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Telecommunications giant Vodacom and South African State-owned power utility Eskom on Wednesday signed a first-of-its-kind virtual wheeling agreement that moves the JSE-listed firm closer to its goal of sourcing 100% of its electricity demand from renewable energy sources by 2025 while adding capacity to the strained national grid.

The agreement, co-developed by the parties to help accelerate efforts to solve the country's energy crisis, enables Vodacom to secure independent power producers (IPPs) under the same terms and conditions which underpin its agreement with Eskom.

"Our virtual wheeling solution will enable South Africa's private sector to participate in resolving the energy crisis which continues to impact the country's economy," says Vodacom Group CEO Shameel Joosub.

The unique agreement followed the conclusion of a successful pilot phase and rigorous testing last year.

The newly co-developed virtual wheeling solution is now accessible to the public and private sector on a larger scale, providing a blueprint for other participants, with the potential to be fast-tracked, depending on the available licensed capacity of IPPs.

"With the agreement now signed, Vodacom will be able to add more capacity to the grid without impacting Eskom's balance sheet, while helping to reduce its greenhouse gas emissions," Joosub comments.

Vodacom South Africa's unique operating situation and the complexities associated with having over 15 000 distributed low-voltage sites across South Africa linked to 168 municipalities previously prevented the company from accessing large scale renewable energy from IPPs.

"Traditional wheeling typically involves a one-to-one relationship between an IPP and a buyer using the national grid to convey their energy. While the concept of traditional wheeling is fairly common practice globally, it has certain limitations for companies with complex operating environments.

"Converting our existing fossil-fuel based electricity supplies directly with on-site renewables is limited by technical constraints that are difficult to scale. We explored a traditional wheeling option, but this had numerous limitations, which we believed could be overcome by reimagining the problem and using technology to solve the issue," he explains, highlighting that the virtual wheeling solution addresses these challenges.

Vodacom South Africa has spent more than R4-billion on backup power solutions, and R300-million in the past financial year alone, on operational costs such as diesel for generators, a significant financial burden.

Vodacom approached Eskom with the ambitions to remove complexity; to use technology to solve legacy limitations; to access renewable energy with a sound business case; and encouraging private participation to help solve the energy crisis.

"Think of it like purchasing renewable energy certificates," adds Vodacom South Africa CEO Sitho Mdlalose.

"Most importantly, it also has the added benefit of positively impacting the supply deficit currently being experienced and nurturing the growth of renewable energy production in South Africa.

He estimates that the initial phase will move about 30% of Vodacom South Africa's power demand onto renewable sources, with Vodacom exploring and developing additional solutions to make up the difference.

"The future of virtual wheeling is looking bright, with a number of parties from across industries already showing commercial interest in the solution enabled by Vodacom subsidiary Mezzanine."

The Department of Public Enterprises (DPE) has confirmed that transitional arrangements are being put in place to ensure that the National Transmission Company of South Africa (NTCSA) will be able to play the role of a transmission system and market operator ahead of legislative changes catering for that role.

NTCSA is currently being established as a wholly owned subsidiary of Eskom Holdings, and acting DPE director-general Jacky Molisane told lawmakers in a briefing that the appointment of an independent board for the entity was under way, with a list of directors having been received by the department.

Acting deputy director-general Donald Nkadimeng added that NTCSA would receive a transmission licence from the National Energy Regulator of South Africa (Nersa), but that transitional arrangements would enable it to play the role of system operator and buyer ahead of the enactment of the Electricity Regulation Amendment (ERA) Bill.

Following delays, the ERA Bill was eventually formally introduced to Parliament on August 23, and it is understood that the Portfolio Committee on Mineral Resources and Energy will consider a programme for its passage soon.

The proposed legislation has been held up as a priority by both government and organised business, with its enactment seen as crucial for creating the framework for a sustainable electricity supply industry, which has been afflicted by loadshedding for some 15 years.

There are nevertheless concerns that there is too little time left ahead of the 2024 elections for both houses of Parliament to consider and approve the legislation.

