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    The Generation of Electricity in South Africa 2024

    Gary Phillips | South Africa | 30 January 2024

    The Generation of Electricity in South Africa 2022

    Stephen Timm | South Africa | 30 November 2022

    The Generation of Electricity in South Africa 2021

    Yasmin Mahomedy | South Africa | 16 February 2021

    The Generation of Electricity in South Africa 2020

    Yasmin Mahomedy | South Africa | 15 January 2020

    The Generation of Electricity in South Africa 2018

    Yasmin Mahomedy | South Africa | 31 October 2018

    The Generation of Electricity in South Africa 2017

    Yasmin Mahomedy | South Africa | 18 October 2017

    The Generation of Electricity in South Africa 2016

    Yasmin Mahomedy | South Africa | 08 August 2016

    The Generation of Electricity in South Africa 2015

    Yasmin Mahomedy | South Africa | 29 May 2015

    Report Info

    Report Summary Table of Contents
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    Report Coverage

    This report on the generation of electricity in South Africa provides comprehensive information on Eskom and independent power producers, energy sources including renewables, and changes to the energy mix, the new draft Integrated Resource Plan, the Eskom crisis, smallscale generation, notable players and regulatory developments. It also covers influencing factors such as input costs, and the changing competitive landscape. There are profiles of 31 companies including Eskom, the Avon and Dedisa peaking power plants, emergency energy provider Karpowership and renewable companies such as Mulilo Energy, EDF, ACWA Power, Oya Energy, African Rainbow and Energy Projects, Sola Group, Globaleq, Enel Green Power, Scatec, Cennergi, Seriti Green and Pele Green Energy.

    Introduction

    • South Africa’s electricity crisis intensified in 2023 due to extensive breakdowns at the debt-laden Eskom’s aging power stations. \r\n
    • This comes at a time when the renewable energy independent power procurement programme has slowed considerably. \r\n
    • Recent regulatory changes have unlocked new avenues of private and municipal investment in electricity generation. \r\n
    • Eskom’s unbundling into separate generation, transmission, and distribution companies, was targeted to be complete by the middle of 2024. \r\n
    • Eskom planned to reduce loadshedding in 2024 with the return of large amounts of capacity to operation after long periods of maintenance. \r\n
    • Eskom continues to be beset by corruption, theft and sabotage. \r\n
    • The electricity grid is at capacity with limited opportunity to receive new supply.

    Trends

    • Eskom’s municipal debt continues to be very high.
    • Eskom’s poor financial and operational performance continues.
    • Loadshedding continues to escalate.
    • Regulatory moves to separate Eskom into three companies and to introduce competition in electricity generation gained pace in 2023.
    • Renewable energy companies have taken advantage of new commercial and industrial self-generation projects.
    • Small-scale embedded solar generation, predominantly residential, rapidly increased in 2023.
    • The contribution of coal-sourced electricity to total generation has been declining.
    • The introduction of new utility-scale independent renewable energy power supply to Eskom is being constrained by the lack of capacity on the national grid.

    Opportunities

    • Electricity trading providing remote markets for independent power producers.
    • Private supply of distributed electricity generation capacity for large companies.
    • Solar panel prices have dropped considerably, making embedded solutions more affordable.

    Challenges

    • Continued theft and corruption at Eskom.
    • Eskom’s continued poor financial and operational performance.
    • Installing sufficient renewable energy and gas generation supply to reduce dependence on coal.
    • The national grid is at capacity.

    Outlook

    • The electricity crisis has caused significant losses to the economy. \r\n
    • Private renewable energy generation companies face challenges as the grid is at full capacity. \r\n
    • The outlook for the electricity generation industry is poor. \r\n
    • Government anticipates the supply deficit to last until 2027. \r\n
    • There could be some relief from the removal of regulatory hurdles to private sector participation and direct municipal procurement of electricity. \r\n
    • Embedded rooftop solar generation and self-generation investment continue to grow. \r\n
    • The unbundling of Eskom will enable the private sector to supply utility-scale electricity.\r\n
    • Treasury has implemented a plan to relieve Eskom debt, and Eskom has implemented a plan to tackle municipal debt.

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    Industry Organogram

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    The Generation of Electricity in South Africa 2020-01-15

