Engineering News Online Audio Articles

Eskom group executive for renewables Rivoningo Mnisi reports that the State-owned company has received a positive response to a tender for companies to support it with the establishment of a standalone renewables business known as 'Eskom Green'.

Eskom released a tender invitation in April seeking firms with proven credentials in establishing renewable-energy businesses to assist it with the creation of the new unit.

Mnisi tells Engineering News that there were more than ten respondents to the tender and that it hopes to be in a position to select the preferred advisory partner by the end of September.

This advisory consortium will include technical, legal and governance specialists and will not be a permanent feature of Eskom Green, but will assist only with its pre-launch structuring.

In finalising the structure, Eskom and its advisers will draw on international experiences where conventional utilities, some of which are also State owned, have established sizeable renewables businesses.

Mnisi tells Engineering News that Eskom Green's eventual structure is likely to reflect a blend of the models that have been deployed in the North American, European and Asian markets.

As part of its just energy transition strategy, Eskom has identified an immediate 5 GW pipeline of so-called 'repowering projects' that could ultimately be brought under the Eskom Green umbrella.

Eskom is initially targeting to develop these new facilities on land in close proximity to its existing power stations and grid infrastructure.

Both are seen as drawcards for potential partners, particularly in light of the current difficulties in securing new grid connections, and the scarcity of transmission infrastructure in provinces with high-yield solar and wind resources.

However, the group has also set an aspiration for the development of 32 GW of renewables by 2040, which would involve the construction of assets on non-Eskom land.

Once founded, the standalone business intends entering into non-exclusive partnerships with independent power producers (IPPs) to build a portfolio of solar, wind, battery, pumped hydro and green hydrogen assets under the Eskom Green banner.

The utility has given itself a two-year lead time for the launch of Eskom Green, which means that some of the repowering projects could proceed ahead of its establishment, but Mnisi is optimistic that the entity will be operational by the end of 2026.

REPOWERING PORTFOLIO

The initial repowering projects are located at five coal power stations (Hendrina, Grootvlei, Arnot, Camden and Kriel) scheduled for retirement by 2030, as well as at Komati, which was retired in 2022.

Eskom's repowering portfolio includes 122 MW of solar PV capacity at Komati, alongside a 150 MW battery energy storage system (BESS); 800 MW of solar PV at Arnot, alongside 200 MW of BESS and 168 MW of wind; 680 MW of solar PV at Camden; 587 MW of solar PV at Hendrina; and 800 MW of solar PV at Kriel, together with 200 MW of BESS and 1 000 MW of gas to power.

Some of these projects, or parts thereof, may proceed ahead of Eskom Green's launch, but Mnisi says they could be progressively brought under its banner once it is established.

For instance, contracts for a 72 MW solar PV plant and 150 MW BESS facility at Komati are likely to be awarded before the end of 2025, while Eskom Green may also not be established in time to align with Eskom's goal of having 2 GW of renewables projects under way by 2026.

Meanwhile, Eskom Generation, which is still to be fully vertically separated, will house the State-owned enterprise's coal power stations, as well as any new gas-to-power projects that could be implemented by Eskom.

Mnisi reports that work is under way to progress the repowering projects to "bankability", including by securing all environmental authorisations and finalising the wind and solar measurements and front-end engineering required by banks and private investors.

Eskom is also in the market for transaction advisers to assist...

Electricity and Energy Minister Dr Kgosientsho Ramokgopa has urged Eskom to stay or withdraw its court action to have the National Energy Regulator of South Africa's (Nersa's) licensing of five electricity traders in 2024 reviewed and set aside, highlighting an accelerated regulatory process to finalise the trading rules.

In a statement, the Minister makes reference to a joint statement by Business Unity South Africa and Business Leadership South Africa slamming Eskom's legal challenge, while also acknowledging Eskom's concerns regarding the "absence of a clear, rules-based framework to manage the transition to a competitive electricity market".

He also noted that Nersa had initiated a process to finalise the rules and had revised its timeframe for doing so from an initial 12 months, whereby the rules would have been Gazetted in only June 2026, to only three months, or by November this year.

He described the development as a welcome recognition of the urgency of the matter, and argued that the revised timeframe presented a valuable opportunity for all stakeholders, including Eskom, to engage constructively in shaping the future trading landscape.

"Given the regulator's accelerated process, the Minister encourages Eskom to consider staying or withdrawing its court action to allow for this participatory regulatory process to unfold without parallel legal processes that may undermine confidence or delay reform," the Minister said.

