Domestic new-vehicle sales in June increased by 14%, to 46 810 units, compared with the same month last year.

The new-passenger-car market reached 29 795 units last month – a gain of 0.8% over June last year.

The rental industry accounted for 13.4% of car sales last month.

Sales of new bakkies, vans and minibus taxis – light commercial vehicles – jumped by 57.1%, to 13 945 units.

June medium-truck sales grew by 8.2%, reaching 743 units, while heavy-truck and bus sales expanded by 19.6%, to 2 327 units.

In contrast to these positive numbers, June export sales, at 27 296 units, dropped by 12.6% compared with the same month last year.

This is an especially poor performance as June 2022 exports were heavily affected by flooding in KwaZulu-Natal.

For the first half of the year the South African new-vehicle market was up 12 284 units, or 4.8%, on the corresponding period last year, while vehicle exports were 4.7% ahead of the first half of 2022.

Electric vehicle (EV) adoption is set to soar in the coming years, with more than 100-million passenger EVs expected on the roads by 2026, and more than 700-million by 2040.

This is a significant increase from the 27-million units recorded at the beginning of this year.

This is according to research company BloombergNEF’s (BNEF’s) latest yearly long-term Electric Vehicle Outlook (EVO) report.

Electrification is now spreading quickly to all sectors of road transport, from rickshaws to heavy trucks, and is also picking up in emerging economies like India, Thailand and Indonesia.

As momentum grows, new economic opportunities are taking shape, notes the report.

The document also notes that EV sales are set to rise sharply.

In the Economic Transition Scenario – BNEF’s base-case scenario which assumes no new policies are implemented – passenger EV sales will rise from 10.5-million units in 2022, to 22-million in 2025 (26% of sales), 42-million in 2030 (44% of sales) and 75-million in 2040 (75% of sales).

Some countries will move much faster, including the Nordics, China, Germany, South Korea, France and the UK.

By 2030, there will be 244-million EVs on the road, rising to 731-million by 2040 (46% of the fleet).

The cumulative value of EV sales across all segments will hit $8.8-trillion by 2030 and $57-trillion by 2050 in BNEF’s base-case Economic Transition Scenario.

“EVs and batteries are now a central part of many countries’ industrial policy and competition to attract investment will increase in the coming years,” says the EVO.

“Direct electrification via batteries is the most efficient, cost-effective and commercially available route to fully decarbonising road transport,” says BloombergNEF EV head Aleksandra O’Donovan.

“Still, a stronger push is needed on areas like heavy trucking, charging infrastructure and raw material supply.”

ICE Sales in Decline

The EVO report also found that oil demand from road transport was very near its peak.

The rise of EVs will lead to a peak in overall road fuel demand in 2027.

Demand in the US and Europe has already peaked, while demand in China is set to peak next year.

Sales of internal combustion engine (ICE) vehicles reached its apex in 2017 and are now in long-term decline.

Engineering News editor Terence Creamer discusses government's that it is considering the possibility of public-private partnerships (PPPs) to expand grid capacity; Eskom's new grid access rules; and the market's response to the new rules.

BMW will invest R4.2-billion over the next five years in its Rosslyn plant in South Africa to build the new-generation X3 sports-activity vehicle, including a plug-in hybrid electric vehicle (PHEV).

South Africa will be the exclusive global supplier of the X3 PHEV, with internal combustion engine production to only be added to the fold later in the product’s lifecycle.

Production of the PHEV will start in the second half of next year, with the first prototype vehicles already rolling off the assembly line in Pretoria.

The PHEV will also be on sale in South Africa.

The Rosslyn plant this year celebrates its fiftieth anniversary. It was the European premium car maker’s first wholly owned plant outside Germany.

BMW management board member for production and BMW Group South Africa (BMW SA) chairperson Dr Milan Nedeljković says the next step for the South African plant will be battery electric vehicles (BEVs).

“By preparing for PHEVs we are setting the path for electrification.”

Nedeljković says PHEV production will require some structural preparation within the plant, as well as skills training.

He adds that flexibility is key to BMW’s global success, especially the ability to assemble different derivatives on a single assembly line, as is currently the case with Rosslyn producing the current X3, as well as the initial prototypes of the fourth-generation X3.

