Engineering News editor Terence Creamer discusses the outlook for the Koeberg life-extension operation following significant delays and rising safety concerns.

The National Energy Regulator of South Africa (Nersa) reports that it registered a further 98 generation facilities - with a combined capacity of 908 MW and an investment value of R17.3-billion - during the second quarter of its 2023/24 financial year.

These registrations, which took place from July to September, raise to 1 185 the total number of generation facilities registered since 2018.

However, the pace of registrations accelerated markedly after a 2021 reform was made to Schedule 2 of the Electricity Regulation Act, lifting the licence-exemption cap from 1 MW to 100 MW. That cap was subsequently removed entirely to accelerate investment as power disruptions intensified.

In August, the National Energy Crisis Committee reported that, since the implementation of the regulatory changes, the pipeline of private sector generation projects had increased to over 100 projects representing more than 10 000 MW of capacity.

Projects registered with Nersa to date, meanwhile, have a combined capacity of 5 785 MW and an investment value of R111-billion and exclude the thousands of smaller installations that have been implemented by households and businesses in response to loadshedding.

Eskom has estimated that some 4 400 MW of behind-the-meter generation was installed between July 2022 and July 2023, mostly in the form of rooftop solar.

Nersa reports that 92 of the registrations during the second quarter were for solar photovoltaic (PV) facilities, which make up 71% of the capacity registered. The balance comprises two solar PV projects with battery energy storage systems, two co-generators and two wind projects.

Regulator Member responsible for Electricity Regulation Nhlanhla Gumede commended the uptake in registrations, which he indicated had been processed by Nersa within an average of five working days. However, he recommended that future registration applications for generation facilities of variable energy sources be coupled with battery storage.

Sixty-eight of the generation facilities registered during the period are connected to the Eskom network and have a total capacity of 785 MW and an associated investment value of R14.8-billion. A total of 30 generation facilities are connected to the municipal distribution network, with a capacity of 27 MW and investment value of R2.5-billion.

The three provinces with the highest number of new registered generation facilities in the second quarter were Gauteng (19 projects for 11 MW), Western Cape (17 projects for 119 MW) and KwaZulu-Natal (15 projects for 7 MW). The top three provinces by capacity were the Free State (251 MW across 7 projects), North West (192 MW across 11 projects) and the Western Cape.

The 11 projects registered in the North West province during the period carried the highest investment value, at R5.8-billion. The average investment cost for the second quarter of the 2023/24 financial year is R19 000/kW, Nersa states.

Serious questions about the effectiveness and desirability of South Africa's prevailing scrap export ban have been raised in a new report, which calls for its immediate lifting unless evidence can be produced showing that the ban is having the desired effect of preventing infrastructure-related theft.

Published by XA Global Trade Advisors, the report follows hot on the heels of a decision by ArcelorMittal South Africa to wind down its long-products business, partly because its integrated mills are unable to compete with those electric-arc furnaces that have secured a significant raw material advantage as a result of the trade restrictions placed on scrap.

XA Global Trade Advisors CEO Donald MacKay argues that the combination of the price preference system, scrap export duties and the prevailing export ban have distorted the domestic steel value chain and have created financial risks that could have major implications for the State-owned Industrial Development Corporation (IDC) if unwound.

The report calculates that there are yearly value transfers of R4.5-billion from metals recyclers to the scrap-based mini-mills on the three-million tons of scrap being sold yearly.

It also estimates that the IDC has built up a R14-billion exposure to scrap-metal consuming sectors, which has created an incentive to sustain these transfers to companies that have become increasingly reliant on subsidised raw materials as electricity prices rise and infrastructure fails.

"The electricity price cannot be lowered and so all the pressure is applied to the scrap recycling sector," the report argues.

In response, the IDC told Engineering News that its exposure to steel-related companies stood at about R10-billion and was not confined to scrap-metal consuming firms.

"The rationale for the IDC support provided to mini-mills was to increase competition in the primary steel industry, improve economic inclusion, access to markets for small and medium enterprises and black industrialists, and to enhance competition in related products.

"The investment case also concerns market segmentation and the ability to comply with the market's requirements," the IDC stated.

It added that the mini-mills supplied a complementary range of "fit-for-purpose" commodity products which were mainly driven by competitive factors such as an ability to respond to the market in a short period of time at the right price.

"While several of the IDC's investee companies produce the standard commodity-type bar mill range, upgrades have also taken place over the years towards higher quality products and diversification," it added in response to questions.

