Electricity and Energy Minister Dr Kgosientsho Ramokgopa has given the strongest indication yet that the next edition of the Integrated Resource Plan (IRP) will include a 10-year delay to the shutdown of certain coal-fired power stations, as was flagged as a possible option when the reworked plan was made public in November.

In response to questions posed by members of the Portfolio Committee on Energy and Electricity on February 20, Ramokgopa indicated that the 'IRP 2024' was currently before the National Economic Development and Labour Council, and expressed a desire for these deliberations to be conducted "expeditiously".

The committee was also told that it was still the ministry's intention for the updated IRP to be adopted by Cabinet early this year, whereafter it would be Gazetted as the country's "blueprint" for electricity security of supply.

While indicating that he was unable to pre-empt what was contained in the new edition of the IRP, Ramokgopa indicated that the delayed shutdown took account of a socioeconomic impact assessment, as well as the results of a security-of-supply study.

He said the socioeconomic assessment pointed to there being a major economic fallout for Mpumalanga should the stations be shut in line with the decommissioning schedule included in the prevailing IRP 2019, including the shedding of tens of thousands of direct and indirect jobs.

The supply study reportedly found that the pipeline of mostly variable renewable energy generators needed so as to fully replace the dispatchable coal fleet would not be deployed at the pace required to ensure security of supply.

Ramokgopa did not name the stations that would be extended for 10 years, but the draft IRP 2024 options unveiled in November stated that, should the life of the coal plants be extended from 50 to 60 years, the following stations would continue operating: Kendal, Majuba, Lethabo, Matimba, and Tutuka.

The document showed that, under a 60-year scenario, coal-based electricity production would not fall by 10 GW by the mid-2030s as was currently assumed. Instead, coal capacity would hold steady until 2042, when 15 GW would be retired.

The option for a coal life extension to 60 years was not presented as the reference case, however, and the document confirmed that it would result in higher carbon and particulate emissions.

Eskom is already operating its coal plants under an exemption from minimum emission standards (MES), and has indicated previously that it would need to invest R300-billion to ensure full MES compliance.

Last year, it also received permission to operate five aged power stations that were due for immediate decommissioning under existing MES plant limits until March 31, 2030. The plants included Hendrina, Grootvlei, Arnot, Camden and Kriel.

The decision is currently being legally contested.

However, Ramokgopa told lawmakers that he was confident that a cost-effective technical solution could be found, making specific reference to ammonia co-firing, which has been commercialised in Japan.

He said he visited Japan in December to investigate the solution and had had further engagements with the technology provider at the recent Mining Indaba.

Should the final IRP include the delayed decommissioning option, it would have implications for South Africa's decarbonisation trajectory, which would have to be reflected in its next Nationally Determined Contribution, which is due to be lodged with the United Nations this year.

It could also affect funding flows under the Just Energy Transition Partnership, which has been extended by several developed countries on the basis that it would help South Africa fund its transition away from coal in a way that cushioned coal workers, as well as communities that live in close proximity to the power stations.

Engineering News editor Terence Creamer discusses what led to Finance Minister Enoch Godongwana being unable to deliver what was meant to have been the first Budget since the formation of the Government of National Unity; the fiscal environment; and the trade-offs Cabinet will now have to consider for the new Budget to be delivered on March 12.

Note: Some of the information in this article has been written on the basis of documents provided to the media during the 2025 Budget lock-up prior to the cancellation of the Budget Speech on February 19. The National Treasury has lifted the embargo imposed on the information, but a new Budget is now due to be tabled on March 12.

In an unprecedented development, the speaker of Parliament Thoko Didiza was forced to postpone the 2025 Budget address by Finance Minister Enoch Godongwana on Wednesday.

This, after Cabinet failed to agree on a two percentage point value-added tax (VAT) hike included in the Budget.

The Budget will now be held on March 12.

In a shock move that went against the wishes of both the parties participating in the Government of National Unity (GNU) and powerful civil society groupings, Godongwana proposed hiking VAT to 17% from April 1.

Had the Budget been tabled, it would have been accompanied by a rates bill confirming the VAT hike, and which would have been implemented on April 1 regardless of whether parties decided to vote it down in the weeks that followed.

The hike was higher than the one percentage point increase signalled in leaks ahead of the Budget, which provoked vocal opposition days before Godongwana's speech, including from key GNU member the Democratic Alliance, as well as African National Congress allies such as the Congress of South African Trade Unions and the South African Communist Party.