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    Table of Contents

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    PAGE
    1. INTRODUCTION 1
    2. DESCRIPTION OF THE INDUSTRY 2
    2.1. Industry Value Chain 5
    2.2. Geographic Position 7
    2.3. Size of the Industry 9
    3. LOCAL 15
    3.1. State of the Industry 15
    3.2. Key Trends 29
    3.3. Key Issues 30
    3.4. Notable Players 30
    3.5. Trade 35
    3.6. Corporate Actions 37
    3.7. Regulations 38
    3.8. Enterprise Development and Social Development 40
    4. AFRICA 41
    5. INTERNATIONAL 45
    6. INFLUENCING FACTORS 47
    6.1. Unforeseen Events 47
    6.2. Economic Environment 48
    6.3. Labour 49
    6.4. Environmental Issues 52
    6.5. Technology, R&D, Innovation 54
    6.6. Government Support 55
    6.7. Input Costs 55
    7. COMPETITIVE ENVIRONMENT 56
    7.1. Competition 56
    7.2. Ownership Structure of the Industry 57
    7.3. Barriers to Entry 58
    8. INDUSTRY SUMMARY 58
    9. OUTLOOK 59
    10. INDUSTRY ASSOCIATIONS 60
    11. REFERENCES 60
    11.1. Publications 60
    11.2. Websites 61
    Appendix 1 62
    Summary of Notable Players 62
    Appendix 2 66
    List of Relevant Legislation 66
    COMPANY PROFILES 73
    Acciona Energy South Africa (Pty) Ltd 73
    ACWA Power Solafrica Bokpoort CSP Power Plant (RF) (Pty) Ltd 75
    African Rainbow Energy and Power (Pty) Ltd 77
    Associated Energy Services (Pty) Ltd 79
    Avon Peaking Power (RF) (Pty) Ltd 81
    BioTherm Energy (Pty) Ltd 83
    Cennergi (Pty) Ltd 85
    Coria (PKF) Investments 28 (RF) (Pty) Ltd 88
    Coxabengoa Services South Africa (Pty) Ltd 90
    Dedisa Peaking Power (RF) (Pty) Ltd 92
    EDF Renewables (Pty) Ltd 94
    Enel Green Power RSA (Pty) Ltd 96
    Engie Southern Africa (Pty) Ltd 98
    Eskom Holdings SOC Ltd 100
    Globeleq South Africa Management Services (Pty) Ltd 104
    Hopefield Wind Farm Local Community Company NPC 106
    Karpowership SA (Pty) Ltd 108
    Lekela Power Intermediate Holdings (Pty) Ltd 110
    Mainstream South Africa Renewable Power (Pty) Ltd 112
    Mulilo Energy Holdings (Pty) Ltd 113
    National Energy Regulator of South Africa 115
    Pele Energy Group (RF) (Pty) Ltd 118
    RCSA Energy (Pty) Ltd 120
    Reatile Group (Pty) Ltd 121
    Red Rocket South Africa (Pty) Ltd 123
    Scatec Africa (Pty) Ltd 126
    SEF SOC Ltd 128
    Seriti Green Developments South Africa (Pty) Ltd 132
    Sola Group (Pty) Ltd 134
    Solar Capital (Pty) Ltd 136

    Report Coverage

    This report on the generation of electricity in South Africa includes comprehensive information on the extent of the crisis, actions and projects aimed at relieving it, and the sources of generation that are planned. There is information on the state of the sector, the role of Eskom and the effect of its financial and operational crisis and renewable energy and embedded generation developments. There are profiles of 30 companies including Eskom, the National Energy Regulator, the Avon and Dedisa peaking power plants, and renewables players such as Enel Green Power, EDF Renewables and Scatec Solar.

    Introduction

    • South Africa, which produces over a quarter of Africa’s electricity, is in an electricity crisis as power cuts escalated in 2022. \r\n
    • The percentage availability of the country’s total installed capacity fell to below 60% by October 2022 as power stations continue to break down, resulting in power cuts to prevent the electricity grid from collapsing. \r\n
    • The crisis has been compounded by Eskom’s debt of about R400bn and the need for the country to transition from its reliance on coal to renewable energy. \r\n
    • Corruption, sabotage, increasing unpaid debt from municipalities and a loss of skills continue to threaten Eskom’s viability.\r\n
    • In a bid to make Eskom more financially viable, government in 2019 announced it would split it into three parts, with a distribution company due to be launched at the end of 2022. \r\n
    • Government recently revived the Renewable Independent Power Producer Programme which had been stalled for some years. \r\n
    • Debate continues over the country’s energy mix and the role that gas, nuclear and coal power will play, with the government not having updated the integrated resource plan since 2019.

    Strengths

    • Eskom is a net electricity exporter to the southern African region.
    • South Africa has abundant sources for coal-fired electricity and renewable energy.
    • South Africa is the largest electricity producer on the continent.

    Weaknesses

    • Delays in Eskom’s build programme for Medupi and Kusile.
    • Electricity is not being managed sustainably due to financial mismanagement and corruption.
    • High capital costs and difficult regulatory environment for independent power producers.
    • Ongoing breakdowns of Eskom’s unreliable aging coal-fired plants leaves the country with only about 60% of installed capacity.
    • Reliance on Eskom for almost 90% of electricity requirements.
    • Some have questioned the role BEE has played in contributing to Eskom’s skills deficit, significant debt and corruption.

    Opportunities

    • Investment, skills, and extra power brought by independent power producers.
    • Job creation and increased energy supply from renewable energy projects.
    • Municipalities can commission and procure their own power needs.
    • South Africa and the region’s recent large gas discoveries could make gas-to-power projects viable.
    • South Africa can encourage the development of local suppliers to build and export renewable energy inputs.
    • The deregulation of the electricity market allows for energy wheelers and traders.
    • The just energy transition is making more climate finance available for renewable projects.
    • The price of most forms of renewable energy is decreasing, making renewable energy investment more attractive.
    • The removal of licensing for power plants of 1MW to 100MW will incentivise embedded generation projects.

    Threats

    • Collapse of the national grid.
    • Corruption and mismanagement at Eskom.
    • Escalating tariffs have reduced electricity demand.
    • Eskom debt, which threatens its viability.
    • Eskom will be liable for high carbon tax if it does not lower its emissions.
    • Rampant criminality with the increase in cable theft, corruption, sabotage and illegal electricity connections.
    • Rising inputs and global logistics delays could delay renewable energy projects and make them unsustainable.
    • The shortage of transmission capacity in the Northern Cape threatens to delay new IPPs from coming online.

    Outlook

    • Electricity shortages are likely to persist until mid-2024, until new power projects come online. \r\n
    • While economic growth is expected to slow as a result of loadshedding, in turn leading to lower electricity production, various measures will open the domestic market up to new producers and electricity traders. \r\n
    • The crisis has driven the addition of renewable energy capacity.\r\n
    • However, the country’s reliance on Eskom represents a major liability, particularly given its debt, which threatens to undermine electricity security if it limits spend on planned plant maintenance and procurement of new capacity.