“We are committed to transformation and our associates’ skills development with the implementation of a plant-wide training programme for the new model,” says Rosslyn plant director Dr Niklas Fichtmüller.

“More than 300 BMW Plant Rosslyn associates will receive specialised training to support the production of the next-generation BMW X3 PHEV.”

Around 20 000 people are directly and indirectly employed at BMW SA’s facilities and within its supply chain.

More than 1.6-million vehicles have been manufactured at the Rosslyn plant, to date, and exported to more than 40 countries worldwide, including 14 African countries.

The production portfolio in Rosslyn has included the BMW 1800 SA and BMW 2000 SA, as well as BMW 5 Series and BMW 7 Series vehicles.

Rosslyn had been an important pillar for the production of the BMW 3 Series from 1983 until 2018, when the BMW X3, the best-selling BMW vehicle in South Africa, started rolling off the assembly line.

PHEV production at Rosslyn will make the X3 the second PHEV model to be produced locally among South Africa’s seven vehicle manufacturers, with one mild hybrid also in production. No BEVs are produced in South Africa.

Unicef

BMW has also announced a donation of R30-million to support a United Nations Children’s Fund (Unicef) programme.

The BMW Group and Unicef will embark on a joint effort targeted at thousands of South African primary and secondary school learners to extend and deepen their knowledge in science, technology, engineering, arts and mathematics.

Eskom’s newly released Interim Grid Capacity Allocation Rules (IGCAR), formulated in response to surging demand for grid access in a context of acute grid scarcity, have received a cool reception from industry, with some of the conditions included in the new framework being viewed as “onerous”.

GM for operations enablement Velaphi Ntuli says the IGCAR, which have been developed and canvassed over the past six months, have been designed to ensure that shovel-ready generation projects are given priority.

The rules, thus, replace the ‘first come, first served’ framework that has hitherto prevailed with a ‘first ready, first served’ approach.

He reports that the rules are also designed to level the playing field between projects participating in public procurement processes and those being pursued in line with a recent reform allowing private distributed generation projects, including those that wheel electricity through the grid, to proceed without a licence.

The absence of a grid queuing system came to the fore during the sixth bid window of the country’s public renewables procurement programme when none of the 23 onshore wind projects that bid for a 3 200 MW allocation were selected as preferred bids, owing to claims of grid over-subscription in the Western, Eastern and Northern Cape provinces.

Ntuli reports that Eskom is working with the Independent Power Producers Office to finalise the status of projects that have been procured under various public programmes and are, thus, continuing to take up a grid allocation, but which have failed to reach financial close.

Engineering manager Seetsele Seetswana says the new rules retain the principle of non-discriminatory and open access, but reports that Eskom has reserved the right to set aside allocations for future public procurement programmes to avoid a repeat of the failure of bid window six.

To facilitate a shift to the ‘first ready, first served’ principle, Eskom outlined the criteria it would apply to assess the ‘state of readiness’ of a project, including:

the securing of all environmental and water-use authorisations;

power purchase agreement heads of terms signed between the independent power producer (IPP) and the end-user;

confirmation of the appointment of Eskom-approved design consultants for self-build connections;

measured data for solar for a period of a year and for two years for wind; and

the payment of a Grid Capacity Allocation Guarantee issued by an Eskom-approved financial institution.

Only once these conditions have been met will Eskom issue a budget quote (BQ) for grid connection, while still reserving the right to revoke such a quote should there be a failure on the part of the IPP to meet any of the milestones outlined in the BQ.

Following a pause of seven months, Eskom will also begin processing BQs again under the new rules, starting with the backlog of applications that has accumulated.

Eskom’s Nonhlanhla Miya reports that the processing of the 40 outstanding applications in the Eastern, Northern and Western Cape provinces would be processed as from the end of June and that the outcome of that process will be communicated by the end of July.

The projects have a combined capacity of some 5 GW and those that are approved should secure BQs soon after having paid their guarantees, while those that fail to meet the IGCAR criteria will receive BQ refunds.

South African Independent Power Producers Association (SAIPPA) chairperson Brian Day has described the new rules as “dysfunctional”, noting that they require grid connection to be done right at the end, and in terms of resource definition are more onerous than what is expected from a bank that might be funding up to 80% of an IPP project.

