourie will build on the company’s foundation and contribute substantially to the country’s economy and people.

CIP partner Robert Helms welcomed Fourie, expressing certainty in maintaining the positive trajectory and fulfilling Mulilo’s goals in contributing to the green transition, local growth, and job creation in South Africa.

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In a bid to evade Eskom’s constant power outages, and reduce soaring generator fuel costs, the Western Cape Health Department has earmarked R87m to install hybrid inverters in every rural primary healthcare facility in the province and solar panels at 15 hospitals.

HoD Dr Keith Cloete said there had been a 56% increase in all infrastructure emergencies at health facilities between the 2022/23 and 2023/24 financial years, with a specific increase of 140% in generator and electrical emergencies.

Although 10 public hospitals in the province are exempted from load shedding, another 193 depend on generators.

Between April and June this year, reports News24, the department spent R12m on diesel during load shedding.

Cloete said the inverter programme at rural clinics would happen in two phases.

“The first will involve 51 clinics, and a budget of R37m, and phase two will target 87 clinics with a budget of R47m in the 2024/25 financial year. In phase one, nine clinical have been completed while 42 are still in planning and costing, 27 are in load testing, and 15 are still to be initiated.”

The first phase would be completed by the end of March next year.

"The clinics have been supplied with inverters and lithium batteries to provide a seamless essential power supply during load shedding.”

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As yet no photovoltaic panels had been installed “due to safety and security concerns”.

On the renewable energy programme, Cloete said the department was planning to install solar photovoltaic embedded generators at 15 hospitals.

“This will be completed at three facilities in 2023/24 while others will be completed thereafter.”

The renewable energy program will be expanded to all other health facilities as resources become available, he added.

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The fire at the Vodacom building at Century City in Cape Town on Sunday 9 July is suspected of having been caused by an issue with the rooftop solar photovoltaic (PV) installation. Such systems for homes and businesses are increasingly popular to mitigate the impact of ongoing loadshedding.

However, for insurance purposes these need to be installed by an accredited installer or electrician, highlights ASP Fire CEO Michael van Niekerk. The onus is on home and business owners to ensure that the installation is correct, especially in terms of accompanying gensets.

“There are several fire safety measures that should be taken into account to prevent the risk of fires when installing a solar power system,” says van Niekerk. Firstly, solar panels must be installed by experienced professionals to prevent fires caused by faulty wiring or overheating.

It is important to use high-quality solar panels, inverters, wiring, batteries and other components from reputable manufacturers. Inferior quality components, especially when it comes to lithium-Ion batteries, are more likely to malfunction, increasing the risk of a fire. Lithium-Ion batteries that are not equipped with a thermal management system have a high chance of overheating, resulting in thermal runaway and a subsequent fire.

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Battery storage rooms must be fire rated to control a battery fire as these are exceptionally difficult to control and extinguish. The flammable gas produced during a Lithium-Ion battery fire can build up inside a garage or room, and if ignited can result in an explosion with disastrous consequences.

Another critical consideration is using properly sized and rated wiring in the installation to prevent overheating, short circuits or other electrical problems that can lead to fires. Wiring should be insulated, and conduit used where necessary to protect the wiring from the elements.

Faulty, poor quality or incorrectly installed solar panel junction boxes located outside on the roof can cause water to ingress the housing, which can lead to a short circuit and a subsequent fire that will result in a loss of the roof top solar installation.

Install an isolation switch to shut the roof-mounted solar panels down safely in case of an emergency, says van Niekerk. Such an isolation switch must be clearly labelled and easily accessible to the fire department. The impact that solar panels have on smoke ventilation and emergency firefighting smoke ventilation in a soft roof building are also important factors to keep in mind when designing solar panel installations.

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Data from Eskom and Professor Anton Eberhard shows that South African households and businesses have installed and estimated 4,400MW of rooftop solar PV – double the solar capacity procured under Eskom’s four bid windows.

According to Eberhard’s data from Eskom, the country’s installed solar rooftop PV increased from 983 MW in March 2022 to 4,412 MW in June 2023 – marking a 349% increase in just over a year.

Eskom’s transmission division is believed to be responsible for this data on private solar installations, as it is determined by analysing the variance between predicted and actual energy demand in the country.

This means the shortfall in actual demand relative the what is predicated by Eskom is assumed to be a result of alternative energy sources (solar rooftop PV).

