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A total of 17 bids have been received in response to the Department of Mineral Resources and Energy's (DMRE's) inaugural public procurement for battery energy storage system (BESS) projects.

The BESS request for proposals was launched on March 7 with an initial bid submission deadline of July 5, which was subsequently postponed to August 2 as a result of delays to the issuance of cost estimate letters for grid connections.

The DMRE is seeking to procure BESS projects with a combined capacity of 513 MW and a minimum of four hours of storage, or at least 2 052 MWh.

The batteries are set to be installed in close proximity to five substation sites in the Northern Cape, which have been specified by Eskom.

The DMRE has published a list of the 17 projects, along with the names of the project companies, which include:

Sol Invictus 6 BESS, bid by Sol Invictus 6 (Pty) Ltd;

Hyperion 2 BESS, bid by Cyraguard (Pty) Ltd;

New Hope 2 BESS, bid by Lacerta Energy (Pty) Ltd;

Impala BESS, bid by Impala Solar Plant (RF) (Pty) Ltd;

Zuurwater BESS, bid by Aggeneis PV2 (Pty) Ltd;

Mogobe BESS, bid by AEP Mogobe (Pty) Ltd;

Kenhardt BESS, submitted by a consortium to be incorporated;

ACWA BESS 1, bid by ACWA BESS 1;

Oasis Mookobi, bid by EDF Development South Africa (Pty) Ltd;

Oasis Aggeneis, bid by EDF Development South Africa (Pty) Ltd;

Oasis Nieuwehoop, bid by EDF Development South Africa (Pty) Ltd;

Sonbesie BESS, bid by Sonbesie Power Plant (RF) (Pty) Ltd;

Boitshoko BESS; bid by Boitshoko Solar Power Plant (RF) (Pty) Ltd;

Red Sands BESS, bid by AGV Projects (Pty) Ltd;

Tulip, bid by Veld PV South (Pty) Ltd;

Protea, bid by Protea Solar Power Plant (RF) (Pty) Ltd; and

Neo BESS, bid by the Neo BESS Bidder Consortium.

The DMRE did not provide further details regarding the identities of the consortium members behind each bid, neither did they indicate whether the bids were evenly spread across the five selected sites.

The substation sites selected by Eskom have been named previously as being Aggeneis, Ferrum, Garona, Mookodi, and Nieuwehoop.

The department also did not comment on the tariffs bid, saying only that the information could be provided only once the evaluation of the bids was completed.

"It is envisaged that preferred bidders will be announced within the next two months," the DMRE told Engineering News in response to questions.

South Africa’s electricity reforms are again being prioritised amid uneven progress. Engineering News editor Terence Creamer unpacks the developments.

To unlock the estimated R235-billion in investment required to strengthen and expand the grid in a way that positions it to connect the 53 GW of new generation capacity that will be required by the early 2030s, a new consultation paper has been published making the case for South Africa to consider alternative funding models, including off-balance sheet financing.

Titled 'Better Finance, Better Grid', the paper's lead authors are Professor Mark Swilling and Erica Johnson, of the Centre for Sustainability Transitions (CST) at Stellenbosch University, and it has been published jointly by CST, the Centre for Renewable and Sustainable Energy Studies and the Blended Finance Taskforce, with support from the Open Society Foundation.

Published amid serious transmission infrastructure constraints, particularly in provinces in the south-western regions of the country with potent wind and solar resources, the report also follows on from a call by Electricity Minister Dr Kgosientsho Ramokgopa for grid investment to receive greater investment priority.

Ramokgopa has indicated that the balance sheets of both Eskom and the national fiscus are unlikely to be sufficient to cover the country's future grid investment needs and has reported that a "healthy" debate is currently under way about possible alternative funding models that seek to mobilise private capital and skills while ensuring that the grid itself remains State-owned.

Eskom's current Transmission Development Plan states that more than 14 000 km of new power lines need to be constructed in the next ten years.