“It's not rational.

“The amount of work on the side of the IPP or developer is now enormous, long before grid connection is known to be possible.

“The amount of money they've got to spend on technical preparations and on lawyers is enormous,” Day asserts.

He notes that al...

The demands of digitalisation, electrification, autonomous vehicles, sustainability and changing consumer preferences have given rise to a host of new occupations within the automotive sector, Isuzu Motors South Africa president and automotive executive oversight committee skills development workstream chairperson Billy Tom has said.

“The automotive industry must take deliberate steps to cultivate a culture that values and encourages the pursuit of technical expertise. By doing so, we can secure a pool of skilled individuals who will drive our industry forward even in the face of challenges,” he said on June 26.

He was one of many industry leaders who spoke at a thought leadership roundtable discussion event hosted by naamsa | The Automotive Business Council, in partnership with financial institution Old Mutual, in Johannesburg.

The event was the second instalment in a four-part series of thought leadership roundtable discussions focussed on the industry’s four key strategic areas for the 2023 calendar year.

Discussions revolved around the theme of ‘transformation beyond compliance’ and how all key stakeholders within the automotive sector of South Africa needed to push the transformation agenda, which had become a licence to trade for the automotive industry in the country.

In the realm of digitalisation, Tom revealed that there was increased demand for software engineers, data analysts and cybersecurity professionals, who were responsible for developing and maintaining the complex systems that enabled autonomous driving. Occupations such as autonomous vehicle engineers, simulation specialists and safety analysts have also emerged as key in the rapidly evolving field.

“These individuals play a crucial role in developing and maintaining advanced digital technologies that power connected vehicles, smart factories and data-driven decision-making processes,” he explained.

Additionally, expertise in virtual and augmented reality, machine learning and artificial intelligence were becoming increasingly valuable for automotive companies, he said.

The shift towards electrification has also given rise to specialised occupations, in electric powertrain systems, betting technology and charging infrastructure. Workers with these skills are essential for the design, development and maintenance of electric vehicles (EVs) in the associated components.

Moreover, occupations such as EV technicians and battery engineers have emerged to meet the growing demand for expertise in this field.

Tom noted that sustainability had also become a more pressing concern for the automotive industry, leading to increased demand for workers with expertise in sustainable manufacturing practices, environmental engineering and renewable energy.

“These individuals contribute to the development and implementation of eco-friendly processes and technologies that reduce the industry's carbon footprint. Additionally, skills in green logistics and supply chain management are increasingly valued as companies strive for sustainability throughout the entire value chain,” he said.

In terms of changing consumer preferences, Tom said skills in user experience design, digital marketing and data analytics were increasingly essential for providing a personalised and connected experience for consumers.

“As the demand for connected vehicles, technologies and smart mobility solutions grows, professionals in these areas play a pivotal role in shaping the future of the automotive industry,” he said.

He added that the successful implementation of skills development initiatives in the automotive industry would require a comprehensive and strategic approach.

“Through assessment analysis, we can identify industry demands, emerging technologies and global trends that shape the future of the work. By collaborating with relevant stakeholders, including government bodies, industry associations and educational institutions, we can ensure that our efforts align with market needs and drive in...

The construction mafia, or so-called ‘business forums’, first reared its head in KwaZulu-Natal in 2014 and 2015, invading construction sites to demand a share of projects, or that companies employ specific people or subcontractors.

By 2018 and 2019 this practice also emerged in other provinces, with these forums often touting heavy-calibre weapons as they made their demands.

A similar model of extortion has since spread to other industries, most notably mining.

Much of the violence has subsided in KwaZulu-Natal, says Jenni Irish-Qhobosheane, a researcher at the Global Initiative Against Transnational Organised Crime.

However, this is not a sign that the illegal activities have stopped, she notes, but rather that extortion has become normalised, and yet another cost of doing business in South Africa.

Ayabonga Cawe, chief commissioner at the International Trade Administration Commission of South Africa, says extortion is compromising government’s infrastructure rollout, which affects the entire economy.

He explains that conflicts such as these often arise when there are different interpretations of laws and regulations.

“The problem lies in how preferential procurement has unfolded, and this opens up the way for opportunistic criminals,” he says.

Irish-Qhobosheane agrees.