The designation of the NTCSA as a buyer of energy from independent power producers (IPPs) was at an advanced stage, lawmakers were told, with an application for its designation as a buyer having been approved by the Department of Mineral Resources and Energy (DMRE) and being considered by Nersa.

Nkadimeng acknowledged that the operationalisation of the NTCSA was lagging the timeframe envisaged when the department first published a roadmap for Eskom's restructuring in 2019, but said progress was dependent on several processes, some of which were outside of the utility's control.

The transfer of assets, people and systems started in September 2023, while operational and financial separation had been implemented.

Eskom's official plan was for NTCSA to commence trading by November 2023, but the timeline was dependent on the approval of the trading licence from Nersa and obtaining lender consent.

Nersa had, to date, approved only a licence for NTCSA to operate the transmission system, but full operationalisation depended on it also securing trading and import/export licences, which had not yet been approved.

Following a consultation phase, lenders were expected to provide their consent by the end of August, but Nkadimeng indicated that the deadline was unlikely to be met.

In a recent briefing, Eskom indicated that the NTCSA was expected to start trading by the first quarter of its next financial year, which began on April 1. The utility also indicated that the entity would provide non-discriminatory grid access to generators and manage the energy market.

Work was also under way to prepare the way with the National Treasury to enable NTCSA to raise capital for its expansion projects. Under a R254-billion debt-relief package, there is currently a moratorium in place on Eskom raising any new debt.

Despite the delays, the DPE stressed that significant progress had been made and indicated that the NTCSA's operationalisation was one of four current departmental priorities. The other priorities were identified as being the finalisation of a National State-owned Company Bill and a holding company for State-owned companies, concluding a new roadmap for Transnet and securing a strategic equity partner for South African Airways.

Besides the licences and lender consent, the key next steps for the legal separation of NTCSA were listed as:

The appointment of the perman...

Amid renewed calls for a functional online mining cadastre to help turn around South Africa's declining exploration performance, the Department of Mineral Resources and Energy (DMRE) reports that a preferred bidder has been identified and the proposed solution is currently being audited by the State Information Technology Agency (SITA).

Addressing the inaugural African Critical Minerals Summit in Sandton, Minerals Council president Nolitha Fakude underlined the importance of the cadastre in supporting the exploration required for South Africa to play a role in the supply of those minerals that were increasingly in demand for both the energy transition and a range of high-tech applications.

Noting that South Africa's share of global exploration spend had fallen from about 5% in 2002 to less than a percent, Fakude called for the underlying causes of the decline to be addressed.

It highlighted the importance of a "functional, transparent, off-the-shelf" cadastral solution that was loaded with geological maps and could be deployed in such a way as to reduce human intervention and possible corruption, she added.

"South Africa is lagging the world in the digital management of its mineral resources, and it is urgent that we have a proven system as soon as possible."

Speaking on the side-lines of the summit, director-general Jacob Mbele confirmed that the department had selected a preferred bidder and that the SITA audit could be completed by late September or by early October.

While no capital investment value was provided, the SITA audit implies that it is material, as such audits are triggered only for larger information technology investments by government departments.

Mbele said the roll-out of the cadastre would follow the signing of the contract but said the nature and timing of the roll-out was still to be finalised.

In his address to the summit, Mantashe reported that South Africa was at an advanced stage of developing a critical minerals strategy, which would seek to help the country industrialise and support its just energy transition to a low-carbon future.

Nevertheless, he argued that South Africa and Africa needed to develop their own definition of critical minerals rather than relying on definitions that had been developed elsewhere and even suggested that coal should be included on Africa's list of critical minerals given its importance to energy security.

Mantashe also urged Africa to develop a united critical minerals strategy "to ensure that it does not repeat the mistakes of the past, as it was done with the pit-to-port approach to mining traditional minerals".

"We hope and believe this platform will take us a step closer to a continental agreement and recommit to the African Mining Vision of a 'transparent, equitable and optimal exploitation of mineral resources to underpin broad-based sustainable growth and socio-economic development'."

Mineral Resources and Energy Minister Gwede Mantashe is aiming to seek Cabinet approval to publish an updated Integrated Resource Plan (IRP) for public consultation during an upcoming Cabinet meeting in September.

