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The International Energy Agency (IEA) is warning that investment in transmission and distribution infrastructure is failing to keep pace with renewables projects, and is leading to a large and growing queue of projects waiting to be connected to the grid globally.

In a newly published report titled 'Electricity Grids and Secure Energy Transitions', the agency notes that advanced projects with a combined capacity of 1 500 GW, or five times the amount of solar and wind capacity added worldwide in 2022, are currently waiting to be connected to the grid.

The report also identifies a lack of investment in grid infrastructure as one of the reasons for ongoing loadshedding in South Africa currently, noting too that no wind projects were awarded during the country's most recent renewables auction as a result of a lack of grid capacity.

However, a recent domestic assessment indicated that significant grid capacity could still be unlocked in provinces such as the Western Cape under a framework accommodative of less than 10% renewable-energy curtailment, which is a common practice among international transmission system operators.

Nevertheless, there is a growing push for accelerated investment in new grid infrastructure, with government even considering private sector participation models to help fund the estimated R210-billion-plus required to add 14 000 km of new power lines and associated transformation capacity by early in the next decade.

A report on the options is being prepared and will reportedly serve before Cabinet in the not-too-distant future.

Globally, the IEA calculates that 80-million kilometres of power lines will need to be added or refurbished by 2040 to meet national climate and security-of-supply targets - a rollout that is equivalent in scale to all grids currently in operation globally.

It adds that yearly grid-related investment will also need to double to more than $600- billion a year by 2030.

In modelling the carbon impact of failing to scale up such investments, the report outlines a so-called 'Grid Delay Case', showing that cumulative carbon dioxide (CO2) emissions between 2030 and 2050 would be almost 60-billion tonnes higher as a result of a slower rollout of renewables that results in higher fossil fuel consumption.

Under such a scenario, emissions would be equivalent to the total CO2 emissions from the global power sector over the past four years, implying a global temperature rise well above the Paris Agreement target of 1.5 °C, with a 40% chance of exceeding 2 °C.

"We must invest in grids today or face gridlock tomorrow," IEA executive director Fatih Birol argued when releasing the first-of-its-kind global study on October 17.

Anglo American Platinum, BMW Group South Africa (BMW SA) and Sasol have partnered to prove that a hydrogen mobility ecosystem can operate successfully within South Africa.

The three companies on Monday inked an agreement at the 2023 South African Green Hydrogen Summit in Cape Town that will bring hydrogen fuel cell electric vehicles (FCEVs) and supporting hydrogen refuelling technology to South Africa.

In terms of the agreement, BMW will provide the FCEVs - a fleet of BMW iX5 Hydrogen cars set to arrive next year - while Sasol will supply the green hydrogen and mobile refueler.

The mobile refueler will transport green hydrogen - hydrogen produced from renewable sources - from the Sasol industrial complex to BMW's facilities in Gauteng where the vehicles will be refuelled.

With Anglo American Platinum's platinum group metals (PGMs) already present in the vehicles' fuel-cell systems, the mining group would provide funding towards the project, said CEO Craig Miller, as part of its effort to drive the global market uptake of PGMs.

Miller noted that PGMs demand would increase by five-million ounces a year if FCEVs capture 10% of the global new-vehicle market, at 100 000 units a year.

BMW SA CEO Peter van Binsbergen explained that the iX5 Hydrogen refuels in three to four minutes, providing 500 km range on its 6 kg tank.

"FCEVs benefit from short refuelling times and long ranges, similar to using a diesel or petrol vehicle, but with the added benefit of zero emissions," said Miller.

While the battery electric vehicle (BEV), with its generally shorter range, may currently be winning the new-energy-vehicle race, as it was cheaper than a FCEV, Van Binsbergen expected the price gap to start closing significantly by the end of the decade.

FCEVs also required less critical minerals than BEVs, he said, "and I'd rather support the PGMs industry in South Africa".

China has, to date, secured a significant chunk of the global BEV battery value-chain.

Sasol Energy Business executive VP Priscillah Mabelane said Sasol was currently producing 150 kg of green hydrogen a day, but that this could soon go to 3 t or 4 t a day as the energy group expanded its renewable energy production.

She said Sasol was targeting the electric mobility; chemicals; steel and sustainable fuels sectors with its production of green hydrogen.

"We produced our first batch of green hydrogen at our Sasolburg facility in June, and in 2024 we will ramp this up to commercial scale when a 69 MW wind farm, situated in the Eastern Cape, comes online."