“We do need to recognise that economic exclusion and a lack of economic transformation creates fertile ground for extortion in construction.

“However, it is important to distinguish between genuine community concerns and criminals involved in extortion for their own gain.”

Business forums typically demand 30% of the contract value be allocated to forum members, or directly to the forum itself.

This figure appears to be derived from National Treasury’s Preferential Procurement Policy Framework Act.

This Act states that 30% of public procurement contracts should be contracted to designated groups, as provided for in the Preferential Procurement Regulations, with the forums’ demands then painted with the veneer of transformation.

National Treasury has strongly condemned this practice as illegal, and as a blow to government’s attempts to advance the interests of historically disadvantaged individuals and small businesses.

Irish-Qhobosheane and Cawe spoke at Human Sciences Research Council events.

Where to Now?

It can hardly be emphasised enough that business has to put in place comprehensive directives for dealing with extortion attempts, says Corobrik director Musa Shangase.

“The first principle should be to afford the business forum the opportunity for dialogue; to present their demands.

“I advise sharing with them the terms of the contract and what the obligations are for advancing transformation goals,” notes Shangase.

“They need to be informed whether the project is a public or private one, and what the implications are in each case.”

Shangase also advises companies to request a database of the business forum’s constituents, and to employ a community liaison officer who can act as a mediator between the community and the company.

The duties of the community liaison officer include negotiating, and developing and fostering relationships.

In public sector projects, the community liaison officer acts as the link between the main contractor and the business forum.

In the case of private sector projects, if a business forum insists on participation, the matter should be reported to the police, says Shangase.

Business Against Crime’s Guidelines

Business Against Crime South Africa (Bacsa) has, as part of the work of the National Priority Committee on Extortion and Violence at Economic Sites, authored a set of guidelines to help companies deal with extortion.

Bacsa national project manager Roelof Viljoen says it is important for companies and their employees to understand what extortion is, so that they can identify and report it as and when required.

Also, successful prosecution is vital to reducing extortion.

Extortion as a crime requires two elements: the demand...

Eskom is expecting demand for the rest of South Africa’s winter months to remain below levels initially assumed when the utility finalised its base case for the high-demand season (see graphic above), while it is also beginning to report improved generation performance at some of its coal stations.

When Eskom unveiled its winter outlook on May 18, it warned that it might be forced to resort to Stage 8 loadshedding (representing 16 hours of cuts in a 32-hour cycle) should it fail to cap coal plant breakdowns to below 15 000 MW and should demand spike on the back of colder temperatures, particularly in Gauteng.

Eskom’s Eric Shunmagum reports that there have been favourable developments on both fronts, with demand having moderated from the 33 000 MW peak experienced in late May and supply having also improved from both Eskom and renewables plants.

The May peak preceded the implementation of the winter tariff, implemented on large energy intensive businesses as from June 1.

Shunmagum says Eskom has not yet calculated the full effect of the winter tariff but estimates that demand is likely to have dropped by between 850 MW and 1 000 MW as a result of large industrial plants having shut down in line with the introduction of the tariff. The utility is also pursuing a demand-side management campaign through which it hopes to shave a further 1 000 MW from consumption over the coming few months.

He stresses, however, that the main reason for the current deviation from the winter demand base case is attributable to weather conditions which have also supported the availability of some renewables generators. The wind fleet in particular, has performed strongly during recent cold fronts, supplying up to 2 000 MW during evening peaks on certain days.

While Gauteng could still face a cold snap, which could drive up demand significantly, the utility is nevertheless expecting peak demand to remain below the base case peak forecast outlined in May for the rest of the winter period to September. The utility’s latest peak demand forecast does not show demand rising above 32 000 MW again this winter.

Shunmagum stresses, however, that there have also been improvements on the supply side, with unit breakdowns, which were trending at between 18 500 MW and 19 000 MW in May, currently trending between 14 500 MW and 16 000 MW.

“So, there's at least a 3 000 MW improvement on breakdowns,” he states.

Ahead of winter, the generation division outlined a goal of sustaining breakdowns to below 15 000 MW and of capping planned outages to below 3 000 MW to limit loadshedding, as well as the use of diesel at the open cycle gas turbines.

