South African residents should expect to experience load-shedding for the next decade, and its intensity could double over the next five years.
This is according to Matthew Cruise, head of business intelligence and public relations at Hohm Energy, who said a significant barrier to ending load-shedding is a lack of transmission grid capacity.
“The CSIR [Council for Scientific and Industrial Research] was saying that because we have constraints on the transmission grid, we can’t allow any more electricity to come onto the grid because it’s already at full capacity,” said Cruise during an interview with 702. “We’ve kind of reached the limit. That alone will create load-shedding for the next ten years, and that’s coming out of the CSIR.
Moreover, Cruise said Hohm Energy expects to see the intensity of load-shedding increase significantly between now and 2028.
“It’s not just the next twelve months, but for the next five years, we actually see load-shedding doubling to the point where we have an average of stage 7 in 2028 and stage 6 in 2027,” he said.
Cruise explained that one of the major barriers to ending Eskom’s rotational power cuts in the near future is a lack of transmission grid capacity and the funding necessary to upgrade it. This echoes a statement from electricity minister Kgosientsho Ramokgopa on Sunday.
“The expansion and the strengthening of the grid is going to require an inordinate amount of money, and of course, the Eskom balance sheet is not in a position to finance the kind of expansion that is required,” said Ramokgopa. Ramokgopa said Eskom will have to think creatively to devise a solution.
“We need about R500 billion to do the expansion of the grid that we foresee it needing going forward,” Cruise stated. The problem with this is that there is very little investor confidence in Eskom, meaning it is unlikely to receive the funding without another government bailout.
For reference, finance minister Enoch Godongwana announced that Eskom would receive a bailout of R254 billion in his 2023 budget speech.
Another hurdle to investing in its transmission infrastructure is that the bailout conditions prohibit Eskom form taking on more debt without Treasury permission. Eskom is also restricted to spending within narrow constraints.
Matthew Cruise, head of business intelligence and public relations at Hohm Energy. “We’ve [Eskom has] asked for money repeatedly and said we’re [Eskom] going to use it for this, we’re going to use it for that,” said Cruise.
“Every single time, Eskom doesn’t really meet the requirements of what they said they were going to use the money for.” “At some point, the government bails them out. Recently, the R254 billion that the government took on themselves for Eskom’s debt hasn’t given any confidence to lenders that the finance provided will be used correctly,” he added.
When asked whether the $8.5 billion (R152 billion) offered at the last COP27 meeting for the Just Energy Transmission could aid the expansion, Cruise said a small portion is designated for grid expansion.
However, it isn’t as straightforward as it sounds. “There is a portion of that money that’s allocated for grid expansion, but that money has been split up for a range of various different uses already,” said Cruise.
“And that’s under the assumption that the money will actually be used for that. There’s already been a shadow of doubt placed over that $8.5 billion in Andre de Ruyter’s revelations of what’s actually going on at a ministerial level.”
He added that there are numerous issues with the transmission grid that have come to light since more focus has been placed on it. “Unfortunately, these issues are going to take about ten years to fix,” said Cruise