Speaking on the sidelines of a critical minerals summit in Sandton, Mantashe indicated that he would be presenting the document, which he dubbed 'IRP 2023', at a Cabinet committee meeting during the first week of September with the aim of making a presentation to Cabinet itself at the subsequent meeting of the executive.

Cabinet, which next meets on August 30, typically convenes on Wednesdays on a fortnightly cycle.

Given the importance he is attaching to the update, the Minister confirmed that he had decided to remain in South Africa for the Cabinet committee meeting rather than to travel to Australia for the Africa Down Under conference, which is scheduled to take place from September 6 to 8.

"[The IRP presentation] has deprived me from going to Australia, to Africa Down Under, because I thought it was a very important item [and] I must go myself to the Cabinet committee," Mantashe told reporters.

He also confirmed that he was "obliged" to take the updated IRP through a public consultation phase once he had received approval from Cabinet to do so.

However, he was adamant that the update should be finalised this year, a timeline reinforced by his continual reference to the document as IRP 2023.

The document would be broken into two phases, with the first phase outlining electricity generation additions to 2030 and the second phase covering the period beyond 2030.

Given Mantashe's vocal support for gas, nuclear and what he calls clean-coal technology there is an expectation that the three technologies could receive greater prominence in the draft update than was the case with the current IRP 2019, which was Gazetted in late 2019.

The extension of the timeframe beyond 2030 is also likely to be supportive of a new nuclear allocation, considering the protracted lead times involved in approving, financing and building new reactors.

The document is likely to be heavily contested, particularly given ongoing research indicating that South Africa's least-cost future electricity supply will arise from a combination of solar, wind and complimentary dispatchable technologies, such as batteries, pumped hydro and some gas or diesel, together with grid-balancing solutions.

The recent minibus taxi strike in Cape Town cost the Western Cape economy an estimated R5-billion, while it also caused at least R18-million in damages in the City of Cape Town, this according to the provincial government.

The strike by the South African National Taxi Council started on August 3, and ended on August 10. Five people were killed during the strike, and 120 arrested for looting and damage to property.

The strike revolved, among other issues, around a wave of taxi impoundments by City of Cape Town, such as for vehicles ferrying commuters without operating permits.

But what is an operating permit and why do taxis need one? How many people make use of taxis in the city? Also, what does Cape Town see as the future for its public transport system?

City of Cape Town Urban Mobility MMC Rob Quintas answers questions on this and other issues.

Engineering News Online: What is a minibus taxi operating licence, and why does a minibus taxis need one?

MMC Rob Quintas: The National Land Transport Act (NLTA) requires all public transport service providers to be in possession of a valid operating licence.

The NLTA applies to all public transport service providers across South Africa.

Thus, if you transport commuters for any type of remuneration, you are required to have a valid operating licence.

Is a minibus taxi operating without an operating licence an illegal taxi?

Yes, any public transport vehicle operating without an operating licence does so illegally.

If minibus taxi owners do not have operating licences, what is their remedy? Will the minibus taxi vehicle remain impounded indefinitely?

The vehicle will be released from the pound once the fine, as well as the impoundment release fee, have been paid.

How many minibus taxis are operating in Cape Town without operating licences, as an estimate?

The City of Cape Town does not issue operating licences and is not the custodian of the operating licence information.

The Provincial Regulatory Entity receives and considers operating licence applications, and, if the operating licence is granted, issues the operating licence to the operator.

What percentage of commuters travel by taxi in Cape Town? And the other modes?

The city's recently approved Comprehensive Integrated Transport Plan provides the following information about the state of transport in Cape Town:

Two per cent of commuters use passenger rail (this represents a decline of more than 95% from 2012 to 2022); 22% of commuters use minibus-taxi services; 9% of commuters use Golden Arrow Bus Services (GABS), MyCiTi and Sibanye; and 58% of commuters use private transport. Around 10% of people walk.

What does the city see as the future of the minibus taxi industry in Cape Town within the larger public transport system?

The minibus-taxi industry is a critical stakeholder and service provider. That said, all of the public transport services and modes (bus, rail, minibus taxi, metered taxi) should operate in support of each other in the interest of bringing down the cost and time of commuting.