To meet the target, the utility says 1 500 km of new lines will have to be built yearly to 2032, up from a current yearly tempo of only 300 km. In addition, some 122 600 MVA of new transformation capacity will have to be introduced, representing 77% of Eskom's current installed base of just over 160 000 MVA.

The utility has indicated that it will be relying more heavily on the engineer, procure and construct, or EPC, contracting model as it seeks to accelerate the pace at which transmission infrastructure is built and has indicated that any other delivery and funding model would require a policy intervention.

The consultation paper states that increasing the grid build rate will be essential to enable further increases in generation capacity after 2030, even though about 17 GW of transmission grid capacity, including 5 GW in areas with the best renewables resources, could be unlocked in the short term through targeted optimisation initiatives.

Achieving such optimisation would involve wind/solar colocation, oversizing the renewables generators relative to the available grid capacity, investing in battery storage and possibly some form of voluntary curtailment, which would increase revenue uncertainty for generators.

The report also concludes that Eskom's current debt burden places constraints on the ability to attract sufficient capital for the transmission grid build out.

Unpacking the report's findings at an event hosted jointly by the Development Bank of Southern Africa and Rand Merchant Bank, CST's Nina Callaghan argued that this financial constraint would persist even after the National Transmission Company of South Africa (NTCSA) was unbundled.

Eskom's debt stands at about R390-billion and the NTCSA's portion of that debt will be reflected in an intra-company loan with Eskom Holdings once the separation becomes effective.

The separation process itself took a step forward at the end of July when the Energy Regulator granted the NTCSA a 25-year transmission facilities licence, with adjudication of the trading and import/export licences, which are required for NTCSA's operationalisation, to follow. Full operationalisation is also dependent, however, on Eskom securing lender consent and the appointment of an independent NTCSA board.

Given these financial constraints, the report argues that financing the transmission infrastructure off-balance sheet could help increase acces...

The Presidency and organised business have called for the passage of the Electricity Regulation Amendment (ERA) Bill to be expedited within the sixth Parliament, following a meeting on August 1 to discuss the progress being made under a previously announced partnership to jointly tackle the country's energy, transport, and crime and corruption crises.

The Bill was eventually tabled in the National Assembly on July 20 following its approval by Cabinet on March 29 and no timetable has yet been set for its passage, with some expressing doubt that there is sufficient time for lawmakers to consider the Bill before the 2024 elections.

However, in a joint statement, the Presidency and organised business identified the passage of the Bill as one of several "critical next steps" required to restore confidence.

In a joint statement, it was argued that the ERA Bill was crucial to ending loadshedding, expediting energy development, expanding transmission infrastructure, establishing a competitive electricity market, and attracting investment in the energy sector.

Speaking during a business report back session following the meeting with government, Energy Council of South Africa CEO James Mackay said that the appeal was for Parliament to treat the ERA as "emergency" legislation, as the Bill was "fundamental to unlocking a lot of the reform confidence and direction that will enable a lot bigger investment".

However, Democratic Alliance shadow energy minister Kevin Mileham raised doubts about whether there was sufficient time for the Bill to be processed by both the National Assembly (NA) and the National Council of Provinces (NCOP) before the 2024 elections, which could take place as early as May.

While expressing support for the passage of the Bill, which he described as urgent and overdue, Mileham told Engineering News that the NA would need to complete both its public participation and its own deliberations before Parliament breaks in either late November or early December. This, to give the NCOP sufficient time, from the reopening of Parliament in February till the general elections, to undertake its own separate processes.

He noted that the public participation process alone for the Upstream Petroleum Resources Development, which involved hearings in all nine provinces, took close to eight months and there was still intensive work required during August before the NA could provide its approval, which was required before the NCOP could undertake its own process.

He also noted that the ERA Bill was not yet on the programme of the Portfolio Committee of Mineral Resources and Energy.

"Therefore, I don't see the ERA being passed by the current Parliament," Mileham told Engineering News.