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    The Generation of Electricity in South Africa
    The Generation of Electricity in South Africa 2022

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    The Generation of Electricity in South Africa 2016-08-08

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    The Generation of Electricity in South Africa 2015-05-29

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    Table of Contents

    [ Close ]
    PAGE
    1. INTRODUCTION 1
    2. DESCRIPTION OF THE INDUSTRY 1
    2.1. Industry Value Chain 4
    2.2. Geographic Position 6
    2.3. Size of the Industry 9
    3. LOCAL 13
    3.1. State of the Industry 13
    3.2. Key Trends 23
    3.3. Key Issues 39
    3.4. Notable Players 40
    3.5. Trade 41
    3.6. Corporate Actions 43
    3.7. Regulations 45
    3.8. Enterprise Development and Social Development 48
    4. AFRICA 50
    5. INTERNATIONAL 53
    6. INFLUENCING FACTORS 54
    6.1. Economic Environment 54
    6.2. Labour 54
    6.3. Environmental Issues 56
    6.4. Technology, R&D, Innovation 58
    6.5. Government Support 58
    6.6. Input Costs 60
    6.7. Eskom Debt 62
    6.8. Corruption, Sabotage and Theft 64
    6.9. Electricity Tariffs 68
    7. COMPETITIVE ENVIRONMENT 69
    7.1. Competition 69
    7.2. Ownership Structure of the Industry 70
    7.3. Barriers to Entry 71
    8. SWOT ANALYSIS 71
    9. OUTLOOK 73
    10. INDUSTRY ASSOCIATIONS 73
    11. REFERENCES 73
    11.1. Publications 73
    11.2. Websites 75
    APPENDIX 1 76
    Summary of Notable Players 76
    COMPANY PROFILES 80
    Abengoa South Africa (Pty) Ltd 80
    Acciona Energy South Africa (Pty) Ltd 82
    ACWA Power Solafrica Bokpoort CSP Power Plant (RF) (Pty) Ltd 84
    African Rainbow Energy and Power (Pty) Ltd 86
    Associated Energy Services (Pty) Ltd 88
    Avon Peaking Power (RF) (Pty) Ltd 90
    BioTherm Energy (Pty) Ltd 92
    Cennergi (Pty) Ltd 94
    Coria (PKF) Investments 28 (RF) (Pty) Ltd 97
    Dedisa Peaking Power (RF) (Pty) Ltd 99
    EDF Renewables (Pty) Ltd 101
    Enel Green Power RSA (Pty) Ltd 103
    Engie Southern Africa (Pty) Ltd 105
    Eskom Holdings SOC Ltd 107
    Globeleq South Africa Management Services (Pty) Ltd 111
    Hopefield Wind Farm Local Community Company NPC 113
    Hulisani Ltd 115
    Kelvin Power (Pty) Ltd 117
    Lekela Power Intermediate Holdings (Pty) Ltd 119
    Mulilo Energy Holdings (RF) (Pty) Ltd 121
    National Energy Regulator of South Africa 123
    Pele Energy Group (RF) (Pty) Ltd 126
    Phelan Energy Group (Pty) Ltd 128
    Red Rocket South Africa (Pty) Ltd 130
    Rosatom Central and Southern Africa (Pty) Ltd 133
    Scatec Solar Africa (Pty) Ltd 135
    SEF SOC Ltd 137
    Sinogy Holding (Pty) Ltd 141
    Sola Group (Pty) Ltd 142
    Solar Capital (Pty) Ltd 144

    Report Coverage

    This report focuses on the generation of electricity and includes information on the size and state of the sector, including coal, gas and renewables and developments at Eskom and in the independent power production programme. There are profiles of 13 companies including Eskom, the National Energy Regulator of South Africa, Dedisa Peaking Power, Hopefield Wind Farm Local Community Company and ACWA Power Solafrica Bokpoort.

    Introduction

    This report focuses on the generation of electricity in South Africa, which is dominated by state-owned utility Eskom. The utility continues to be plagued by financial instability, corruption, generating capacity shortages, and a debt burden which is threatening the country’s economy. Eskom’s debt, which is fuelling South Africa’s economic crisis, stood at R488bn at the end of March 2020, up by R48bn from March 2019, and it reported a net loss after tax of R20.7bn for the 2020 financial year. In October 2020, during Eskom’s quarterly state of the system briefing, officials said that “load shedding will likely persist in the near future as plants undergo much-needed maintenance”. Although Eskom has spent billions on the construction of two massive coal-fired stations Medupi, which began in 2007, and Kusile, in 2008, to increase capacity, it produced less electricity from coal than a year ago. Eskom produced 194,357 gigawatt hours (GWh) from coal in the year to end-March 2020, compared to 200,210GWh in the prior year. Total electricity produced for the same period, which includes electricity from sources other than Eskom including renewables, also declined from 218,939GWh in 2019, to 214,968GWh in 2020. Eskom’s reduced capacity has been mainly due to maintenance, and unplanned breakdowns, which led to 20 days of load-shedding from July to 14 December 2020. This figure would have been higher if Eskom had not used open cycle gas turbines which run on diesel, at R10m per hour, to support the power system when capacity was severely strained. Eskom spent R7.5bn on diesel-generated power to prevent load-shedding in the year to end-March 2020. For the six months to end-September 2020, Eskom spent R1.4bn on open cycle gas turbines, compared to R1.1bn for six months to end-September 2019. Although government’s Integrated Resource Plan 2019 (IRP 2019), which outlines the energy mix for the next decade, includes increased generation capacity from renewable sources, South Africa is reliant on coal for the near future.

    Strengths

    • South Africa has abundant sources for coal-fired electricity and renewable energy.
    • South Africa is the largest electricity producer on the continent.