The XA report also highlights a lack of data transparency since the initial ban on the export of ferrous and nonferrous scrap metal was imposed by the Department of Trade, Industry and Competition (dtic) on November 30, 2022, or following its six-month extension on July 31 this year.

MacKay says that, despite Promotion of Access to Information Act requests, no information has been released on the theft of infrastructure since the ban, with even Transnet's cable theft data, which had been published regularly on the State-owned utility's website, having been removed from the public domain.

Transparency, MacKay argues, is essential for assessing whether the ban's negative economic impacts are outweighed by the benefits.

"The secrecy around scrap metal policy has created fertile ground for lobbying and corrupt decisions," he adds.

The dtic told Engineering News it would study the report but did not want to comment so close to the closing date for comments on whether or not to extend the ban.

"All comments received by the closing date will be carefully considered by Minister Ebrahim Patel before a decision is taken.

"The Minister will consider all inputs and will carefully weigh the impact of the scrap and waste-metal ban on the steel value-chain against the substantial damage done to infrastructure and the associated disruptions to bus...

South African independent power producer the SOLA Group has started construction on a pioneering 195 MW solar photovoltaic (PV) plant in the Free State, which will wheel and sell clean electricity across the country to multiple buyers eager to decarbonised their operations.

The R2.8-billion project has already secured an initial three multinational anchor offtakers, but SOLA has reserved a significant portion of the project's energy for flexible, short-term power purchase agreements with a wide range of customers.

SOLA says it plans to sign up interested buyers for the uncontracted power from mid-2024, with delivery of electricity scheduled for mid-2025.

CEO Dom Wills notes that the initiative is in line with reforms under way in the South African electricity market, which are facilitating the creation of competition among electricity suppliers.

"In this sense, SOLA is pioneering the first steps toward a more flexible and efficient electricity system and makes use of the existing Eskom wheeling framework to bring choice and flexibility to South African businesses," Wills adds.

Eskom is currently piloting a virtual wheeling platform that will, from 2024 onwards, allow for one or more generators to transact with multiple customers that have disbursed operational footprints, including ones located in municipal distribution areas.

SOLA, which has a 15-year track record in the renewable energy market, has already entered into wheeling arrangements with large private customers, including Tronox Mineral Sands, which will buy electricity from plants developed in the North West province.

Those two 100 MW projects were the first to be registered by the National Energy Regulator of South Africa in 2022 following an amendment of Schedule 2 of the Electricity Regulation Act allowing for such projects to proceed without a licence and to wheel electricity through the grid.

The latest 195 MW project represents the fourth utility-scale renewable wheeling project closed by SOLA in the past 15 months, with the group's wheeling projects under construction currently standing at 581 MW.

SOLA says that by mid-2025, its fleet will generate 1.34 terawatt-hours annually, or enough to power nearly 500 000 homes.

Independent power producer (IPP) Red Rocket reports that it has signed up customers for 500 MW of the 2 000 MW of capacity it aims to deploy over the coming three years as part of an innovative scheme designed to provide multiple private offtakers with renewable electricity as from 2026.

In recent weeks, the company has been running a national advertising campaign inviting potential customers to make contact regarding its intention to sell "affordable, renewable energy to businesses".

Red Rocket says the 2 000 MW forms part of a broader hybrid portfolio comprising 2 800 MW of wind and 1 500 MW of solar photovoltaic that has been fully permitted and has received cost estimate letters for grid access from Eskom.

The projects are not yet registered with the National Energy Regulator of South Africa, with such registration to be undertaken only once a critical mass of customers has been secured.

The power purchase agreement contracts will vary based on the arrangements with the specific offtaker, with pricing determined by the length of the contract, wheeling costs and whether the contract is 'take or pay' or 'take and pay'.

"The objective is to produce the first electricity at the end of 2026, with the full 2 000 MW operational by the end of 2027.

"This is the first phase of the full development, consisting of over 4 000 MW," the company, which is headed by Matteo Brambilla, tells Engineering News.

The first phase of the project will produce about 5 500 GWh of renewable electricity yearly.

The investment value for the initial 2 000 MW is estimated at R70-billion, including self-build grid upgrades, and Red Rocket says it will be fully funded through a project finance scheme.

The initiative is in response to regulatory changes that have made it possible to wheel renewable electricity through the grid and is also aligned with the virtual wheeling framework that is being developed by Eskom and which will be implemented at scale in 2024.