Thus, there is a role and place for the minibus-taxi industry, both the MyCiTi bus service and GABS, rail and metered-taxi services.

Cape Town is experiencing increased congestion, created by growing job opportunities within the Western Cape, as well as semigration to suburbs and informal settlements. This means new people are continuously arriving with vehicles of their own, or seeking access to public transport. What is the way forward in terms of public transport? Is there any mode that can get people out of their cars? Gauteng has the Gautrain, for example.

The passenger rail service in Cape Town is being managed by the Passenger Rail Agency of South Africa (PRASA), thus, national government.

Unfortunately, passenger rail in Cape Town has imploded under PRASA's watch, which means the city has seen a huge increase in the number of people now making use of road-based transport, be it in private vehicles, minibus taxis or buses.

As such,...

A new 'Freight Logistics Roadmap' is currently undergoing an internal government consultative process for publication before the end of the year, the latest Operation Vulindlela progress update confirms.

"The roadmap will incorporate proposals to resolve the immediate operational challenges while developing interventions to fundamentally restructure the logistics sector to support inclusive economic growth," the update states.

The roadmap is being developed by government and Transnet and a final draft is expected to be concluded in the third quarter of 2023.

Implementation of the roadmap will be overseen by the National Logistics Crisis Committee (NLCC), established by President Cyril Ramaphosa earlier this year to address problems afflicting the sector, including a steep deterioration in rail services and ongoing port inefficiencies.

Operation Vulindlela is overseeing several proposed reforms in the sector, including ones aimed at improving the efficiency of the country's ports and facilitating third-party access to the freight rail network.

The update acknowledges that reforms in the sector are still facing significant implementation challenges, which require interventions to overcome. However, it does highlight the completion of the selection of an international terminal operator partner for the Durban Pier 2 container terminal, which it argues will crowd in private investment and skills, as well as the establishment of a multistakeholder task team to address congestion at the Durban Port.

The report also indicates that the suite of reforms will be expanded in line with the finalisation of the roadmap and the creation of the NLCC, which was formally instituted in July and comprises representatives from the Presidency, Transnet, the National Treasury and the departments of Transport, Public Enterprises, and Trade, Industry and Competition.

A joint strategic operations committee is also being established between the NLCC and the private sector, with organised business having identified the logistics crisis as one of three areas in which it will provide direct support to government. Similar joint action is also under way in the areas of electricity and crime and corruption.

The NLCC's objectives have been set as improving the operational performance of freight rail and ports, restructuring Transnet to ensure its future sustainability, and implementing reforms to modernise the freight transport system and restore its efficiency and competitiveness.

The NLCC includes eight workstreams focusing on the following matters:

Workstream 1, which is pursuing improvements to the operational performance of the multimodal and bulk freight rail network and port system;

Workstream 2, which is focussing on improving road transport operations and border transit;

Workstream 3, which is pursuing plans to restore passenger rail services, with a devolution strategy targeted for finalisation by March 2024;

Workstream 4, which is assessing the structural reform of the freight logistics system;

Workstream 5, which is focusing on procurement;

Workstream 6, which is assessing financing;

Workstream 7, which is focusing on security; and

Workstream 8, which is prioritising communications.

The urgency of sectoral reform is also reinforced in the update, which describes Transnet's decline as posing a material risk to the country's economic prospects, with rail's underperformance having resulted in losses equivalent to 5.3% of gross domestic product in 2021

"South Africa continues to lose rail market share, with Transnet Freight Rail (TFR) volumes falling short of targeted volumes - where our rail system moves less than 40% of rail-friendly freight tonne-kilometres," the updates states, adding that port performance is poor by international benchmarks.

"Actions to improve efficiencies, encourage private participation and enable increased competition and investment are required to arrest the sector's decline."

During the coming quarter, Operation Vulindlela...

State-owned utility Eskom has confirmed that it is prioritising 47 grid-related projects within its larger R210-billion Transmission Development Plan that it believes could collectively add 37 GW of connection capacity over the coming few years.

It is also close to finalising the approach it will be taking to the issue of curtailment as it moves to immediately unlock scarce grid capacity in high-potential renewables regions ahead of its grid investment roll-out.