Godongwana decried the leak, which he attributed to a Cabinet member.

He also stressed that the VAT hike had not been dropped on Cabinet out of the blue, indicating that members had been made aware of the National Treasury's directional thinking regarding the VAT increase two weeks prior to the special Cabinet meeting on February 19.

However, the size of the increase had not been disclosed.

The VAT hike, should it be agreed, would raise R58-billion in additional revenue in 2025/26 and was proposed against a backdrop of a R19.3-billion downward revision to the 2024/25 tax revenue estimate when compared with the 2024 Budget and a wider government deficit of 5%.

NOW BEFORE CABINET

Godongwana said he was in favour of the high level of interest being shown in the trade-offs by Cabinet, which would now need to decide collectively how best to fund the GNU's priorities.

The options, he said, included expenditure cuts, tax hikes or increased borrowing; the latter would represent a break from the National Treasury's current fiscal strategy, which is aimed at containing debt and reducing the fiscal deficit.

Godongwana said Cabinet had decided to postpone the release of the 2025 Budget to allow for further discussions, but said these discussions would not be broadened to other stakeholders, nor would it be feasible to conduct a wholesale expenditure review before March 12.

He also said there was no deadlock-breaking mechanism when it came to approving a Budget, which was a Cabinet document.

President Cyril Ramaphosa subsequently issued a statement assuring South Africans that Cabinet's continuing deliberations on the Budget would "deliver outcomes that will protect vulnerable citizens and lay a platform for economic growth".

He confirmed that the postponement was the result of disagreement, but added that there was also "collegial and mature consensus within Cabinet that Budget proposals be worked through comprehensively and productively to secure the wellbeing of the economy and individual citizens".

WHY VAT WAS CHOSEN

Ahead of the postponement, Godongwana had moved to justify the VAT hike on the basis that it was preferable to the other options of increasing borrowings, cutting expenditure, or raising other taxes.

The Budget Review document, which was provided to journalists under embargo, added that VAT was selected as raising personal income tax rates was likely to be inefficient because individuals would find ways to reduce their liabilities.

It added that hiking the corporate tax rate could impede competiti...

In an unprecedented development, the speaker of Parliament Thoko Didiza was forced to cancel the 2025 Budget address by Finance Minister Enoch Godongwana on Wednesday.

This, after Cabinet failed to agree on a two-percentage point value-added tax (VAT) hike included in the Budget.

The Budget will now be held on March 12.

In a shock move that went against the wishes of both the parties participating in the Government of National Unity (GNU) and powerful civil society groupings, Godongwana proposed hiking VAT to 17% from April 1.

The hike was higher than the one percentage point increase signalled in leaks ahead of the Budget, which provoked vocal opposition days before Godongwana's speech, including from key GNU member the Democratic Alliance, as well as ANC allies such as the Congress of South African Trade Unions and the South African Communist Party.

Godongwana decried the leak, which he attributed to a Cabinet member.

He also stressed that the VAT hike had not been dropped on Cabinet out of the blue, indicating that members had been made aware of the National Treasury's directional thinking regarding the VAT increase two weeks prior to the special Cabinet meeting on February 19.

However, the size of the increase had not been disclosed.

The VAT hike, should it be agreed, would raise R58-billion in additional revenue in 2025/26 and was proposed against a backdrop of a R19.3-billion downward revision to the 2024/25 tax revenue estimate when compared with the 2024 Budget and a widen government deficit of 5%.

Godongwana said he was in favour of the high level of interest being shown in the trade-offs by Cabinet, which would now need to decide collectively how best to fund the GNU's priorities.

The options he said, included expenditure cuts, tax hikes or increased borrowing; the latter would represent a break from the National Treasury's current fiscal strategy, which is aimed as containing debt and reducing the fiscal deficit.

Godongwana said Cabinet had decided to postpone the release of the 2025 Budget allow for further discussions, but said these discussions would not be broadened to other stakeholders, nor would it be feasible to conduct a wholesale expenditure review before March 12.

He also said there was no deadlock-breaking mechanism when it came to approving a Budget, which was a Cabinet documents.

The South African government has reiterated its stance that South African needs a mega oil refinery despite "fundamental changes" under way globally, including the transition to electric mobility.

In addition, it has expressed an eagerness to pursue the development in partnership with a regional oil company at the mothballed Sapref refinery site, which bp and Shell sold to the State-owned Central Energy Fund for R1 in 2024, having shut the refinery in 2022.