The other electricity-related priorities outlined included:

Completing the establishment of the National Transmission Company of South Africa (NTCSA), a move that is viewed as necessary to create a level playing field for electricity generators and to enable increased investment in transmission infrastructure; and

Fully operationalising the 'One Stop Shop' to fast-track renewable energy projects. This includes ensuring that adequate capacity and systems are in place to facilitate authorisations for energy projects and reduce lead times to construction.

Although the Energy Regulator, the highest decision-making body of the National Energy Regulator of South Africa, approved a 25-year transmission facilities licence for the NTCSA on July 27, it refrained from approving the two other licences required for the operationalisation of the new independent grid company.

Eskom has formally welcomed the decision to approve the licence for the operation of the transmission system, but noted that the NTCSA had also applied for a trading licence and an import/export licence.

"The granting of the requisite operating licences to NTCSA is one of the key dependencies required to enable the operationalisation of the NTCSA," Eskom said in a statement.

The other two dependenc...

Energy and chemicals group Sasol has moved to formally appeal a decision of the National Air Quality Officer (NAQO) to decline its application to have its Secunda boilers regulated using a load-based emission limit for sulphur dioxide (SO2) rather than the prevailing concentration-based emissions limit used for setting Minimum Emission Standards (MES).

The plants are currently operating on the basis of a ten-year postponement, until March 31, 2025, from meeting new plant standards for SO2 emissions, which was granted on February 23, 2015.

The appeal has been lodged with Forestry, Fisheries and the Environment Minister Barbara Creecy following NAQO's rejection in early July of Sasol's "alternative" approach, which the JSE-listed company claims to have made in line with Clause 12A of the MES.

The application was rejected on several grounds, including the fact that the Secunda Operations are located within the Highveld Priority Area, wherein the national ambient air quality standards for SO2 and particulate matter (PM) emissions are frequently exceeded.

Through the appeal process, Sasol states that the Minister is empowered to consider its 12A application afresh.

In practical terms, the company is requesting that it be allowed to reduce its SO2 emissions by reducing the total number of boilers in use at Secunda and thus the load, rather than by reducing the concentration of SO2 produced by each boiler.

The group argues in its appeal that this approach will result in an improvement of ambient air quality within the local airshed over-and-above MES compliance, while ensuring that its operations continue.

The Secunda complex is located in the Mpumalanga province where the majority of Eskom's coal-fired power stations are also located, which has resulted in the air in the area being highly polluted.

Sasol also claims that its proposed 'integrated emission reduction solution' will achieve double the reductions on SO2 emissions than would be the case under the concentration-based limit, while also reducing PM and nitrogen oxides, or NOx, emissions.

The plant's greenhouse-gas emissions, Sasol adds, would also be reduced by 30% by 2030, as the proposal involves "turning down" the steam boilers used to produce coal-based electricity and replacing it with renewable electricity or displacing it through energy efficiency.

Sasol notes that it has procured more than half its 1 200-MW renewable-energy target and that the first renewable electricity is expected to become available in 2025.

The remaining operating boilers will continue to produce the steam required for the production of synthetic fuels and chemicals.

The solution is contingent, however, on the SO2 emissions from the boilers at the steam plants of its Secunda Operations being regulated using a load-based emission limit instead of the concentration limit currently being prescribed in the MES from April 1, 2025 onwards.

In a statement confirming the appeal, Sasol sought to illustrate the difference between the two approaches to limiting SO2 by using the analogy of sugar and caffeine consumption in cups of coffee, whereby the number of cups represented the boilers, the sugar represented SO2 and caffeine represented PM and NOx.

Under the load-based approach the total number of cups of coffee consumed is reduced, lowering both the sugar (SO2) and the caffeine (PM and NOx) intake, whereas under the concentration-based approach only the number of spoons of sugar is reduced and the caffeine intake remains unchanged.

Sasol argues that its proposal does not seek an exemption from regulation, with Sasol energy operations and technology VP Simon Baloyi stating that it is taking full responsibility for reducing its environmental footprint.