    Weaknesses

    • Delays in Eskom’s build programme.
    • Electricity is not being managed sustainably due to financial mismanagement and corruption.
    • Eskom’s capacity constraints due to maintenance and breakdowns, resulting in load-shedding.
    • Eskom’s high debt burden.
    • High capital costs and difficult regulatory environment for independent power producers.
    • Reliance on Eskom for about 90% of electricity requirements.

    Opportunities

    • Investment, skills, and extra power brought by independent power producers.
    • Job creation and increased energy supply from renewable energy projects.
    • The price of most forms of renewable energy is decreasing, making renewable energy investment more attractive.

    Threats

    • Collapse of the national grid.
    • Corruption and mismanagement at Eskom.
    • Eskom will be liable for high carbon tax if it does not lower its emissions.
    • Increase in vandalism, cable theft, and illegal electricity connections.
    • Increasing shortage of skills.

    Outlook

    he future of South Africa’s industrial and economic growth will remain uncertain in the absence of an efficient electrical system, and due to Eskom’s inability to repay its debt. Eskom has experienced an approximate 1% reduction in sales volumes per annum in recent years. The coronavirus pandemic placed further pressure as the economy contracted and Eskom said it is unlikely that electricity demand will recover to pre-pandemic levels by the end of 2021 due to the long-lasting effect of the economic recession. Although government has recognised that South Africa needs an abundant, reliable supply of electricity with affordable prices to attract investment, it will still not commit to 100% renewable power in the foreseeable future. Eskom’s de Ruyter has warned that the utility’s power generation crisis would persist for longer if government failed to allow it to procure more electricity from independent power producers. According to Bloomberg Economics, “the single biggest risk to South Africa’s economic outlook remains the availability of electricity. It is a binding constraint that continues to hold back productivity and investment growth. Without it, the country’s growth potential will remain stuck at around 1%, even if progress is made in other areas.”

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    The Generation of Electricity in South Africa
    The Generation of Electricity in South Africa 2021

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    The Generation of Electricity in South Africa 2020-01-15

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    The Generation of Electricity in South Africa 2018-10-31

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    The Generation of Electricity in South Africa 2017-10-18

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    The Generation of Electricity in South Africa 2016-08-08

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    The Generation of Electricity in South Africa 2015-05-29

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    Table of Contents

    [ Close ]
    PAGE
    1. INTRODUCTION 1
    2. DESCRIPTION OF THE INDUSTRY 1
    2.1. Industry Value Chain 4
    2.2. Geographic Position 5
    3. SIZE OF THE INDUSTRY 9
    4. STATE OF THE INDUSTRY 11
    4.1. Local 11
    4.1.1. Trade 24
    4.1.2. Corporate Actions 25
    4.1.3. Regulations 26
    4.1.4. Enterprise Development and Social Economic Development 28
    4.2. Continental 29
    4.3. International 32
    5. INFLUENCING FACTORS 34
    5.1. Coronavirus 34
    5.2. Economic Environment 34
    5.3. Rising Operating Costs 35
    5.4. Supply and Quality of Coal 36
    5.5. Corruption, Fraud and Mismanagement 36
    5.6. Electricity and Equipment Theft 38
    5.7. Technology, Research and Development (R&D) and Innovation 39
    5.8. Environmental Concerns 40
    5.9. Labour 42
    6. COMPETITION 45
    6.1. Barriers to Entry 46
    7. SWOT ANALYSIS 47
    8. OUTLOOK 47
    9. INDUSTRY ASSOCIATIONS 48
    10. REFERENCES 48
    10.1. Publications 48
    10.2. Websites 49
    APPENDIX 1 50
    Summary of Notable players 50
    COMPANY PROFILES 52
    ACWA POWER SOLAFRICA BOKPOORT CSP POWER PLANT (RF) (PTY) LTD 52
    ASSOCIATED ENERGY SERVICES (PTY) LTD 54
    AVON PEAKING POWER (RF) (PTY) LTD 57
    CENNERGI (PTY) LTD 59
    CORIA (PKF) INVESTMENTS 28 (RF) (PTY) LTD 62
    DEDISA PEAKING POWER (RF) (PTY) LTD 64
    ESKOM HOLDINGS SOC LTD 66
    HOPEFIELD WIND FARM LOCAL COMMUNITY COMPANY NPC 70
    KELVIN POWER (PTY) LTD 72
    NATIONAL ENERGY REGULATOR OF SOUTH AFRICA 74
    PHELAN ENERGY GROUP (PTY) LTD 77
    ROSATOM CENTRAL AND SOUTHERN AFRICA (PTY) LTD 79
    SEF (SOC) LTD 81

    Introduction

    This report focuses on the generation of electricity in South Africa. State-owned utility Eskom, which dominates the country’s power generation, is in crisis due to generating capacity shortages, financial instability, corruption and mismanagement and a R450bn debt exposure. Eskom reported a net loss after tax of R20.7bn for the 2019 financial year. In November 2019 former chairperson Jabu Mabuza said it would make a R20bn loss in the 2020 financial year. The utility has been blamed for causing the economy to lose billions of rands as a result of load-shedding, which resumed in the first week of December 2019 and reached stage 6, or shedding 6,000 megawatts (MW) – an indication that it has lost 40% of generating capacity, according to experts. Economists said the latest power cuts will affect fourth quarter GDP. Ratings agencies may consider further sovereign downgrades. In October 2019, government approved the Integrated Resource Plan 2019 (IRP 2019), which outlines the energy mix for the next decade. The bulk of the increased generation capacity will be from renewable sources to lessen South Africa’s reliance on coal and help reduce the country’s carbon emissions.

    Strengths

    • South Africa has abundant sources for coal-fired electricity and renewable energy.
    • South Africa is the largest electricity producer on the continent.

    Weaknesses

    • Electricity is not being managed sustainably due to financial mismanagement and corruption.
    • High capital costs and difficult regulatory environment for independent power producers.
    • Reliance on Eskom for about 90% of South Africa’s electricity requirements.