Flanked by Mineral and Petroleum Resources Minister Gwede Mantashe, deputy director-general Tseliso Maqubela told the Portfolio Committee on Mineral and Petroleum Resources that the security of the country's fuel supply had become vulnerable because of the recent closure of domestic refineries.

He pointed to a significant rise the number of fuel tankers delivering product through the Port of Durban as an indication of the country's prevailing import dependence, which was being mitigated in the short term through ensuring diverse supply sources and an increase in storage.

However, there was still insufficient inland storage, while the vulnerability of supply was highlighted recently by a fire at the Natref refinery, which left the OR Tambo International Airport in a precarious supply position.

Maqubela indicated that additional storage and the development of fuel terminals at Island View in Durban and at the Port of Ngqura would be important for boosting supply security in the short term.

However, he argued that a new mega refinery with a daily capacity of more than 400 000 bbl was also still required.

This, despite warnings of a stranded-asset risk, in light of the significant refining capacity that had been developed in the Middle East and Asia in recent years and the uncertainty posed by the energy transition.

"We need to build a refinery, whether it's at Sapref or elsewhere," he said, with government having previously proposed that a refinery be developed at Coega, in the Eastern Cape.

"[And] we can't have a Sapref that comes back at 180 000 bbl/day. Sapref must come back at 400 000 bbl/day or more," he averred.

In addition, Maqubela indicated that government was aiming to pursue the investment with a national oil company from within the region.

"What would give us comfort is if . . . Sonangol [of Angola] can be part of rebuilding Sapref, or Botswana Oil," he added.

In his presentation, Maqubela indicated that Angola had already emerged as a significant supplier of crude to South Africa.

Lawmakers were also informed that work was under way on a Petroleum Sector Masterplan, which would be completed in the coming financial year.

The trading arm of private energy company NOA is gearing up to supply wheeled renewable electricity to multiple customers in South Africa following the National Energy Regulator of South Africa's (Nersa's) recent approval of its trading licence.

NOA Group CEO Karel Cornelissen says the licence enables NOA Trading to aggregate energy from the company's own renewables generators and other independent power producers and supply it to Eskom- or municipal-connected customers across the country.

"Unlike embedded generation and physical bilateral agreements, this approach offers far greater flexibility by allowing customers access to a mix of utility scale solar PV, wind and battery storage from multiple generation facilities, without the complexity of contracting with multiple generators or requiring offtakers to justify a generation facility dedicated to their own consumption," he explains.

NOA Trading has already entered into long-term generator power purchase agreements with two large wind projects of 140 MW and 94.5 MW apiece, one of which is owned by NOA and the other by a third-party.

Both projects, one in the Western Cape and the other in the Eastern Cape, are under construction, having achieved financial close.

NOA tells Engineering News that it has also entered into multiple energy supply agreements, including disclosed agreements with Old Mutual Properties, Netcare, Manganese Mining Company, and Tronox. Agreements are also in place with another listed real estate investment trust, a data centre customer and another smelter.

"In total NOA's current offtake portfolio exceeds 1 300 GWh per annum, on flexible energy supply agreements ranging in tenor from one to 25 years."

NOA reports that it has the necessary wheeling agreements to begin trading, but says it is continuing to work with Eskom, its customers and Nersa to update the various agreements and registrations to comply with the latest wheeling frameworks and regulatory requirements.

It was not immediately clear whether the licence, which was awarded at the end of January following public hearings last year, will be legally contested by Eskom Distribution, which is seeking a legal review of the trading licences granted by Nersa last year to CBI Electric Apollo, Discovery Green, Green Electron Market and GreenCo Power Services.

The State-owned company has objected to NOA's licence on the same grounds advanced in relation to the other traders, which is that the traders are cherry picking its industrial customers.

NOA is not aware of Eskom having formally commenced any legal proceedings, however.

Engineering News did not receive an immediate reply to questions posed to Eskom on the matter.

Cornelissen argues that NOA Trading's model will help maximise South Africa's renewables generation potential, improve energy security, and meet a growing requirement among companies to decarbonise their operations.

"NOA is extremely excited to play a meaningful role in the transition of South Africa's energy supply sector and contributing to commercial and industrial customers achieving their cost saving and decarbonisation goals, ensuring South African businesses remain globally competitive," he added.