He also used the statement to reaffirm the Ministry's commitment to the reforms under way in the electricity sector, including the proposed unbundling of Eskom and the ongoing liberalisation of the market.

"By separating Eskom into distinct entities for generation, transmission, and distribution, this initiative is designed to create opportunities for new entrants, promote fair competition, and reduce the historical monopolistic hold in the power sector.

"This transformation aligns with long-standing commitments outlined in national energy policies and is focused on better serving the needs of all South Africans," the statement reads.

Engineering News editor Terence Creamer discusses the coming into force of the 30% reciprocal tariffs imposed on South African exports to the US and how government and businesses plan to navigate this.

The South African government will on Monday August 11 unveil the support measures for companies and workers affected by the imposition of 30% reciprocal tariffs by the US on South African exports as from 12:01 am eastern daylight time on August 8.

The tariffs are being implemented notwithstanding a telephone call between President Cyril Ramaphosa and US President Donald Trump on August 6, during which it was agreed that trade negotiations should continue.

In a statement released by the South African Presidency following the call, it was confirmed that both leaders "undertook to continue with further engagements recognising the various trade negotiations the US is currently involved in".

The statement added that their respective trade negotiating teams would take forward more detailed discussions.

Cabinet spokesperson and Minister in The Presidency Khumbudzo Ntshavheni said the call had ensured that there was still "room for negotiation", while adding that South Africa remained optimistic that the tariffs would be "reviewed" as soon as the two countries reached a deal.

No details were provided regarding the modalities or timelines for the further talks, with Ntshavheni confirming only that they would be led by Trade, Industry and Competition Minister Parks Tau, with the support of Agriculture Minister John Steenhuisen and International Relations and Cooperation Minister Ronald Lamola.

No details were provided as to what changes South Africa was prepared to make relative to the 'Framework Agreement' presented during Ramaphosa's visit to Washington in May, and which failed to avert the 30% tariffs. This, despite including proposals in relation to the importation of liquefied natural gas from the US, concessions on agricultural trade, as well as joint investment commitments.

Asked again whether South Africa was considering concessions in relation to black empowerment and affirmative action, alongside taking firmer action in relation to farm murders, Ntshavheni asserted that South Africa's transformation agenda was "non-negotiable".

"We are not pursuing the transformation agenda for its own sake, but it is to make sure that we build an equal, united and prosperous South Africa," she said during her briefing on Thursday of decisions taken by Cabinet at its August 6 meeting.

She announced that Cabinet had affirmed government's commitment to "finding constructive and sustainable solutions through continued engagements with the United States of America including at a Presidential level".

"Government's efforts remain focused on growing the economy to save and create new jobs, which include intensifying diversification efforts and strengthening global supply chain integration as the country works to expand its export markets to Asia, Europe, the Middle East, and across Africa to enhance our economic resilience."

Ntshavheni also confirmed that government was focusing on demand-side interventions for industries impacted by the tariffs, together with targeted interventions to ensure industry stability and to safeguard employment.

Government estimated that some 30 000 jobs a could be affected by the tariffs across various industries, including agriculture and automotives.

Details of the final support package would be unveiled at a briefing to be hosted by Tau on Monday, but would include:

The establishment of an Export Support Desk, to serve as a direct point of contact for affected companies; Measures to assist companies to absorb the tariff so as to protect jobs and productive capacity;Leveraging of the Localisation Support Fund to support the competitiveness of affected companies; Using the Export and Competitiveness Support Programme to provide a working capital facility and a plant and equipment facility to address short- to medium-term needs across affected industries; Deploying existing instruments of the Department of Employment and Labour to mitigate potential job losses; and The publication by the Competition Commission of a dra...

The National Transmission Company South Africa (NTCSA) reports strong interest in its recently launch three-day educational programme to prepare potential participants for the launch next year of the South African Wholesale Electricity Market (SAWEM).

The first official SAWEM School was hosted at the Wits Business School in late July and attracted more than 60 participants, drawn from academia, trading companies, large power users, the NTCSA itself and various other entities. It followed on from an earlier pilot school that involved more than 40 participants.

NTCSA senior manager for market operations Keith Bowen describes the launch of the SAWEM School as one of several milestones in ongoing efforts to prepare for the launch of the SAWEM early next year.

Other key milestones relate to the building of internal capacity at the NTCSA to ensure it is able to function as the Market Operator, as well as to it securing various regulatory approvals.

Bowen confirms that the NTCSA has applied to the National Energy Regulator of South Africa (Nersa) for a Market Operator licence and that it will be submitting the most updated version of the Market Code for regulatory scrutiny in September.