The framework, which has been piloted by Eskom and Vodacom, incorporates the principle of revenue neutrality for Eskom and municipal distributors, which is seen as critical for unlocking virtual wheeling. However, Eskom has indicated that it intends excluding those municipalities whose accounts reflect long-standing arrear debt.

"Virtual wheeling is an important component of these projects, as it enables these types of transactions to occur.

"Traditional wheeling severely impacted the geographic areas to which we could deliver the electrons, as only a few municipalities have wheeling frameworks in place," Red Rocket says.

Therefore, no additional regulatory changes are required before the scheme can be launched, as the lifting of the generation cap has enabled private-sector offtakers to transact directly with IPPs.

"The solution that Red Rocket is proposing is viable under the current electricity regulations and legislation."

However, Red Rocket says a simplification of the wheeling/trading framework could accelerate its roll-out.

The latest full Blue and No Drop, and the Green Drop Progress Report, released by the Department of Water and Sanitation (DWS) on Tuesday, shows the deterioration of South Africa's drinking water quality, wastewater management performance and water losses and nonrevenue water.

The Blue and No Drop Reports indicate that there is has been a decline in drinking water quality and an increase in non-revenue water since the last reports were issued in 2014. The Green Drop Progress Assessment Report also indicates a deterioration in the performance of municipal wastewater treatment systems.

The full Blue Drop Report, assessing the quality of South Africa's drinking water from July 1, 2021, to June 30, 2022, shows that while South Africa's drinking water quality is generally good in the major metropolitan areas, there has been a regression in drinking water quality since 2014.

Of the 958 water supply systems (WSS) in each of the 144 water services authorities (WSAs) across South Africa, only 26, or 3%, scored more than 95% and qualified for the Blue Drop Certification, compared with the 44 WSS, or 4%, which were awarded the Blue Drop status in 2014.

According to the report, 277, or 29% of systems located in 62 WSAs, are in a critical state of performance, a deterioration from the 174 WSS' in 33 WSAs that were found to be in a critical state in 2014.

Overall, 85% of drinking water systems were in an "average or better" infrastructure condition.

Of the 151 systems physically assessed, 3% were found to be in a critical infrastructural condition; 12% in a poor infrastructural condition; 49% in an average infrastructural condition; 31% in good condition; and 5% in an excellent condition.

This indicated that non-infrastructure factors such as a lack of skilled staff or a lack of proper process controls are as important as infrastructure condition as contributors to poor performance, said DWS director-general Dr Sean Phillips.

Unpacking the results, he pointed out that assessment found that Gauteng, which has the highest percentage, at 62%, of drinking water systems with excellent or good performance, has the lowest shortfalls of qualified staff.

Comparatively, the Northern Cape, which has the highest percentage, at 87%, of drinking water systems with poor or critical performance, a significant deterioration on the 48% recorded in 2014, has the highest shortfalls of qualified staff.

"Based on water quality tests carried out by municipalities themselves during the 2021/22 municipal financial year, 54% of water supply systems achieved excellent or good microbiological water quality compliance and 46% achieved poor or bad microbiological water quality compliance," he continued.

In 2014, 5% of water supply systems achieved poor or bad microbiological water quality compliance.

Further, in terms of chemical water quality compliance, 76% of systems achieved excellent or good, while 24% of systems were unacceptable, compared with 15% in 2014.

Phillips assured that DWS has sent noncompliance letters to the municipalities with systems which scored poorly or badly in terms of drinking water quality in the 2023 Blue Drop Report, requiring the municipalities to inform their residents should they still have poor or bad compliance.

During the audit period, 14 WSAs did not report water quality data - or provide any other evidence that they have been testing their water quality - to the DWS, with noncompliance notices issued to those municipalities, instructing them to issue advisory notices to their residents that their water might not be safe to drink if it has not been properly tested.

"Some of these WSAs indicated that they are in the process of appointing laboratories, others commenced with sampling, and others provided evidence of testing and achieving drinking water quality, and where necessary these WSAs did issue advisory notices," Phillips commented.

Meanwhile, the No Drop Report, which assesses the status of water losses and nonrevenue water, a...

The National Nuclear Regulator (NNR) will decide in January whether to grant Eskom's request for the Koeberg Unit 1 and Unit 2 licences to be separated to reflect a later commercial operation date for Unit 2 to enable the unit's continued operation beyond July 2024.