The International Energy Agency (IEA) anticipates global electricity consumption will increase at the fastest pace in years over 2025 to 2027, fuelled by growing industrial production, rising use of air conditioning, accelerating electrification and the expansion of data centres.

Global electricity demand increased by 2.5% in 2023, 4.3% in 2024 and will likely grow by another 4% a year from 2025 to 2027.

The IEA expects global electricity consumption to rise by an unprecedented 3 500 TWh over the next three years, with emerging economies expected to account for 85% of electricity consumption growth through to 2027.

While the electricity consumption of advanced economies as a whole remained almost unchanged in 2024 compared with 2021, these economies are expected to account for 15% of global demand growth over the 2025 to 2027 period, bucking the trend of flat electricity consumption growth over the past 15 years.

In China's case, more than half of global electricity demand growth in 2024 came from China, where it grew by 7% in 2024. The IEA expects electricity demand in China to increase on average by 6% every year to 2027.

Electrification is progressing rapidly in China, where the share of electricity in final energy consumption (28%) is much higher than in the US at 22% or the European Union at 21%. China's electricity consumption has been growing faster than its economy since 2020, which shows the speed at which electrification across all sectors is taking place.

India, Southeast Asian countries and other emerging markets are also expected to record strong demand growth, supported by economic expansion and rising air conditioner ownership.

ENERGY SOURCES

The IEA expects record-high electricity generation from renewables and nuclear to meet all the additional global demand over the next three years.

Renewable energy such as solar, wind and hydropower are set to meet about 95% of electricity demand growth in the forecast period, providing more than one-third of total electricity generation globally and overtaking coal.

In China, rapid expansion of renewables is expected to meet about 90% of new electricity demand, though weather-related events and unexpected electricity consumption changes can affect this trend in individual years.

The rapid expansion of ever-cheaper solar PV is expected to account for almost half of global electricity demand growth to 2027, up from 40% in 2024.

Globally, solar PV generation hit the 2 000 TWh mark in 2024, accounting for 7% of global electricity generation, compared with 5% in 2023.

Over the next three years, the IEA says, solar PV will likely generate an additional 600 TWh a year.

In turn, nuclear power generation will also reach a new high in 2025, the IEA states, on the back of French nuclear power output recovery, restarts in Japan and new reactors entering operation in China, India, Korea and other countries.

RISING RISK

The new era of electricity has heightened the need for secure and resilient power systems. As more electricity supply systems have become weather-dependent, ensuring reliability is imperative.

The IEA finds that extreme weather owing to winter storms or intense heatwaves, especially when compounded with impacts on the supply side such as droughts, fuel supply disruptions or power plant outages, can put significant strain on power systems.

The agency says the world experienced widespread power outages owing to weather-related events in 2024, including a massive winter storm in the US having left more than 800 000 residential and commercial clients in 12 States without power across the eastern half of the US.

Additionally, Hurricane Beryl left nearly three-million customers without power in Texas on July 8, 2024.

In Australia, a storm resulted in the collapse of six transmission towers in Victoria on February 13 last year year, leading to 2.7 GW of generation being disconnected from the grid. More than 530 000 customers were left without power in this instance.

Ecuador ...

Engineering News editor Terence Creamer discusses this week's State of the Nation Address debate, which was heavily influenced by an executive order signed by US President Donald Trump; President Cyril Ramaphosa's response; what this could mean for South Africa's Government of National Unity and for economic growth; and what South Africa can do to improve its prospects given Washington’s hostility.

President Cyril Ramaphosa insists that South Africans know the pain of forced removals and will, thus, never again allow land to be confiscated - a position that he said was enshrined in the Constitution's prohibition against the arbitrary deprivation of property.

Replying after two days of debate on his State of the Nation Address (SoNA), which was dominated by President Donald Trump's executive order halting aid to South Africa on the unproved basis that the country was confiscating land from white farmers, Ramaphosa said South Africans had "toiled long and hard to build a nation united in its diversity".

"And I repeat, we will not be bullied from our intent to work together," he added, with reference to his SoNA speech - one made against the backdrop of a threatened withdrawal of American aid, which Trump formalised days later in an order titled 'Addressing Egregious Actions of the Republic of South Africa'.

Insisting that South African should "not allow others to define us or to divide us", the President also reflected on the country's history of force removals under apartheid, as well as the poverty and depravation experienced by black South Africans as a result of the Natives Land Act of 1913.

Again labelling the land question as South Africa's "original sin", he defended ongoing efforts to redress the country's apartheid legacy, which he said was necessary for building "a nation in which all people enjoy equal worth and equal opportunity".