It is also likely that Nersa will need to approve the wholesale tariffs, as well as the vesting contracts that will be put in place for existing generators during the transition from a regulated market to a competitive one.

The Market Code has been heavily consulted and Bowen reports that the latest version will be canvassed with stakeholders again in September prior to its submission for Nersa's approval.

There is an expectation that the regulator will open up these processes for public comment and public hearings.

Therefore, Bowen acknowledges that the schedule for consultation, adjudication and approval is "extremely tight" if the NTCSA is to meet its target launch date of April 1, 2026 to coincide with the start of its new financial year.

The idea is to launch the trading platform in phases and to begin allowing market participants to engage in day-ahead and intra-day trading in a way that aids price discovery and increases accountability for market balancing.

At minimum the first phase of the launch will include the Eskom power station fleet and those independent power producer (IPPs) generators procured under South Africa's public procurement mechanisms.

However, NTCSA is hoping to be in a position to open the market to other IPPs that are selling electricity to single or multiple customers by means of power purchase agreements, as this will improve the ability of the system operator to anticipate and schedule generation to ensure sufficient supply.

The NTCSA is preparing to scale-up its own internal capacity in preparation for the launch, having established a market operations function at Simmerpan, in Germiston, Ekurhuleni, where NTCSA's National Operations Centre is also located.

Bowen says there are currently eight employees dedicated to market operations and that the intention is to grow to 40 employees by April.

A recruitment process is under way with a particular focus on securing individuals with information technology qualifications and experience.

In parallel, NTCSA is hoping to broaden the reach of the SAWEM School beyond Gauteng, with its next three-day course scheduled to take place at the University of Cape Town between August 26 and 31.

Another three-day course will take place at Discovery's head office in Sandton in September and the NTCSA's Palesa Zwane reports that discussions are under way with universities in several other provinces, with a SAWEM School likely to be held in KwaZulu-Natal in October.

Graduation from the SAWEM has been made mandatory for any participant in the market when it is launched and Zwane says the course has been designed to offer participants insight into the future market structure, including the roles and responsibilities of each participant.

The course exposes participants to issues such as the f...

Trade, Industry and Competition Minister Parks Tau will present Cabinet with a proposed support package for South African companies and workers that will be negatively affected by the 30% reciprocal tariffs to be imposed on South African exports to the US at 12:01 am eastern daylight time on August 8.

The package is being developed in parallel to ongoing attempts to negotiate a trade deal with the US, which accounts for 7.5% of all South African exports, making America South Africa's third-largest global export market after the EU and China.

South African exports to America, which stood at $14.9-billion in 2024, could decline by up to $2.3-billion yearly, independent research has indicated.

Previous attempts at finalising a deal have failed, despite South Africa having proposed a framework deal in May, which included various concessions on agricultural exports to South Africa and even an offer to buy American liquefied natural gas.

Speaking during a joint briefing held in Ekurhuleni with International Relations and Cooperation Minister Ronald Lamola, Tau said his department was currently modelling the impact on industries and companies that were exposed to the 30% tariff and working on possible support measures with other government departments.

Initial modelling indicated that up to 30 000 workers could be negatively affected by the reciprocal tariffs. This, after also considering prevailing tariffs on automotives, steel and aluminium and the exemptions confirmed by the US.

A total of 35% of South African exports to the US were exempted, including "copper, pharmaceuticals, semiconductors, lumber articles, certain critical minerals, stainless steel scrap and energy and energy products", Lamola said.

Besides the Export Support Desk that had already been established to offer affected companies advice on the tariffs and to support their export diversification, Lamola provided an overview of some of the other components that were being finalised for incorporation into the so-called 'Economic Response Package', including:

Various measures that could assist companies to absorb the tariffs, while protecting jobs and productive capacity;

Drawing on the Localisation Support Fund to issue an open call from firms operating in affected value chains, with the aim of providing targeted competitiveness and efficiency support;The creation of an Export and Competitiveness Support Programme, which will include a working capital facility and plant and equipment facility to address short- to medium-term challenges across all industries; The initiation, with the Department of Employment and Labour, of measures to mitigate potential job losses by using existing instruments within its entities; and

The publication in the coming days of a block exemption by the Competition Commission that will allow collaboration and coordination by competitors to achieve export economies of scale and efficiencies.

"We are going to Cabinet on Wednesday with a set of more detailed proposals that we are finalising with sister departments that will elaborate on the structure of the support package," Tau said, indicating that the final package should be communicated before the end of the week.

Both Tau and Lamola stressed that they had not given up on securing a trade deal with the US, stating that all diplomatic channels would be used to negotiate a "mutually beneficial" agreement.