Should the NNR board refuse Eskom's request for a decoupling, the regulator has confirmed both Koeberg units will be offline simultaneously as from July 21, given Eskom's announcement that Unit 1 is scheduled to undergo another 200-day outage as from that date for further compulsory maintenance, including an integrated leak test of the containment building.

The current licence limits the operation of both units to July 21, 2024, in line with the 40-year operating life of Unit 1, which began commercial operations on July 21, 1984. However, Eskom has requested a decoupling to reflect an operation limit for Unit 2 in line with its November 9, 1985, commercial operation date.

During 2023, only a single Koeberg unit has been operational at any one time, exacerbating loadshedding during what has already been confirmed as the country's worst-ever year for power disruptions.

Unit 1 was removed from service on December 10, 2022, for what was initially scheduled as a 180-day extended outage to replace the unit's three steam generators.

However, the unit was eventually only synchronised to the grid on November 18, with a two-week ramp-up, delaying the Unit 2 steam-generator replacement outage further, from its initial September start date.

The replacement of the six steam generators is a key requirement for securing a Long-Term Operation (LTO) authorisation from the NNR, which would enable each unit to operate for a further 20 years.

In May 2021, Eskom applied for a variation to Koeberg's NIL-01 licence to be allowed to operate Koeberg beyond July 21, 2024, and also made a request that Unit 1 be authorised to operate to July 21, 2044, and Unit 2 until November 9, 2045.

NNR divisional executive for nuclear power plants Orion Phillips reported during a briefing that a review of Eskom's request for a separation of the licences had been completed.

The recommendation arising from the review would be presented to a board technical committee on December 11 and the NNR board would consider the outcome of those deliberations at its meeting in late January, after which an announcement of the decision would be made.

To accede to the separation request, the NNR would have to confirm whether systems that are common to both units, including seismic bearing and cables in the containment area, where safe to continue operating.

The NNR was, in parallel, progressing with its assessment of Eskom's LTO Safety Case, submitted in June 2022.

LTO DECISION BY JULY

Programme manager for nuclear power plants Peter Bester reported that an initial review had been completed but that requests for additional information had been made to Eskom.

These responses would be considered, together with comments arising from the NNR's public consultation processes, prior to an LTO recommendation being presented to the board for its consideration.

Bester indicated that a recommended record of decision would be presented to the board in March, with a regulatory decision expected in July once the board had completed its deliberations.

The organisation was currently preparing to host public hearings in February, follow an initial public comment period during which 37 representations were received, from which the NNR had extracted 209 comments.

Principal specialist for nuclear power plants Ubert Coetzee confirmed questions were raised about the International Energy Agency's redacted Safety Aspects of Long-Term Operations, or Salto, report, which highlighted several areas of concern regarding Koeberg.

Concern was also raised about the adequacy of the public consultation process to date, as well as with issues relating to radioactive waste, emergency planning, the role of Koeberg in loadshedding and the state of certain ...

Eskom has confirmed that it has delivered a curtailment framework, as well as its proposed Gated Generator Connection Process (GGCP) to the National Energy Regulator of South Africa (Nersa) for approval. However, it is not yet clear whether either will be approved ahead of the restart of public procurement for new independent power producer (IPP) capacity.

Minerals Resources and Energy Minister Gwede Mantashe reported this week that Bid Window Seven (BW7) of the Renewable Energy Independent Power Producer Procurement Programme would be launched "within two weeks", along with an inaugural gas-to-power bidding round and a second battery storage bid window.

The renewables bidding round was initially expected to be launched by mid-year following the partial failure of the previous round, when no wind project advanced to preferred-bidder status after Eskom indicated that all grid connection capacity in the Eastern, Northern and Western Cape provinces had been absorbed.

The subsequent renewables round, together with the gas-to-power and second battery bid window, had since been delayed largely because of ongoing uncertainty over what grid capacity was still available and whether Eskom would implement curtailment to unlock capacity in the grid-constrained provinces.

In October, Eskom published its latest Generation Connection Capacity Assessment (GCCA), indicating there to be 19.9 GW of grid-connection capacity available nationally, but with zero capacity remaining in the three Cape provinces and the Hydra Central area, which borders the Cape provinces and the Free State.

In November, however, Eskom indicated that curtailment studies had been undertaken to provide "developers with an alternate option if they are still keen to connect in these constrained areas". It also indicated that a curtailment addendum to the GCCA would be published that could unlock 4 GW of connection capacity in the Eastern and Western Cape provinces.