When asked at what point South Africans could expect to see the first FCEV sold in the domestic market, Van Binsbergen referenced the development timeline for BEVs, noting that the first BMW i3 was on the market in 2013, with BEVs now in production and readily available all over the world.

"As a versatile energy source, hydrogen has a key role to play on the road to climate neutrality," he added.

"We believe South Africa - with its abundance of raw materials and sound infrastructure base - is ideally placed to deliver on the green hydrogen economy's promises."

The Eastern, Northern and Western Cape provinces have agreed to team up in a bid to position South Africa as a global hub for the production of green hydrogen and derivative products, as well as to produce the components required in the green hydrogen value chain, ahead of the finalisation of the long-awaited Green Hydrogen Commercialisation Strategy.

The three coastal provinces are all playing host to potential multi-billion rand green-hydrogen projects and have been working separately on strategies and roadmaps in an effort to capture the jobs, growth and industrialisation opportunities that could flow should the projects materialise.

However, the three provincial administrations have also decided that there is greater potential to advance the opportunity through cooperation rather than competition, particularly in the areas of infrastructure, skills development, trade and investment promotion, as well as on the development of supportive policy and regulation.

They are also open to extending this cooperation into the region, including to green-hydrogen aspirant Namibia, in an effort to create a Southern African Development Community hydrogen corridor.

The areas of collaboration have been formalised into a memorandum of understanding (MoU) that will be signed at South Africa's second Green Hydrogen Summit under way in Cape Town.

The trilateral MoU follows on from a similar agreement announced in 2022 between the Western Cape and Northern Cape governments, which have both since also advanced with their individual strategies.

The Western Cape government is aiming to developed Saldanha Bay, which is an established deep water port and industrial hub, into a production centre for green hydrogen and derivatives such as green direct reduced iron, which could be manufactured at the currently mothballed Saldanha Steel Works, as well as bunkering fuel for the shipping industry.

The province also envisages the Atlantis Special Economic Zone becoming a key production centre for components used in the green-hydrogen value chain, including wind, solar and electrolyser components.

Green hydrogen is produced by using renewable electricity in an electrolyser to split water into hydrogen and oxygen. The clean energy carrier and the derivative products are seen as becoming increasingly important in assisting those sectors that are unable to decarbonise directly using renewable electricity, such as steel, petrochemicals, fertilisers, cement, as well as long-haul land, sea and air transportation.

The Northern Cape has also finalised its Green Hydrogen Roadmap, which indicates that between $300- and $500-billion of green hydrogen production and value-chain investment could be directed the way of the province, which has abundant sun, wind and land, by 2050.

There are several projects already being progressed in the province, which also views the proposed greenfield port of Boegoebaai, located just south of the Namibian border, as potentially emerging as a flagship future production and export hub.

In the Eastern Cape, the strategy will be implemented primarily in the Coega Special Economic Zone, where Hive Hydrogen is considering a 1.07 GW investment to produce green hydrogen and green ammonia for export.

The MoU and the provincial strategies are said to be in line with the draft Green Hydrogen Commercialisation Strategy, which has been under development since 2021 but which has not yet been approved by government.

Speaking at the launch of the summit, Electricity Minister Kgosientsho Ramokgopa indicated that he did not expect the strategy to meet with any resistance from Cabinet once it was presented for approval, but provided no definitive timeframe for its consideration by the executive.

Industrial Development Corporation COO Joanne Bate, who is also leading the panel established by Trade, Industry and Competition Minister Ebrahim Patel to oversee the finalisation of the strategy, indicated that its formulation was well advanced.

Bate reporte...

The National Treasury has confirmed that the collective debt owed to Eskom by the 28 municipalities approved for participation under the Eskom Municipal Debt Relief Support Programme represents R26.69-billion of the R58.5-billion owed to the utility as of the end of March.

Eskom has confirmed that the arrears debt has since climbed to above R65-billion.

In response to questions posed by Engineering News, the National Treasury also confirmed that collective debt owned by non-applicants stood at R31.81-billion.

However, it reiterated that the deadline for applications had been extended until October 31, from an initial deadline of the end of September to allow for further voluntary applications.

It also expected to finalise assessments of a further nine applications by October 16, having indicated in a previous statement that 25 possible additional applications were currently serving before respective provincial treasuries.

The programme, which was announced during the February Budget, is designed to enable Eskom to write off municipal debt, with 136 of the country's 257 municipalities having been in arrears to Eskom at the end of March.