"However, this requires time, effort and capital," he adds.

The head of Eskom's transmission division says he was not surprised by the decision of the Energy Regulator to approve only one of the three licence applications made by the National Transmission Company South Africa (NTC), which is being unbundled from Eskom.

However, the Presidency has expressed concern that the decision to process the licence applications separately could delay the operationalisation of the independent grid company, which it views as a priority reform for the embattled sector.

The Energy Regulator, Nersa's highest decision-making body, approved a 25-year transmission licence for NTC during its meeting on July 27, and indicated that the trading licence and an import/export licence, which had also been applied for in a bundled application, would be processed separately.

Nersa is yet to publish its reasons for decision and has not yet provided a firm timeframe for the processing of the other two licences, but heralded the decision to grant the transmission licence to NTC as a major "milestone".

"The NTC's independence is an important signal to all stakeholders, including investors, that they will have non-discriminatory access to the transmission system," Nersa said in a statement.

Eskom group executive for transmission Segomoco Scheppers described Nersa's decision to process the licences independently as an administrative one, which he did not view as presenting a major impediment to the operationalisation of the NTC.

Eskom has indicated previously that it is aiming to operationalise the NTC before the end of 2023 and has indicated that the three licences, along with lender consent and the appointment of a board remained the main outstanding preconditions for the independent functioning of the new grid company, which will initially remain a wholly owned subsidiary of Eskom Holdings.

The board appointment has been said to be imminent, while lender consent was expected to follow on from the transfer of the three licences from Eskom to NTC.

Speaking alongside Scheppers at a regular weekly Energy Action Plan briefing, the Presidency's Saul Musker underlined the importance of the NTC's unbundling, which would be followed by the vertical separation of the generation and distribution entities.

He described having a "meaningfully independent" grid company as critical for levelling the playing field between Eskom and independent power producers (IPPs), as well as to ensure that transmission infrastructure investment was prioritised.

"Given the scale of the investment that is required in the transmission network over the next decade, having a transmission company that is able to focus on that roll-out is really crucial."

It is anticipated that some R210-billion will have to be invested into some 14 000-km of power lines and more than 122 600 MVA of transformation capacity by 2032.

Musker stressed that Nersa had not rejected the other two licence applications, but said the Presidency was nevertheless troubled that the applications had not yet been approved.

"We are very concerned about that, because the NTC needs all three licences in order to operate and to fulfil its intended functions.

"[Given] the enormous importance of fully operationalising the NTC, our hope is that we would be able to resolve this sooner rather than later and have the remaining two licences in place alongside the other two conditions [lender consent and an independent board], so that there shouldn't be too much of a delay in establishing the entity," Musker added.

Meanwhile, Electricity Minister Dr Kgosientsho Ramokgopa also dedicated a large portion of the briefing to the importance of transmission investment to overcoming South Africa's current loadshedding crisis.

He also indicated that it was becoming increasingly apparent that the Eskom and fiscal balance sheets were insufficient to ensure grid investment at the "speed and scale" required to address capacity backlogs, particularly in the renewables-rich provinces of the Western, Eastern a...

South Africa's Energy Regulator, the highest decision-making body of the National Energy Regulator of South Africa (Nersa), has approved a 25-year transmission licence for the National Transmission Company South Africa (NTC), which is being unbundled from Eskom.

Only a transmission facilities licence was granted during the meeting on July 27, and the regulator indicated that the trading licence and an import/export licence, which had also been applied for by NTC in a bundled application, would be processed separately.

Nevertheless, Nersa chairperson Thembani Bukula, who presided over the virtual meeting, stressed that the approval represented a "milestone" for the electricity sector.

"This is a milestone decision in the sense that we have always had one Eskom with everything [generation, transmission and distribution] and the fact that we are setting up a transmission company is a milestone on its own," Bukula said.

The Energy Regulator approved the licence together with draft licence conditions, which would be shared with the NTC for comment.