Speaking from the same platform where Mantashe announced the new IPP bidding timeframe, Eskom Transmission MD Segomoco Scheppers confirmed that the curtailment framework and GGCP were currently before Nersa but did not comment on when the regulator was expected to decide on the documents.

IPP Office head Bernard Magoro indicated that there had been ongoing engagements with Eskom following BW6 to find solutions to the grid-access issues that rose to prominence during the round, as well as to ensure an "orderly approach" to grid allocation, in light of regulatory changes that had made it possible for private-offtaker projects of any size to proceed in the absence of a licence, including when these were grid-connected.

Eskom's GGCP proposes a shift from a one-on-one assessment of the connection requests to a clustered process, whereby aggregated grid adequacy and stability assessments will be made in batches.

The GGCP also envisages "rolling cycles of procurement" that alternate between the public and private offtaker programmes, with grid cost estimate letters to be specific to each programme.

It was not immediately certain whether Nersa intended hosting hearings on either the curtailment framework or the GGCP.

Creamer Media editor Terence Creamer discusses ArcelorMittal South Africa's announcement that it may cut about 3 500 jobs as it plans to wind down its long-products business; the reasons for it taking this step; the impact of the closure on the town of Newcastle, as well as South Africa's industrial capacity and beneficiation ambitions; and whether there is anything government can do to prevent the closure of the business and the job losses.

A R47-billion guarantee facility, effective immediately, has been extended to struggling State-owned freight logistics group Transnet in support of its recovery plan and to meet its immediate debt obligations.

The guarantee was announced following concurrence between Finance Minister Enoch Godongwana and Public Enterprises Minister Pravin Gordhan and follows a high-level meeting between government and business earlier in the week at which business leaders argued for immediate financial support for Transnet to address its port congestion crisis and to arrest the collapse in the rail service.

In a statement, the National Treasury said that Transnet would drawdown an initial amount of R22.8-billion to deal with immediate liquidity matters such as settling maturity debt.

It added that no equity injection had been considered given that the Budget for 2023/24 was "closed" and expressed confidence that the guarantee facility, alongside swift implementation of the Transnet Recovery Plan, would be sufficient to resolve the State-owned company's challenges.

When announcing the Transnet Recovery Plan, Transnet chairperson Andile Sangqu said that the success of the plan would hinge on shareholder support. Media reports indicated that Transnet has requested relief covering R61-billion of its R130-billion debt, as well as a R47-billion equity injection.

Godongwana reacted coolly to the request, saying in a Medium-Term Budget Policy Statement media briefing that further engagements were required before support could be extended, and expressed unhappiness that Transnet had seemingly simply presented the National Treasury with an "invoice".

He also stressed that any support to State-owned companies would need to be governed by strict conditions, pointing to those that had accompanied recent support extended to Eskom and Denel.

In the statement, the National Treasury said a "Guarantee Framework Agreement between the National Treasury, Department of Public Enterprises, and Transnet will include strict guarantee conditions that will be continuously reviewed and amended when deemed necessary".

It added that any further drawdowns would be subject to Transnet meeting those conditions.

"A Guarantee Framework Agreement must be concluded between National Treasury, the Department of Public Enterprises and Transnet within 14 days of the activation of the guarantee to ensure that any fiscal risks are mitigated and that the conditions of the facility are fully agreed to by all parties.

"In addition, National Treasury will continue to work with Transnet to pursue other initiatives to revive its operations and financial viability," the statement reads.

Godongwana also emphasised that government continued to pursue deep-running, broader reforms of the company and the logistics sector as a whole, adding that "without a comprehensive reform of the sector, rather than that of a single entity, we risk being faced with similar challenges in the future".

However, he also expressed confidence that the reforms needed to put Transnet back on track could be achieved if the entity committed to meeting the strict conditionalities attached to the guarantee and if its speedily implemented the reforms informed by the National Logistics Crisis Committee.

Transnet, the National Treasury added, would explore further the divestment of noncore assets, a reduction of its current cost structure, as well as alternative funding models for infrastructure and maintenance requirements.

"The latter includes but is not limited to project finance, third-party access, concessions, and joint ventures."

Gordhan highlighted the fact that Transnet remained critical to the South African economy.

"A well-functioning logistics company is particularly important given the geographical distribution of economic activity in the country, our reliance on commodity and other exports, as well as our distance from key export markets."