The National Treasury also provided Engineering News with a list of the names of the successful applicants, including five municipalities that owe more than R1-billion: the Emalahleni municipality (R7.4-billion), the Emfuluni local municipality (R5.9-billion), the Govan Mbeki local municipality (R3.7-billion), the City of Matlosana local municipality (R1.4-billion) and the City of Mbombela local municipality (R1.1-billion).

The other municipalities named as having applied successfully for the programmes are Enoch Mgijima (R991-million), the Rand West City (839-million), Modimolle-Mookgophong (R832-million), Victor Khanye (R637-million), Nketoana (R620-million), Walter Sisulu (R537-million), Mkhondo (R431-million), Mangaung metropolitan municipality (R387-million), Msukaligwa (R333-million), Siyancuma (R228-million), Mogale City (R216-million), Nama Khoi (R210-million), Ulundi (R143-million), Emakhazeni (R142-million), Matzikama (R113-million), Renosterberg (R108-million), Beaufort West (R77-million), Endumeni (R76-million), Dawid Kruiper (R65-million), Richtersveld (R53-million), Cederberg (R45-million), Kannaland (R45-million) and Mthonjaneni (R7-million).

The writedowns will be implemented over three financial years should the participating municipalities meet the scheme's 14 conditions, including minimum collections stipulations, a ringfencing of the Eskom account which should be paid first and a restriction on borrowings.

There is also the potential for a revocation of a municipality's electricity distribution licence should it fail to comply with the conditions.

Requests for proposals (RFPs) to redevelop the Tygerberg Hospital in Cape Town are expected to go out next year, says Western Cape government Department of Health and Wellness communication deputy director Mark van der Heever.

"This megaproject aims to improve health infrastructure for the people of the Western Cape by replacing the current inefficient and ageing Tygerberg Hospital - which has become increasingly costly to maintain - with two modern, efficient facilities equipped with 21st century technology."

Tygerberg Hospital is a tertiary hospital located in Parow.

The hospital was officially opened in 1976 and is the largest hospital in the Western Cape and the second largest in South Africa.

It acts as a teaching hospital, in conjunction with Stellenbosch University's Faculty of Medicine and Health Sciences.

The decision to redevelop the hospital was made by the provincial cabinet in 2009 already, at a then estimated cost of R5-billion, excluding equipment.

"Due to the size and complexity of the hospital, its redevelopment is classified as a megaproject, and the support of not only provincial, but also national stakeholders is required," says Van der Heever.

The feasibility study of the project was approved in November 2022, and is currently "in the procurement stage of the public-private partnership (PPP) cycle", he adds.

"This stage involves determining the output requirements to formulate the request for proposals, which is expected to be advertised in 2024.

"Should all things go according to plan, the new Central Hospital is expected to be operational by 2031."

The new Central Hospital will be a new 893-bed tertiary facility on the Tygerberg Hospital estate, "thereby maintaining the facility's close linkages with higher education institutions for training health professionals and technologists", says Van der Heever.

A second facility will be a new 596-bed Regional Hospital, offering Level 1 and 2 services on a site procured for this purpose at Belhar.

Tygerberg Hospital will be maintained, and will remain operational until the new Central Hospital and the Belhar Hospital are operational, says Van der Heever.

Engineering News Editor Terence Creamer discusses Eskom's plans to roll-out a new virtual wheeling platform that could unlock renewables supply to companies with operations spread across the country.

The credit risk associated with municipalities in arrears to Eskom poses a challenge to the roll-out of the utility's proposed virtual wheeling platform and is also likely to limit the ability of corporates with distributed facilities to rely exclusively on virtual wheeling as currently conceived to meet their net-zero commitments.

Eskom aims to launch the platform - which allows for one or more generators to transact with multiple customers that have disbursed operational footprints, including ones located in municipal distribution areas - in the second half of 2024.

The platform is being developed jointly by Eskom and telecoms group Vodacom, through its subsidiary Mezzanine.

It is currently being piloted and validated using a combination of electricity wheeled from Vodacom's campus in Midrand, Gauteng, and purchased directly from the utility to power 740 mobile telecoms towers.

Vodacom is hoping to use virtual wheeling to meet its 2030 net-zero goal across its South African business, which includes 15 000 base stations located on sites that are too small to be powered by on-site renewable generators.

While the platform has been structured to ensure that no changes must be made to existing supply agreements and billing systems, Eskom will only pursue such arrangements with municipalities in "good sanding" with regard to their payment of Eskom accounts.