However, Tau highlighted the "unprecedented" nature of the negotiation process, whereby South Africa was being asked to make a final offer without any sense of what tariff it could receive or whether the US would respond.

"So, we can only make an offer and sit and wait and hope."

He noted, for instance, that having been requested by the US to hold off from pursuing a bilateral agreement while America finalised a template for sub-Saharan Africa and then having signed a confidentiality agreement, the agreement was then never counter-signed by the US.

Nevertheless, South Africa had no intenti...

A leading advocate for the provision of free basic electricity (FBE) to poor South African households has welcomed moves by government to pursue its universal access goal through a "developmental" lens but believes more still needs to be done to firm up what affordable access means and the best ways of achieving that objective.

In his Budget Vote speech, Dr Kgosientsho Ramokgopa announced that government's revised universal access strategy would reframe electrification as a developmental and rights-based obligation rather than a legacy infrastructure backlog.

He also announced that a blended finance approach would be adopted to mobilise the funding needed to connect the 1.6-million households in South Africa by 2030 that still do not have access to electricity. In addition, delivery would be broadened to include alternative technologies, including micro- and off-grid solutions, especially in rural areas, but also potentially in informal settlements and peri-urban areas.

Public Affairs Research Institute (PARI) just transition programme head Dr Tracy Ledger, a vocal champion of the cause of affordable electricity access who has authored several research papers on the topic, believes the profile being given to both universal access and affordability by Ramokgopa is laudable.

In light of South Africa's fiscal constraints, Ledger also agrees that it is important to pursue innovative financing models to address the electrification backlog, as well as the chronic infrastructure constraints in urban townships. This, so as to cater for the consumption growth that accompanies densification and the rise of economic activity in areas initially developed as dormitory towns, without resorting to so-called load reduction, which results in areas being cut during peak periods.

She is more cautious, however, about broadening the supply options to include 'micro-grid' solutions outside of remote rural areas, arguing that universal access should be premised on the provision of a grid-type service, and not one that relegates such access to only lighting and the charging of a few appliances.

Only if these off-grid and micro-grid alternatives are able to supply consistent electricity for more power-intensive functions such as cooking and activities that support livelihoods, should they, in Ledger's view, be included as a universal service roll-out option.

REDEFINING ACCESS & AFFORDABILITY

Ledger is most critical, however, of government's definition of both access and affordability, arguing that these definitions need to be made more "concrete" if they are to meet the developmental objectives that have been outlined by the Minister.

"To deliver a developmental mandate in the area of electricity, the focus of universal access must be on ensuring that everybody can actually access a developmental level of electricity, which we calculate to be between 250 kWh and 350 kWh a month," she tells Engineering News.

South Africa's current monthly FBE threshold is 50 kWh, which Ledger says falls well short of the developmental goals of raising living standards and hoping to catalyse micro economic activity.

In a recently released PARI research paper titled 'Affordability of Basic Services for South African Households', written by Ledger and Nonhlanhla Mathibela, the prevailing free basic services of 50 kWh of electricity a month and 25 litres of water a day is described as mere "survival access" rather than developmental in nature.

In addition, to secure these services, poor South Africans must currently register to be included on a municipality's indigent register; a process that in most cases is so onerous that the majority of eligible households find themselves excluded from the benefit.

"In 2022, municipalities reported a total of 2.8-million registered indigent households, against national funding for 10.9-million households.

"Only 1.7-million households were reported to have received the FBE benefit in that year," the paper highlights.

There is also cu...

July delivered the best monthly new-vehicle sales tally since October 2019, says naamsa | The Automotive Business Council.

Last month's new-vehicle sales, at 51 383 units, were up 15.6% compared with July last year, with the action on South Africa's showroom floors driven by improved consumer confidence, favourable credit conditions and a steady recovery in disposable incomes, notes the auto sector body.

The new-passenger-car market jumped by 20.1% in July, to reach 36 248 units - the highest number since January 2017.

Sales of new small trucks, bakkies, minibuses and panel vans increased by 6.9%, to 12 356 units.

Sales of medium trucks, at 703 units, were up 13.9%, while sales of heavy trucks and buses declined by 1.3%, to 2 076 units.

"We are encouraged by the sustained positive momentum in new-vehicle sales, which clearly underscores the resilience of South African consumers and the strategic importance of a stable macro-economic policy environment," says naamsa CEO Mikel Mabasa.

In contrast to the largely positive news on the local front, export volumes for July decreased by 1.9%, to 35 379 units.