Fulltime electricity regulator Nhlanhla Gumede, who presented the licence for approval by the Energy Regulator, noted that the licence application had been subjected to a public participation process, including a public hearing, which was held in April.

The licence application was in line with the Department of Public Enterprises' 2019 'Roadmap for Eskom in a Reformed Electricity Supply Industry', which envisaged the unbundling of the vertically integrated monopoly into three separate businesses of generation, transmission and distribution.

The transmission division had already been functionally separated and was awaiting the appointment of its own independent board. But given the complexities of unbundling the debt-laden State-owned enterprise, the NTC would initially continue to fall under Eskom Holdings, as would be the case with the other two businesses.

Besides the licence approvals, Eskom would have to secure lender consent for the separation of the NTC ahead of its operationalisation. The debt attributed to NTC would continue to reside with Eskom Holdings but be reflected in the form of an equivalent inter-company loan.

The utility is still aiming for the NTC to come into operation before the end of 2023, but there are some concerns that the deadline may be missed given the number of approvals that are still required.

The separation of the NTC from Eskom's generation and distribution divisions has been prioritised in light of the importance of such an entity in levelling the playing field between Eskom generation and independent power producers.

Likewise, its establishment is seen as crucial in ensuring that sufficient capital is invested into the grid, which has become a constraint to the connection of new generators.

The current Transmission Development Plan indicates that more than 14 000 km of new lines will be needed by 2032, along with 122 600 MVA-worth of transformation capacity.

The investment value of the roll-out is currently estimated at R210-billion.

It’s been another turbulent week on the electricity front, with ongoing high levels of loadshedding, the launch of a law suit against Eskom’s grid queuing rules and false and confusing statements about the decommissioning of Komati. Engineering News editor Terence Creamer discusses the week’s developments.

ArcelorMittal South Africa, which slumped to a R448-million loadshedding-induced loss in the interim period to June 30, expects renewable energy and regional infrastructure projects to stimulate a recovery in sales for the remainder of the year but probably without a commensurate price recovery.

The JSE-listed company shocked the market on July 20, when it revealed in a trading statement that its earnings were poised to contract dramatically from the comparable period of 2022 when it reported a R3-billion profit, which resulted in its shares falling 40% to R2, before recovering slightly.

The poor performance was attributed to intense loadshedding during the period, which CEO Kobus Verster said had disrupted the market and its own operations, with Eskom instructing the group to curtail its demand 41 times during the period, up from only four such episodes for the whole of 2022.

More damagingly, however, the group admitted to having underestimated the effect that the intense power cuts would have on curtailing downstream demand, as fabricators pulled back on production shifts leading to a build-up of steel stocks and a fall in demand - all of which took place in an already soft international steel-price environment.

Speaking during the release of the group's interim results, Verster forecast a recovery in sales for the remainder of the year, making specific reference to demand emerging from both the renewables sector as well as several steel-intensive infrastructure projects in the rest of Southern Africa.

He also revealed that ArcelorMittal South Africa was making preparations to leverage future anticipated renewables growth over the coming ten years, including by using its own 200 MW solar project at Vanderbijlpark to showcase the use of steel in such facilities.

The R3-billion project, which will be jointly owned by the South African company and its international parent, is the first of several renewables projects on ArcelorMittal South Africa's radar. This, as it seeks to reduce carbon emissions and shore up clean electricity supply ahead of the introduction of a 1.7-million-ton-a-year electric arc furnace at Vanderbijlpark, which also forms part of its decarbonisation roadmap.

Interim CFO Gavin Griffiths reported that the South African group was planning to introduce its parent company's patented high-strength, high corrosion-resistant Magnelis solution, a metallic coating that enables steel to withstand hostile environments such as those to which solar-plant components are exposed.

"We have an opportunity to really convert our own solar project into a banner project for steel in South Africa," Griffiths reported.

He added that it was also looking to develop downstream partnerships with fabricators able to convert Magnelis into components used in solar farms, such as upper structures, poles and cable trays.