The platform will generate a single electricity bill for the buyer, which can be a corporate or a trading entity, that includes both Eskom and independent power producer (IPP) electricity charges. Eskom then refunds the buyer for the overcharged portion on the bill.

Mezzanine CEO Jacques de Vos indicated during a webinar that its simulations show that 56% of municipalities are not currently in good standing with Eskom and will, thus, not be eligible for the refund.

"So, until we have solved the municipal credit risk issue, a buyer will not be able to get to and net-zero position through the virtual wheeling mechanism alone and will need a combination of mechanisms, [such as] embedded generation, traditional wheeling and virtual wheeling," De Vos said during a presentation hosted by EE Business Intelligence.

From a financial perspective, electricity traders and aggregators were expected to play a key mitigation role by not only blending supply profiles of customers to enable them to meet their decarbonisation goals, but also to "blend the municipality risk".

The cashflows to fund the transactions were provided by the buyer and given that the scheme is based on refunds for overpayment there is also an incentive for the municipality to pay Eskom, given that the alternative to virtual wheeling was likely to arise in the form of embedded generation that would directly erode municipal revenues.

Nevertheless, Eskom would not contract with defaulting municipalities and, as of March, 136 of the country's 257 municipalities were in arrears to the tune of more than R65-billion.

Andre Nepgen, who heads Discovery Green, the subsidiary of the Discovery Group pursuing an electricity trading licence, and which viewed wheeling as central to corporates meeting their net-zero ambitions, believed there were ways to manage the municipal credit risk in the short term.

He said it would be crucial to ensure that there were enough customers in municipal areas in good standing, and warned of even bigger problems should traders and corporates entirely evade municipalities outside of that category.

The alternative of avoiding the virtual wheeling risk, Nepgen argued, would be worse, it would result in less renewables generation and a perpetuation of loadshedding.

Meridian Economics MD Grové Steyn argued during the webinar that "tweaks" to the virtual wheeling framework could reduce the risks further and revealed that Meridian planned to publish a paper containing its proposals in this regard in the coming weeks.

The paper would make the case for an electricity credit token system, which Steyn argued wo...

Steel producer ArcelorMittal South Africa (AMSA) is moving ahead with a study into the production of green hydrogen directly reduced iron (gHDRI) at its mothballed Saldanha Steel Works, in the Western Cape.

Market and product development head Jerry Dungu told participants at an industry conference that the JSE-listed group had signed a memorandum of understanding with a "developer of transformational energy solutions" to advance the production of gHDRI at the plant.

He did not reveal the name of the company but highlighted that, since October 2022, AMSA and Sasol had been jointly studying the potential of developing Saldahna Bay into a hub for the production of green hydrogen and derivatives, such as gHDRI.

Demand for gHDRI is expected to rise strongly as steelmakers using electric arc furnaces (EAFs) seek to use the material to help decarbonise their production processes.

Dungu confirmed that the investigation would focus on using green hydrogen in the Saldanha Works' Midrex process to produce gHDRI, which could be exported or used domestically.

When the Saldanha Works was operating, process gases produced in the Corex plant, were used in the Midrex plant. However, it is believed that the Midrex plant can be converted to be either traditional natural gas-based and/or to use green hydrogen.

There is a growing expectation that South Africa could emerge as a low-cost producer of green hydrogen, owing to its natural resource endowments of sun, wind and land, which together with electrolyser costs, are the main drivers of cost competitiveness.

Green hydrogen is produced by splitting water into hydrogen and oxygen using an electrolyser that employs renewable electricity and there is a global drive to reduce production costs from between $5/kg and $3/kg currently to below $1/kg.

Should green hydrogen be produced competitively on the West Coast, possibly using desalinated water, there is potential for the Saldanha Works to emerge as a large source of green hydrogen demand, consuming up to 104 000 t/y in the production of gHDRI.

The gHDRI concept features in ArcelorMittal's Decarbonisation Roadmap, but Dungu told Engineering News on the sidelines of a Steel and Engineering Industries Federation of Southern Africa conference that it was not part of the group's immediate plan to reduce its carbon intensity.

Under the roadmap, AMSA is targeting to lower the carbon intensity of every ton of steel produced from 2.9 tons of carbon dioxide equivalent (tCO2e) in 2018 to 2.16 tCO2e by 2030 and 0.4 tCO2e by 2050.