    Opportunities

    •  The price of most forms of renewable energy is decreasing, making renewable energy investment more attractive.
    • Investment, skills and extra power brought by independent power producers.
    • Job creation and increased energy supply from renewable energy projects.

    Threats

    • Collapse of the national grid.
    • Corruption and mismanagement at Eskom.
    • Eskom will be liable for high carbon tax if it does not lower its emissions.
    • Increasing shortage of skills.

    Outlook

    Eskom is a significant threat to the stability of the South African economy due to its soaring debt obligations, declining sales, insufficient installed capacity to meet the electricity needs of country, and the effect of blackouts on the economy. There is a severe mismatch between what Eskom is likely to be able to charge for electricity and the associated costs, excluding the possible costs to meet emissions standards over the next decade. Government continues to bail out the debt-ridden utility and despite the declining cost of renewable energy, South Africa’s energy plan will not be committing to 100% renewable power in the foreseeable future. Dom Wills, engineer and CEO of solar company Sola, reported that “a move to renewable energy will not only boost the economy and create jobs, it is also the path to providing South Africa with potentially the cheapest electricity in the world given our natural wind and solar resources.”

    The Generation of Electricity in South Africa
    The Generation of Electricity in South Africa 2020

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    Industry Landscape

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    Historical Reports

    The Generation of Electricity in South Africa 2024-01-30

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    The Generation of Electricity in South Africa 2022-11-30

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    The Generation of Electricity in South Africa 2021-02-16

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    The Generation of Electricity in South Africa 2018-10-31

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    The Generation of Electricity in South Africa 2017-10-18

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    The Generation of Electricity in South Africa 2016-08-08

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    The Generation of Electricity in South Africa 2015-05-29

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    Table of Contents

    [ Close ]
    PAGE
    1. INTRODUCTION 4
    2. DESCRIPTION OF THE INDUSTRY 4
    2.1. Industry Value Chain 7
    2.2. Geographic Position 8
    3. SIZE OF THE INDUSTRY 9
    4. STATE OF THE INDUSTRY 10
    4.1. Local 10
    4.1.1. Trade 17
    4.1.2. Corporate Actions 18
    4.2. Regulations 18
    4.2.1. Enterprise Development and Social Economic Development 20
    4.3. Continental 21
    4.4. International 22
    5. INFLUENCING FACTORS 23
    5.1. Economic Environment 23
    5.2. Rising Operating Costs 24
    5.3. Supply and Quality of Coal 25
    5.4. Crime, Corruption and Mismanagement 25
    5.5. Technology, Research and Development (R&D) and Innovation 27
    5.6. Labour 27
    5.7. Electricity and Equipment Theft 30
    5.8. Environmental Concerns 30
    6. COMPETITION 31
    6.1. Barriers to Entry 32
    7. SWOT ANALYSIS 32
    8. OUTLOOK 33
    9. INDUSTRY ASSOCIATIONS 33
    10. REFERENCES 33
    10.1. Publications 33
    10.2. Websites 34
    APPENDIX 1 35
    Summary of Notable Players 35
    COMPANY PROFILES 37
    ACWA POWER SOLAFRICA BOKPOORT CSP POWER PLANT (RF) (PTY) LTD 37
    ASSOCIATED ENERGY SERVICES (PTY) LTD 39
    AVON PEAKING POWER (RF) (PTY) LTD 41
    CENNERGI (PTY) LTD 43
    CORIA (PKF) INVESTMENTS 28 (RF) (PTY) LTD 46
    DEDISA PEAKING POWER (RF) (PTY) LTD 48
    ESKOM HOLDINGS SOC LTD 50
    HOPEFIELD WIND FARM LOCAL COMMUNITY COMPANY 54
    KELVIN POWER (PTY) LTD 55
    NATIONAL ENERGY REGULATOR OF SOUTH AFRICA 57
    PHELAN ENERGY GROUP (PTY) LTD 60
    ROSATOM CENTRAL AND SOUTHERN AFRICA (PTY) LTD 62
    SEF (SOC) LTD 64

    Introduction

    This report focuses on the generation of electricity in South Africa. Eskom, the state-owned utility, which dominates the country’s power generation, continues to struggle with declining electricity sales, looming coal shortages, financial instability, and corruption and mismanagement. Eskom reported a loss of R4.6bn in its annual financial results for the 2017/2018 financial year and more than R19bn in irregular expenditure has been identified. In a major blow for the majority of South Africans who are already struggling with increasing living costs, the National Energy Regulator of South Africa (Nersa) granted Eskom a 4.1% increase, which will come into effect in April 2019. However, Eskom also needs to increase its sales of electricity and make way for more players offering alternative forms of energy. The electricity generation and distribution landscape in South Africa is changing in accordance with its climate change commitment and the country has already introduced renewable energy through independent power producers. The draft Integrated Resource Plan (IRP) makes it clear that renewable energy will be the focus in the next decade.

    Strengths

    • South Africa has abundant resources for coal-fired electricity and renewable energy.
    • South Africa is the largest electricity producer on the continent.

    Weaknesses

    • Electricity is not being managed sustainably due to financial mismanagement and corruption.
    • Reliance on Eskom for about 90% of South Africa’s current electricity requirements.
    • South Africa has an ageing electricity distribution infrastructure.

    Opportunities

    •  The price of most forms of renewable energy is decreasing, thus ensuring renewable energy becomes more attractive.
    • Investment, skills and extra power brought by independent power producers.
    • Job creation and increased energy supply from renewable energy projects.

    Threats

    • Corruption and mismanagement at Eskom.
    • Increasing shortage of skills.