This drop comes amid long-standing tariff threats by the US - now set to materialise from August onwards.

naamsa warns that pressure is mounting within the local vehicle production base as other export-oriented economies are redirecting their product volumes toward South Africa's established markets.

"South Africa's automotive industry has long relied on the strength of its export engine to drive production, attract investment and create high-value employment," says Mabasa.

"The current environment is testing that model, but our ability to maintain solid export volumes amid escalating trade uncertainty demonstrates the commitment of our [vehicle manufacturers] to South Africa's industrial base."

While most other countries have negotiated reduced tariffs from the US government, South Africa has been unable to do so.

This will translate into declining competitiveness compared with peer countries, warns naamsa.

"…The automotive industry stands exposed, both in immediate volumes and long-term market access," says Mabasa.

"We are not giving up on the US market, but we must now look to deepen regional trade, expand market access in Africa and Asia, and accelerate the rollout of South Africa's new-energy vehicle transition strategy to attract new investment and safeguard production capacity."

This year marks a critical juncture for the local automotive sector as it prepares to sit down with government for the review of the South African Automotive Masterplan 2035 and the Automotive Production and Development Programme Phase 2.

These reviews will aim to align government policy with shifting global market dynamics, and to reset performance goals in light of emerging domestic and export challenges.

Engineering News editor Terence Creamer discusses the launch of the much-anticipated process to shortlist bidders for South Africa’s inaugural procurement of independent transmission projects, or ITPs; how procurement of these projects will be carried out; and the plan to launch.

The National Treasury has confirmed that it will inject 20% of the $500-million initial funding required to set up the Credit Guarantee Vehicle (CGV) being established to derisk South African public infrastructure projects that will be built by private investors without recourse to any government guarantees.

The CGV will be set up as a private non-life insurance company, regulated by the Prudential Authority, in July 2026; a timeline that is aligned to the scheme supporting the first independent transmission projects (ITPs) that will be procured in the coming months.

Electricity and Energy Minister Dr Kgosientsho Ramokgopa formally launched the first stage of government's ITP procurement programme at an event hosted at the JSE in Sandton, following the release of a request for prequalification (RFQ) on July 30.

Through the RFQ, the department aims to identify and shortlist prequalified bidders with the technical expertise, financial capacity and experience to build high-voltage transmission lines and associated substations across seven pre-identified corridors.

These prequalified project sponsors will be invited to submit bids in response to a request for proposals (RFP), to be launched at the end of November.

Preferred bidders would be named following a six-month adjudication process conducted under the auspices of the Independent Power Producer Office, which has been authorised to manage the first ITP procurement stage.

Deputy Finance Minister Dr David Masondo said the CGV was being established with the support of the World Bank and its group companies, specifically the International Finance Corporation and the Multilateral Investment Guarantee Agency.

He confirmed that the National Treasury's 20% contribution would amount to about R2-billion, which would be funded by way of a World Bank loan. However, details were still being finalised with further announcements likely in the Medium-Term Budget Policy Statement and next year's Budget.

The balance of the funding would most probably be raised from development finance institutions, with the National Treasury's Jeffrey Quvane reporting that up to seven such institutions had expressed an eagerness to participate during recent pre-capital-raising meetings.

Quvane indicated that the National Treasury was also aiming to tap concessional funding that had been committed by international partners to South Africa's Just Energy Transition Partnership.

The CGV will extend a combination of payment and termination guarantees to the ITP special purpose vehicles, which would pay premiums to the CGV to secure such insurance. These premiums would be recovered through the electricity tariff.

"While the Credit Guarantee Vehicle will focus in the initial phase on enabling investments in transmission infrastructure, it will be expanded into other areas such as logistics and water over time," Masondo said.

He lauded the scheme as being a "globally innovative model", while describing it as a "privatisation" of the risk that would otherwise have increased government's contingent liabilities.

"The CGV will operate as a standalone entity with an independent balance sheet and will target a minimum credit rating of AAA.

"A professional executive management team and board of directors with relevant experience and expertise will be appointed to operate and manage the fund," Masondo added.

"We are targeting an initial capital raise of $500-million for the vehicle, spread across a range of development partners.

"National Treasury has committed to providing first-loss capital of 20%, which will be an initial $100-million increasing to $500-million (about R9-billion) if needed," he added.

FIRST ITP PROCUREMENT

Ramokgopa said the infrastructure earmarked for the inaugural procurement of ITP capacity had been identified by the National Transmission Company South Africa (NTCSA) from late-stage and potentially high-impact projects included in its Transmission Development Plan (TDP).

The TDP envisages the constr...