Speaking to editors on behalf of the transmission division this week, Eskom's Prince Moyo reported that the National Energy Crisis Committee (Necom) was actively monitoring progress on the priority projects, most of which involved transformer-related investments.

Necom had also established a specific workstream to address grid-related constraints to the integration of new generation capacity.

Eskom would also publish an updated Generation Connection Capacity Assessment (GCCA) ahead of the next renewables bid window to provide investors with visibility of the grid capacity and connection points, as well as to avoid the grid-related problems that arose during Bid Window Six.

During the procurement round not one of the wind projects that bid for a 3 200-MW allocation progressed to financial close, owing to a claim that the grid capacity on which the projects were based had been absorbed by private projects.

The release of the GCCA could be accompanied by Eskom's new curtailment framework that, if introduced, would allow for additional generation capacity to be built at points on the grid that had previously been shown as fully committed.

Moyo reported that Eskom had studied the approach taken to curtailment in various other jurisdictions - including Europe, where it is standard operation procedure - and was currently finalising its approach.

The framework, including how the costs would be allocated, would also require the approval of the National Energy Regulator of South Africa (Nersa) and an outline by the Independent Power Producer Office, which procures generation on behalf of government, as to how it would be implemented.

Curtailment involves the reduction of the output from renewables plants in response to system-security needs or constraints and is widely employed globally to release immediate grid capacity.

Engineering News understands that a preliminary analysis has indicated that if Eskom accepts curtailment of no more than 10%, the capacity of a grid-constrained province such as the Western Cape to host additional renewables generators could be almost doubled, and that as much as 4 GW of additional capacity could be connected immediately.

Moyo indicated that Eskom was likely to initially limit curtailment to "single-digit percentages".

Separately, an assessment was under way regarding whether those independent power producers with approved grid connection budget quotes were able to proceed with their projects, or whether the budget quotes should be revoked and reallocated to new projects with superior prospects.

Moyo said the benefits of such an approach would be to ensure that grid capacity was not being "artificially used up by those who applied first but are not utilising their allocation".

Despite a legal challenge, Eskom was also continuing to implement its Interim Grid Capacity Allocation Rules, which are based on a "first-ready, first-served" principle rather than the "first-come, first-served" approach that prevailed previously.

The rules, which could be refined further, will be submitted to Nersa for approval and codification.

Work was also under way to find a solution to the fact that bidders to the public procurement programmes were unable to secure budget quotes prior to being named as preferred bidders, leaving the grid connections on which their projects were premised vulnerable to developers of private projects.

This solution is also expected to be announced ahead of the next renewables bid window.

The Port of Maputo is reaping the results of an $800-million investment that has taken the port from handling five-million tons overall in 2007, to a record 27-million tons last year, says Grindrod CEO Xolani Mbambo.

"In the recent five-year period we have invested $200-million."

Mbambo's comments come as the Maputo port again reported a volume increase of 30% in the six months to end-June, this while South Africa's rail and port corridors failed to meet demand.

Commenting on Grindrod's financial results for the half-year period, Mbambo emphasised that it took patience as a private sector investor, and trust from the Mozambican government in the private sector, for private-sector participation projects such as that at the Port of Maputo to yield results.

Ports, terminals and logistics operator Grindrod is a shareholder in the Maputo Port Development Company, along with global logistics specialist DP World, the State-owned rail operator, CFM, and other local partners.

Mbambo noted that there was growing appetite in Africa to invite private players to participate in traditionally State-owned logistics assets, and particular so in East Africa.

He cited the example of the recently awarded Lobito corridor concession (not to Grindrod), running from the Democratic Republic of the Congo to Angola.

"The opportunities are there, in general."

Mbambo regarded East Africa, which was currently recording good economic growth, as an "exciting region" for the group.

Mbambo acknowledged that Grindrod, along with a European partner, had been included in the top-ten list for the recent 25-year Durban Container Terminal concession, which was ultimately awarded to International Container Terminal Services Inc (ICTSI) in July.