    Outlook

    Power utilities around the world are facing increasing costs and declining sales volumes. In South Africa this has been particularly evident over the past few years and is expected to continue as Eskom battles to meet debt obligations and continue operating in a stagnating economy. Although the decreasing cost of renewable energy is changing the energy sector globally, South Africa’s new energy plan does not commit to 100% renewable power in the foreseeable future. Energy analysts are keen to see the target for 2050. According to independent energy expert, Knox Msebenzi, South Africa’s energy policy needs to be revised within the next five to 10 years and the process must be led from the top down, with stakeholders being honest and transparent when providing opinions and recommendations. “All stakeholders must be involved in amending policy, government, communities, the economically advantaged and disadvantaged. Inclusivity is the only way to ensure policy truly meets the needs of the people.”

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    The Generation of Electricity in South Africa 2020-01-15

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    The Generation of Electricity in South Africa 2017-10-18

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    The Generation of Electricity in South Africa 2016-08-08

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    Table of Contents

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    PAGE
    1. INTRODUCTION 1
    2. DESCRIPTION OF THE INDUSTRY 1
    2.1. Industry Value Chain 5
    2.2. Geographic Position 6
    3. SIZE OF THE INDUSTRY 7
    4. STATE OF THE INDUSTRY 8
    4.1. Local 8
    4.1.1. Trade 12
    4.1.2. Corporate Actions 13
    4.1.3. Regulations 13
    4.1.4. Enterprise Development and Social Economic Development 15
    4.2. Continental 16
    4.3. International 18
    5. INFLUENCING FACTORS 19
    5.1. Economic Environment 19
    5.2. Rising Operating Costs 20
    5.3. Supply and Availability of Coal 20
    5.4. Corruption and Mismanagement 21
    5.5. Technology, Research and Development (R&D) and Innovation 22
    5.6. Labour 23
    5.7. Electricity and Equipment Theft 25
    5.8. Environmental Concerns 25
    6. COMPETITION 26
    6.1. Barriers to Entry 26
    7. SWOT ANALYSIS 27
    8. OUTLOOK 27
    9. INDUSTRY ASSOCIATIONS 28
    10. REFERENCES 28
    10.1. Publications 28
    10.2. Websites 28
    APPENDIX 1 30
    Summary of Major Players 30
    COMPANY PROFILES 32
    ACWA POWER SOLAFRICA BOKPOORT CSP POWER PLANT (RF) (PTY) LTD 32
    ASSOCIATED ENERGY SERVICES (PTY) LTD 34
    AVON PEAKING POWER (RF) (PTY) LTD 36
    CENNERGI (PTY) LTD 38
    CORIA (PKF) INVESTMENTS 28 (RF) (PTY) LTD 41
    DEDISA PEAKING POWER (RF) (PTY) LTD 43
    ESKOM HOLDINGS SOC LTD 45
    HOPEFIELD WIND FARM LOCAL COMMUNITY COMPANY 50
    KELVIN POWER (PTY) LTD 51
    NATIONAL ENERGY REGULATOR OF SOUTH AFRICA 53
    PHELAN ENERGY GROUP (PTY) LTD 56
    ROSATOM CENTRAL AND SOUTHERN AFRICA (PTY) LTD 58
    SEF (SOC) LTD 60

    Introduction

    This report focuses on the generation of electricity in South Africa. State-owned utility Eskom, which supplies 95% of the country’s power, has been plagued with negative publicity relating to increasing electricity costs, corruption and mismanagement. Credit ratings downgrades, financial instability and declining electricity sales have made the utility heavily reliant on government funding and despite the high upfront capital costs of nuclear projects, government plans to go ahead with the nuclear build programme. This together with Eskom’s refusal to conclude supply contracts with the developers of new renewable energy power stations is threatening the viability of the entire renewable energy sector in South Africa.

    Strengths

    • South Africa has abundant sources for coal-fired electricity and renewable energy.
    • South Africa is the largest electricity producer on the continent.

    Weaknesses

    • Delays in the awarding of contracts in the Renewable Energy Independent Power Producer Programme (REIPPPP).
    • Electricity is not being managed sustainably due to financial mismanagement and corruption.
    • Reliance on Eskom which about 95% of South Africa’s current electricity requirements.
    • South Africa has an ageing electricity distribution infrastructure.

    Opportunities

    • Investment, skills and extra power brought by IPPs.
    • Job creation and increased energy supply from renewable energy projects.
    • The price of most forms of renewable energy is decreasing, thus ensuring renewable energy becomes more attractive.

    Threats

    • Continuing corruption and mismanagement at Eskom.
    • Eskom’s reluctance to sign more power purchase agreements with private producers could lower the attractiveness of South Africa as an IPP investment destination and caused uncertainty in the sector.
    • Government’s determination to go ahead with the nuclear build programme, which will cost trillions, and threatens the supply of affordable electricity.
    • Increasing shortage of skills.

    Outlook

    Power generation in the country is finally stable mainly due to additional power being generated by the four newly commissioned 800MW units at Medupi and Kusile as well as through the REIPPPP, which has added 4,200MW of generation capacity to the grid. A further 620MW is expected to be added to the grid in the 2017/2018 financial year. However, there is now an energy surplus and with the national decline in energy demand as a result of South Africa’s stagnating economy, the situation does not look promising for IPPs. Although Eskom stated that it is committed to government’s energy procurement programmes, the utility’s delay in signing power purchase agreements related to these programmes, has caused uncertainty in the sector. Eskom has also decided to go ahead with plans to build large new nuclear power stations, despite the increasing cost of compliance and safety for nuclear projects. According to former Energy Intensive User Group (EIUG) of Southern Africa chairperson Piet van Staden, “The optimum way forward may be to separate the transmission and market businesses and ensure it is managed sustainably, while the existing Eskom generation business should be exposed to competition and managed as efficiently as possible to the end of life over the next few decades.”