Land redistribution, however, would be pursued within the framework of the Constitution, which stipulated that "just and equitable compensation be paid in the event of expropriation for a public purpose or in the public interest".

No reference was made to the newly enacted Expropriation Act's provision for "nil compensation" in certain circumstances, nor a recent move by the Democratic Alliance (DA), which is one of ten parties participating in the Government of National Unity (GNU) that Ramaphosa leads, to challenge the Act in the High Court.

In his speech during the debate, DA leader John Steenhuisen called for the Expropriation Act to be amended, while also calling on the country to unite in the face of a "new threat" of possible US tariffs and even sanctions.

Ramaphosa, meanwhile, expressed confidence in the ability of the GNU to navigate the "different political and ideological perspectives" of participating parties, stating that "ways of mediating our differences" were being found in the interests of stability and economic growth.

However, he also said that the Constitution made it clear that a sitting President must assent to a Bill passed by Parliament, unless that President had reservations about its constitutionality.

"The Constitution does not permit that the act of assent by the President be subject to negotiation or to the terms of an agreement between parties."

South Africa, he added, should also strive for a "common message" on the type of society it was seeking to build, "particularly now when we are facing harsh global winds".

"This is not the time for any of us to rush off to foreign lands to lay complaints about issues that we can solve ourselves in our country," he added.

This, an indirect reference both to Trump's offer to resettle Afrikaner "refugees" in the US and plans by AfriForum to send its own separate delegation to the US in response to the order.

"We need South African solutions to South African problems," he said.

Electricity and Energy Minister Dr Kgosientsho Ramokgopa says the private sector participation framework being developed for the transmission sector will be unveiled within five weeks, while announcing that it will also offer a template for other infrastructure-focused State-owned enterprises (SoEs) seeking to crowd-in private investors.

In his contribution to the debate on the 2025 State of the Nation Address (SoNA), Ramokgopa emphasised the central role of infrastructure in raising South Africa's growth to the 3% target outlined by President Cyril Ramaphosa in his earlier speech.

With gross fixed capital formation languishing at 14% of GDP, well below the National Development Plan's 30% target, and with South Africa's deep fiscal constraints, the Minister said that private-sector investment would be crucial for raising yearly infrastructure investment to the plan's R2.1-trillion aspiration.

The R940-billion in public infrastructure investment referred to by Ramaphosa in the SoNA, Ramokgopa said, was what government departments and SoEs were planning to invest over the coming three years.

"We need to design bespoke financing instruments that will tap into the liquidity of the private sector, [while] ensuring you provide sufficient guardrails to protect the investments of the private sector," he argued, adding that infrastructure needed to be an asset class that could crowd-in private investment.

He made specific reference to the work under way to begin procuring independent transmission projects (ITPs) to help accelerate the roll-out of the National Transmission Company South Africa's Transmission Development Plan.

"On the electricity front, we make the point that the State's sovereign balance sheet is weak, the Eskom balance sheet has been eroded, [so] we need to design an instrument that helps us to ensure that there is accelerated private-sector investment.

"We need to modernise and grow the transmission grid by over 14 000 km in the next ten years [and] we need about R450-billion.

"We have designed an instrument, President, [and] we will be introducing that instrument to the country in the next five weeks.

"We are going to use that instrument as a template; we will take it to Transnet, we will take it to all SoEs so that we are able to drive this infrastructure going forward," he said in the closing speech of the SoNA debate, ahead of Ramaphosa's official reply to the debate.

The first pilot procurement of ITPs is expected to be launched towards the end of 2025, with the National Treasury and World Bank currently finalising a credit guarantee instrument to de-risk grid projects in the absence of government guarantees.

Regulations for ITPs are also being prepared for release for public comment, alongside a Ministerial determination that will be required to trigger the inaugural procurement programme. The initial bid window will be overseen by the Independent Power Producer Office, which has been responsible for the public procurement of new private generation since 2011.

Meanwhile, Ramokgopa said that specific freight rail corridors were being prioritised for private-sector participation as part of a goal of increasing railed volume from 149-million tons last year to 250-million tons by 2030.

Even in the vital water sector, Ramokgopa argued that there were both social and commercial aspects that could facilitate private-sector involvement, pointing to the Vaal Gamagara Scheme and the Lebalelo Water Users Association as examples of ways to combine public and private investment to shore up supply.