This 349% increase in solar rooftop PV to 4,400MW is double the estimated 2,200MW installed under the government’s Renewable Energy Independent Power Producer Procurement Programme (Reipppp) – meaning South Africans are beating the government at its own game.

However, there are reasons why this is the case, and the main one is that Eskom has very limited grid capacity, which has hamstrung the power utility’s efforts to add new generation capacity.

To alleviate that pressure, Eskom introduced its so-called Interim Grid Capacity Allocation Rules. Still, many private power developers have criticised this move, arguing that it would increase the money developers must spend before they know whether they have access to the grid – which could scare off future investments.

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Around 1.2 billion people worldwide do not yet have access to electricity. With microgrids, even remote places can be electrified, with renewable energies that are climate-neutral and sustainable. Upper Blinkwater in South Africa is a model village.

When Neliswa Gaju wants to know what's going on in the world right now, she goes into the living room and turns on her TV. That may sound trivial, or like a boring, self-evident routine. But it's not. Because Neliswa lives in Upper Blinkwater in the Eastern Cape of South Africa about 200 km north-east of Port Elisabeth. The small village with about 70 households is so remote that it was not connected to the national electricity grid. For a long time, there was no electricity here until 2020, when a small independent power grid - a so-called microgrid - was installed. Many different companies and associations are involved in the project, which was initiated by the Eastern Cape Province in South Africa and the federal state of Lower Saxony in Germany.

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“Everything is easy now”
“Our life was very, very difficult at that time of our parents, the old time,” says Gaju. “At that time, we were using fire for cooking, even for making warm water. Every morning, staying up early in the morning and doing that job. And cooking, everything we were doing on the fire. Even lighting, we were using candles and paraffin to light at night. Now, everything has changed. Everything is easy. We can use electricity for cooking, ironing, fridge, washing machines. We have electric lights and TVs. We can watch everything, even from overseas.”

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Trade, industry and competition minister Ebrahim Patel launched the Energy One Stop Shop and Energy Resilience Fund on Thursday, 27 July 2023.

This is part of the Energy Mitigation Strategy through the National Energy Crisis Committee.

President Cyril Ramaphosa had tasked Invest South Africa to establish an Energy One Stop Shop to deal with and fast-track applications from energy developers.

The Energy One Stop Shop is expected to input to the streamlining of regulatory processes required for private investment in electricity generation, facilitate pre-investment screening for all energy projects and thereby fast-track the approval of energy applications.

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This is to be achieved through timely intervention on blockages and red tape, and consequently reduce both the time and cost of getting energy projects onto the grid.

The requirement for predictable energy availability has led the Department of Trade, Industry and Competition (the dtic) to formulate a series of interventions, including alternative energy generation solutions, storage and efficiency measures aimed at supporting businesses to become energy resilient.

Speaking during the launch, minister Patel said the Energy One Stop Shop was developed to address a key constraint that energy developers face, namely that the many regulatory and other measures that need to be complied with, can and do slow down approval of energy supply projects.

“The Energy One Stop Shop and Energy Resilience Fund are critical steps towards alleviating the challenges faced by our industries during this energy crisis,” Patel said.
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Only half of all renewable energy projects procured during Bid Window 5 have come online, with the rest unable to reach financial close due to rising borrowing costs and unsustainable tariff pricing.

4,600MW of renewable energy generation was expected to come online from Bid Window 5 in 2021. However, 12 of the 25 projects have failed to reach financial close while a further 4 are awaiting financial closure.

This leaves only 9 projects that have reached financial close from Bid Window 5.

The 12 projects that have failed to reach financial close so far are from the Ikamva Consortium, which comprises a Danish company and Patrice Motsepe’s (pictured) African Rainbow Energy, along with other local companies.

The consortium blames rising interest rates, costs of renewable technologies, and declining production of materials used to construct the plants for distorting its calculations.

However, the head of advisory at the Economic Development Platform, Maloba Tshehla, told 702 that many of these projects were too aggressively priced to win the contracts.

This made these projects unsustainable long-term as their tariffs left no space for external shocks or price increases.

“The prices quoted in bid window five were absolutely crazy even at the time of bidding,” Manie de Waal, joint CEO of Energy Partners Group, told Reuters.

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Tariffs for renewable energy have been declining sharply in South Africa, with prices for electricity from wind and solar more than halving over the last decade.

However, companies proposed tariffs with razor-thin margins to win contracts offered at the bid windows.

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