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    The Generation of Electricity in South Africa 2018-10-31

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    The Generation of Electricity in South Africa 2016-08-08

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    Table of Contents

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    PAGE
    1. INTRODUCTION 1
    2. DESCRIPTION OF THE INDUSTRY 1
    2.1. Industry Value Chain 4
    2.2. Geographic Position 5
    3. SIZE OF THE INDUSTRY 6
    4. STATE OF THE INDUSTRY 9
    4.1. Local 9
    4.1.1. Corporate Actions 17
    4.1.2. Regulations 18
    4.1.3. Enterprise Development and Social Economic Development 19
    4.2. Continental 20
    4.3. International 22
    5. INFLUENCING FACTORS 23
    5.1. Economic Environment 23
    5.2. Rising Operating Costs 24
    5.3. Corruption and Mismanagement 25
    5.4. Labour 26
    5.5. Electricity Theft 28
    5.6. Technology, Research and Development (R&D) and Innovation 28
    5.7. Environmental Concerns 29
    6. COMPETITION 30
    6.1. Barriers to Entry 31
    7. SWOT ANALYSIS 31
    8. OUTLOOK 32
    9. INDUSTRY ASSOCIATIONS 33
    10. REFERENCES 33
    10.1. Publications 33
    10.2. Websites 33
    APPENDIX 1: 35
    Eskom Power Capabilities as at 1 September 2017 35
    APPENDIX 2: 37
    REIPPPP Capacity, Tariff and Investment Outcomes per Technology and Bid Window 37
    COMPANY PROFILES 38
    ACWA POWER SOLAFRICA BOKPOORT CSP POWER PLANT (RF) (PTY) LTD 38
    ASSOCIATED ENERGY SERVICES (PTY) LTD 40
    AVON PEAKING POWER (RF) (PTY) LTD 42
    CEF (SOC) LTD 44
    CENNERGI (PTY) LTD 48
    CORIA (PKF) INVESTMENTS 28 (RF) (PTY) LTD 51
    DEDISA PEAKING POWER (RF) (PTY) LTD 53
    ESKOM HOLDINGS SOC LTD 55
    HOPEFIELD WIND FARM LOCAL COMMUNITY COMPANY 59
    KELVIN POWER (PTY) LTD 60
    NATIONAL ENERGY REGULATOR OF SOUTH AFRICA 62
    PHELAN ENERGY GROUP (PTY) LTD 64
    ROSATOM CENTRAL AND SOUTHERN AFRICA (PTY) LTD 66

    Report Coverage

    Generation of Electricity in South Africa describes the current market, the latest developments and discusses factors influencing the success of the sector. The report profiles 19 role players, including Eskom and the National Energy Regulator of South Africa (NERSA). Also profiled are companies in the solar sub-sector, including Phelan Energy Group (Pty) Ltd which launched the largest solar farm in Africa near De Aar in the Northern Cape. The solar farm provides power to about 175,000 households and employs 50 full-time members of staff.

    Introduction

    This report focuses on the generation of electricity in South Africa. State-owned utility Eskom supplies 95% of the country’s power, but it has been plagued by problems over the last five years. These include the deteriorating condition of its ageing power plants, delays and escalating costs to complete its new build programme, increasing operating costs, credit ratings downgrades and declining or stagnant electricity sales to key customers. Through the Department of Energy’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) Eskom has signed 65 power purchase agreements with Independent Power producers (IPPs), which will add 4,900MW of IPP capacity to the grid by 2020/21. However, in July 2016 the Eskom board announced that it will not sign any further power purchase agreements after the current round is finalised.

    Strengths

    • South Africa has abundant sources for renewable energy.
    • South Africa is the largest electricity producer on the continent.

    Weaknesses

    • Eskom cannot currently supply the country’s generation needs.
    • South Africa has an ageing electricity distribution infrastructure.

    Opportunities

    • Increased electricity prices could result in higher demand for solar products.
    • Investment, skills and extra power brought by IPPs.
    • Job creation and increased energy supply from current and future renewable energy projects.
    • Pending installed capacity from the Medupi and Kusile power stations and the REIPPPP.

    Threats

    • Increasing shortage of skills.
    • Strike action.
    • The minimum local content threshold rule of 70% for solar water heater tanks and collector components is too stringent for local manufacturers.
    • Uncertainty with regard to Eskom’s decision not to sign any more power purchase agreements with private producers could lower the attractiveness of South Africa as an IPP investment destination.

    Outlook

    South Africa’s electricity supply has stabilised over the past eight months, mainly as a result of government’s independent power producers’ programme, which has not only introduced private sector companies into the energy generation sector, but through the REIPPPP, has added 2,145MW to the grid and resulted in R194bn in direct investment. However, the future of the IPP programme is now uncertain following the Eskom board’s decision not to sign any further power purchase agreements with private producers. Eskom’s concern about its future revenue streams will come at a cost for South African consumers who will have to keep paying more for electricity each year after being warned by the utility in March 2016 to “brace for more electricity price hikes in the future.”