The company was already supplying plate into the domestic wind market having worked with various original-equipment manufacturers to ensure that its plate grades were specified.

Besides the immediate and emerging renewables opportunities, ArcelorMittal South Africa expected second-half demand to be buoyed by seasonal factors (the third quarter of the calendar year is historically the strongest for steel sales) and a stabilisation of production, which would ensure that product was available in the event of a recovery.

"That's the volume story, if not hope, and then obviously price is the uncertain part," Verster said.

He also reported that, following much soul searching, it had also concluded that there was a future business case for its troubled Newcastle mill, within a revamped long-products strategy.

"We have earmarked areas where we have superior quality and product and we are going to grow these markets.

"And, we think that we can secure, in the next three years, a baseload of a million tons of steel, which would be adequate to cover Newcastle's minimum production."

Diversified chemicals group AECI delivered record growth in revenue; earnings before interest, taxes, depreciation and amortisation (Ebitda); and headline earnings per share (HEPS) for the six months ended June 30.

The group's revenue increased by 19% year-on-year to R18.4-billion, while Ebitda increased by 18% year-on-year to R1.83-billion.

HEPS increased by 5% year-on-year to 603c and earnings a share by 5% to 600c.

AECI declared a dividend of 100c a share.

"I am pleased with the resilience of the business, which has seen it deliver solid results in the interim period. Performance has been driven by strong volume recovery and market expansion at AECI Mining, as well as AECI Water.

"Positive growth was also experienced at AECI Agri Health, where a robust first-quarter performance drove performance," AECI Group CE and executive director Holger Riemensperger said on July 26.

He noted that the group's strong performance was achieved against the backdrop of a challenging trading environment.

Overall, the operating business segments of the group delivered good growth, but the chemicals business was impacted by the South African macro-environment.

Riemensperger told Engineering News & Mining Weekly that the group's mining business - the largest of the group's business segments - was also its best-performing business.

"In mining particularly, the growth we are generating comes from outside of South Africa. Our most important and fastest-growing businesses are Australia and Australasia, as well as Central Africa.

"Increasing our share of outside South Africa business in our portfolio . . . is one of our important strategic goals," he added.

He further pointed out that the AECI Water business continued to gain new customers, many of which were in the mining sector.

Owing to this, AECI Mining and AECI Water work closely together to provide a more holistic service to mines, he emphasised.

Riemensperger noted that AECI's industrial business in the water segment was also growing.

"We have seen lower growth or no growth in the public water business, but we see that picking up now. This is also related to weather conditions. It's a question of rainfall, as more rainfall means that more water treatment is required, so that is the driver. This is not market-related, but rather a weather condition."

While the group is making progress in improving its balance sheet strength and the turnaround of the underperforming AECI Schirm Germany business, its focus is on ensuring the delivery of value across the group.

To this end, a strategy review is under way.

Riemensperger explained to Engineering News & Mining Weekly that the strategy it had in place was developed in 2018, prior to significant global events, such as the Covid-19 pandemic, the global energy crisis and the start of the energy transition, as well as geopolitical events such as Russia's invasion of Ukraine.

All of these factors needed to be taken into account for a strategy review, he stressed.

"We are still in the relatively earlier stages. What we will do, however, is really look into the portfolio of the businesses we are in. We will look more into what is core and where can we grow, and where our businesses maybe have less opportunities to grow.

"These elements we will have at the forefront, but operational excellence will also play an important role.

"The group is also reviewing options with respect to its broad-based black economic economic empowerment ownership goals," he said.

Riemensperger told Engineering News & Mining Weekly that AECI implemented its employees share trust (EST) in 2012, which vested without value and was wound up.

The beneficiaries did benefit from receiving net dividends of R35-million over the prescribed period.

"In the spirit of that EST, and also to maintain goodwill, we decided to make an ex-gratia payment totalling R106-million to the beneficiaries.

"What we are doing at the moment is working on a new EST scheme as one of the options which we want to ...