However, he said that Grindrod's European partner "could no longer stomach the risk they perceived" associated with the South African project, despite Grindrod's insistence that it was familiar with the environment and the associated challenges.

Grindrod on Friday reported a 32% increase in revenue from core operations for the six months under review, compared with the same period last year, to R3.8-billion.

Revenue from noncore operations, which were proving more challenging to dispose of than anticipated, stood at R7.2-billion.

Trading profit from core operations was up 16%, to R1.1-billion.

Grindrod had the necessary "war chest to chase opportunities", noted Mbambo, expressing the hope that those opportunities would come "as quickly as possible", before Grindrod was accused of not putting its balance sheet to good use.

He said the company had a R1.9-billion project pipeline, running from 2023 to 2025 and ranging over a number of commodities, including expanding its magnetite-handling capacity.

Grindrod also aimed to diversify from one of its main revenue earners - coal - to more environment-friendly commodities, such as lithium and graphite.

"We are working on a medium-term project to unlock graphite," said Mbambo.

The temporary stacks being introduced at the Kusile coal power station, where three previously operational units have been out of service for ten months, have been built and interim CEO Calib Cassim has expressed optimism that the units could be returned to service earlier than previously indicated.

All three units, which have a combined capacity of 2 100 MW, became inoperable after the Unit 1 flue duct collapsed on October 23 due to a build-up of slurry. The collapse also compromised the unit 2 and 3 flue ducts, which share a common chimney with the Unit 1 flue.

In the face of intense loadshedding, Eskom secured environmental authorisation earlier this year to build three temporary flues that bypass Kusile's flue gas desulphurisation plant until March 31, 2025. A decision that is being challenged in the courts.

The solution was proposed by Eskom in an effort to reintroduce the units earlier than would have been the case under a scenario where permanent repairs were implemented.

The temporary repair is expected to cost between R200-million and R250-million and will enable the three units to produce electricity while the permanent repairs are undertaken, albeit at a lower rating of 520 MW apiece rather than their 720 MW nameplates.

The cost of the permanent repair has not yet been finalised.

It was communicated previously that the first unit was likely to return towards the end of November, followed by the second unit in mid-December and the third on Christmas eve.

However, Cassim told editors on Thursday that the Kusile temporary stacks had been built and that it was, thus, possible that two of the units could begin producing by mid-November.

He indicated Unit 3 would be reintroduced first and was likely to be followed in quick succession by Unit 1, with the reintroduction of Unit 2 to take longer, owing to the configuration of the temporary solution.

In addition, Unit 5 could be synchronised to the grid in late November, which would add additional production from the power station, which currently only had Unit 4 operating. Although Unit 5 would operate only intermittently as tests were carried out ahead of full commercial operation.

Updates were also provided on the other major long-term outages and refurbishments that, together with Kusile, collectively involved 8 652 MW, including:

A repair to Medupi Unit 4, which Eskom expects to bring into operation in July 2024, using a second-hand stator;

The return of Koeberg Unit 1 on November 3, following a major outage slip during an extended outage to prepare the unit for a further 20 years of operation. Unit 1 is due to be returned ahead of a Unit 2 outage, which will start on November 7;

The replacement of Kriel cooling tower 4 by March 2024;

The completion of Majuba Unit 3's re-bagging by March 2024; and

The cooling tower replacement at Tutuka by October 2024.

Chairperson Mpho Makwana said the initiatives formed part of the 'Generation Operational Recovery Plan' approved by the board earlier in the year following stakeholder consultations and which aimed to recover Eskom's energy availability factor (EAF) to 70% by March 31, 2025.

"While there is a gradual improvement in some areas of Generation, our recovery efforts have not fully yielded the desired outcomes, owing to the extensive work that needs to be done against a vulnerable and unreliable power system," Makwana said, while describing the EAF goal as a stretch target.

Eskom failed to meet the 60% EAF target set for the end of March 2023, reporting an EAF of 56%.

Engineering News editor Terence Creamer speaks about the latest developments at Sasol's Secunda operation, including the R36-billion impairment Sasol has taken, what this means for the Secunda operation, the air quality emissions challenge Sasol is facing and what the developments at Sasol say about South Africa and the country's approach to the energy transition.