“There has definitely been an improvement in generation performance,” he says, reporting particularly pleasing turnarounds at Tutuka, Duvha, Kendal and Majuba.

On the supply-side, Eskom has also welcomed the decision by the Department of Forestry, Fisheries and the Environment to grant Kusile a postponement in meeting sulphur dioxide minimum emission standards.

The postponement means that Eskom will be able to operate temporary stacks at the three units rendered inoperable after the Unit 1 flue duct collapsed on October 23, owing to a build-up of slurry. The collapse also compromised the unit 2 and 3 flue ducts, which share a chimney with the Unit 1 flue.

Under the updated Atmospheric Emission Licence, Kusile will be able to bypass the flue gas desulphurisation plant until March 31, 2025 and resume output using temporary stacks that will be returned to service in November (Unit 3) and December (Unit 1 and Unit 2).

The units will not be introduced at full load of about 720 MW, however, and will produce at about 520 MW apiece while employing the temporary stacks.

The utility is planning to complete repairs to the ducts in the permanent stack by December 2024.

Regulator-licensed South African electricity trader Enpower Trading is promoting wheeling and trading over municipal networks as a way of combatting the trend of “off-grid flight”, which poses a threat to electricity income that can contribute more than half of a municipality’s overall revenues.

There is a growing demand from independent power producers (IPPs) and traders to transport, or wheel, electricity across both Eskom and municipal networks and such demand is expected to grow in light of reforms that could result in IPPs and traders seeking multiple customers for their surplus generation.

Municipalities are also receiving an increasing number of wheeling applications from local business, but the current absence of a national wheeling framework, the development of which is being prioritised by the National Energy Crisis Committee, means there are currently no clear guidelines, and many municipalities also lack the skills to conclude such agreements with either IPPs or traders.

Enpower Trading CEO James Beatty says municipalities are justifiably concerned about entering into lopsided agreements that could further deepen their financial challenges and accelerate utility death spirals.

At the same time, however, there is a growing risk of losing rate-paying customers as a result of grid defection, which Enpower describes as off-grid flight.

“If the energy is not flowing through the grid, the municipality can’t generate income from it,” Beatty highlights, adding that such defection is also resulting in less income to support indigent communities.

It is also negatively affecting affordability for those who remain grid-connected, as there are fewer customers to share the grid costs.

“In most instances, customers are leaving the grid because the energy has become too expensive and unreliable. If a lower-cost and cleaner alternative can be provided, businesses and households will stay connected.”

Enpower Trading, which is one of only a handful of electricity traders currently licensed by the National Energy Regulator of South Africa, believes a revenue-neutral energy trading model can play a role in curbing such defection and is currently engaging with some 60 municipalities on the concept.

The model has been designed, Beatty explains, to ensure that a municipality retains both its customers and its electricity revenue surplus by facilitating the purchase of cheaper and cleaner electricity from IPPs.

The municipality enters into a Use of System Agreement with Enpower, which includes a wheeling tariff that is priced to cover the municipalities network costs and sustain any surplus revenues generated from the asset.

Enpower Trading, rather than the municipality, contracts with the IPPs, eliminating the need for a procurement process, and is also responsible for collecting payment for wheeled energy from customers.

The company’s first live and operational transaction was concluded with the George municipality, in the Western Cape, and involves trading power from SolarAfrica Energy’s 1.8 MW George-embedded solar plant to four low voltage-connected customers inside the George distribution grid.

Enpower Trading has entered into a power purchase agreement (PPA) for 1 MW of the solar energy generated on site in George and has signed supply agreements with the four customers priced at a discount to their existing municipal tariff. The George municipality is compensated for wheeling the electricity through an agreed wheeling tariff. The company has also entered into a PPA for a further 100 MW which is expected to become operational toward the end of 2024.

A use of system agreement has also since been concluded with the Overstrand municipality and Enpower Trading is a participant in the City of Cape Town’s wheeling and trading pilot project, which is set to commence operations in July.

Beatty believes South Africa’s preoccupation with generation has resulted not only in an underinvestment in distribution networks by municipalities, but ...

Engineering News editor Terence Creamer talks about the grid constraints, particularly in the Eastern, Western and Northern Cape; Eskom's approach to grid access to date and how it proposes to change that; and what else will be needed to deal with the issue of grid constraints.