To do so, various initiatives are being pursued, including integrating renewable electricity at its mills, replacing a blast furnace at Vanderbijlpark with an EAF and introducing carbon capture and utilisation at the same operation.

Under its partnership with Sasol, AMSA is working on a plan to redirect its captured CO2, via pipeline, to the chemical and energy group's Sasolburg complex some 20 km away, where it will be used to produce chemicals and plastics.

University of Cape Town honorary research associate Hilton Trollip, who has been studying the decarbonisation of the steel value chain for several years, said gHDRI was now almost certain to be a central component of decarbonisation of world steelmaking and that South Africa was well positioned to be a low-cost producer.

He argued that there were several advantages to exporting South African-produced green hydrogen "embodied" in gHDRI, including ease of transport and storage, and that it was in the interests of the European steel industry to foster the development of low-cost exporters, such as South Africa.

However, subsidy support for green transitions in Europe, the US and China could place developing countries at a disadvantage, while raising the global cost of decarbonisation.

Trollip argued that there was a need to level the international playing field by directing support the way of primary steel manufacturing in developing countries, including South Africa.

Meanwhile, S...

Only 28 municipalities have to date been given approval by the National Treasury to participate in the Eskom Municipal Debt Relief Support Programme, which was announced in the February Budget as part of a R254-billion debt-relief package that has been extended to the utility.

The programme is designed to enable Eskom to write off municipal arrears debt, which stood at R58.5-billion at the end of March with 136 of the country's 257 municipalities in arrears.

In September, Eskom indicated that its outstanding municipal arrears debt had increased to above R65-billion.

The National Treasury did not name the 28 municipalities nor what they owed Eskom individually or collectively.

The scheme has several strict conditions, however, including minimum collections stipulations, a ringfencing of the Eskom account which should be paid first, a restriction on borrowings and a potential revocation of a municipality's distribution licence should it fail to comply with the conditions.

The 28 approvals arise from 37 applications, with the National Treasury still assessing the other nine.

There were also 25 additional applications currently serving before respective provincial treasuries for submission for approval.

In addition, the National Treasury announced that the closing date for applications under the debt-relief programme had been extended to October 31, from an initial cut-off date of September 30.

Electricity Minister Kgosientsho Ramokgopa says that work is under way on the creation of an "instrument" that will allow poorer households to participate in the ongoing roll-out of rooftop solar systems - a trend currently dominated by higher-income households and companies.

Speaking during his weekly briefing on the Energy Action Plan (EAP), the Minister said the current incentives available from the National Treasury, as well as the financing available from banks, presupposed that firms and households had financial resources available upfront to investment in solar generation.

He argued that a different method of funding would be required to "democratise" the deployment of rooftop solar but provided no details on the nature of the instrument, nor on when it might be launched.

Ramokgopa's comments follow the release by the South African Photovoltaic Industry Association (SAPVIA) of data showing that the country's total installed solar photovoltaic (PV) capacity stood at 5.5 GW at the end of the first quarter of 2023, a sharp rise from the 2.8 GW recorded for the fourth quarter of 2022.

The residential market, SAPVIA said, made up 11% of the installed capacity, or 620 MW.

The rest of the small-scale embedded generation market, comprising mostly rooftop systems of below 1 MVA installed on houses and at commercial and industrial facilities, stood at 1 247 MW, or 33% of installed capacity.

Ramokgopa said the rise in rooftop installation was in line with Outcome 4 of the EAP but could pose a risk to municipal and Eskom revenues, given that most of those migrating to rooftop solar with "good payers".

A "rethink" on how municipal revenues were secured was required, given that electricity revenues formed a significant portion of overall revenue collections that, on average, covered 90% of a municipality's revenues, with the balance arising from the National Revenue Fund.

Electricity wheeling revenue could help bolster revenues, with the National Energy Regulator of South Africa currently adjudicating the framework.

However, it is widely accepted that the tariff structure will also have to be adjusted to accommodate a shift from volume-based payments to one where grid services are reflected separately.

Meanwhile, Ramokgopa endorsed the virtual wheeling pilot being undertaken by Eskom and Vodacom, which had the potential to safeguard Eskom Distribution and municipal revenues, while allowing for the customers with distributed facilities to integrate renewable energy purchased from independent power producers.

The virtual wheeling scheme, which Eskom hopes to roll out to the rest of the market before the end of 2024, is a contracting platform that allows for one or more generators to transact with multiple customers that have distributed operations, including facilities located in municipal distribution areas and connected to low-voltage networks.