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    The Generation of Electricity in South Africa 2021-02-16

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    The Generation of Electricity in South Africa 2020-01-15

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    The Generation of Electricity in South Africa 2018-10-31

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    The Generation of Electricity in South Africa 2017-10-18

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    The Generation of Electricity in South Africa 2015-05-29

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    Table of Contents

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    PAGE
    1. INTRODUCTION 1
    2. DESCRIPTION OF THE INDUSTRY 1
    2.1. Industry Value Chain 4
    2.2. Geographic Position 4
    3. SIZE OF THE INDUSTRY 6
    4. STATE OF THE INDUSTRY 9
    4.1. Local 9
    4.1.1. Corporate Actions 16
    4.1.2. Regulations 16
    4.1.3. Enterprise Development and Social Economic Development 18
    4.2. Continental 19
    4.3. International 20
    5. INFLUENCING FACTORS 21
    5.1. Economic Environment 21
    5.2. Rising Operating Costs 23
    5.3. Government Intervention and Policy 24
    5.4. Labour 25
    5.5. Supply and Quality of Coal 28
    5.6. Electricity Theft 29
    5.7. Technology, Research and Development (R&D) and Innovation 29
    5.8. Environmental Concerns 30
    6. COMPETITION 31
    6.1. Barriers to Entry 32
    7. SWOT ANALYSIS 32
    8. OUTLOOK 32
    9. INDUSTRY ASSOCIATIONS 33
    10. REFERENCES 33
    10.1. Publications 33
    10.2. Websites 33
    COMPANY PROFILES 35
    Allied Electronics Corporation Ltd 35
    Associated Energy Services (Pty) Ltd 39
    CEF (SOC) Ltd 41
    Cennergi (Pty) Ltd 45
    Crest Operations (Pty) Ltd 48
    Current Automation (Pty) Ltd 50
    Darling Wind Power (Pty) Ltd 52
    Eskom Holdings SOC Ltd 54
    Kelvin Power (Pty) Ltd 58
    KGE Technology Two Thousand CC 60
    Kwikot (Pty) Ltd 62
    National Energy Regulator of South Africa 64
    Phelan Energy Group (Pty) Ltd 67
    Plan-My-Power (Pty) Ltd 68
    Sinetech (Pty) Ltd 70
    Solarzone (Pty) Ltd 72
    Solsquare Solar Heat (Pty) Ltd 74
    Sunflare Renewable Systems CC 76
    Teal and Green Trading (Pty) Ltd 78

    Report Coverage

    This report describes the current situation in the country, government’s attempts to ensure the reliable generation of electricity and factors influencing the sector’s success. The report also profiles 20 industry players, ranging from state-owned enterprise Eskom to small enterprises, Solarzone (Pty) Ltd and Darling Wind Power (Pty) Ltd, which are both involved in the renewable energy sector and employ ten people.

    Introduction

    This report focuses on the generation of electricity in South Africa, which is in a state of crisis. State-owned utility Eskom, which supplies 95% of power in the country, has been forced to implement controlled blackouts to avoid a total collapse of the national grid due to its ageing, deteriorating and under-serviced power plants that are struggling to meet demand. The latest series of load shedding started in November 2014 due to the collapse of a coal storage silo at the Majuba power plant which provides approximately 10% of South Africa’s electricity. While the load shedding has been intermittent since then, April 2015 experienced the highest number of consecutive days of load shedding. Eskom has stated that South Africans must “brace themselves for power-supply troubles for the next three years, while it tries not only to complete the building of new capacity but also to deal with a major maintenance backlog, which will take between 20 and 30 months to resolve.”\r\n\r\nThe National 2010 Energy Plan called for a diversification of energy supply through independent renewable plants using wind, solar, biogas and other sources of power. Through the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), a total of 79 projects with a capacity of 5,243 megawatt (MW), representing an investment of R168bn, have been approved by the Department of Energy (DoE).

    Strengths

    • Pending installed capacity from the Medupi and Kusile power stations and the REIPPPP.
    • South Africa has abundant sources for renewable energy.
    • South Africa is the largest electricity producer on the continent

    Weaknesses

    • Eskom cannot supply the country’s generation needs.
    • Many of Eskom’s stations are past their mid-life and require major refurbishment.
    • South Africa has an ageing electricity distribution infrastructure.
    • The deteriorating quality of the coal supplied to Eskom’s stations.

    Opportunities

    • Increased electricity prices could result in higher demand for solar products.
    • Job creation and increased energy supply from current and future renewable energy projects.
    • Skills and extra power brought by IPPs.

    Threats

    • Cheap imports of solar water heaters threaten local manufacture.
    • Increasing shortage of skills.
    • Strike action.
    • The minimum local content threshold rule of 70% for SWH tank and collector components is too stringent for local manufacturers.
    • Uncertainty with regard to grid connections could lower the attractiveness of South Africa as an IPP investment destination.

    Outlook

    Despite Eskom’s new build projects and the REIPPPP, the short-term prospects for the generation of electricity remain negative. Eskom’s new build projects have been delayed because of quality and labour issues, the utility is under considerable financial pressure and as a result, the country’s growth forecast has been revised downward. The downgrade of Eskom’s long-term credit rating to junk status has led to a loss of confidence in the utility’s corporate governance and is expected to negatively affect its ability to access affordable external funding. \r\n\r\nWhile Government is eager to improve South Africa’s energy mix and expand the renewable energy programme, leading experts in the wind energy sector report that “continuing constraints to grid capacity and a lack of cohesion from government agencies may inhibit progress.” However they expressed optimism after the Minister of Energy’s announcement on 16 April 2015 that the DoE plans to “shorten procurement processes over the next year in an effort to accelerate the availability of energy capacity.”

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    The Generation of Electricity in South Africa
    The Generation of Electricity in South Africa 2015

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    The Generation of Electricity in South Africa 2021-02-16

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    The Generation of Electricity in South Africa 2020-01-15

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    The Generation of Electricity in South Africa 2018-10-31

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    The Generation of Electricity in South Africa 2017-10-18

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    Table of Contents

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    PAGE
    1. INTRODUCTION 1
    2. DESCRIPTION OF THE INDUSTRY 1
    2.1. Industry Supply Chain 4
    2.2. Geographic Position 5
    3. SIZE OF THE INDUSTRY 6
    4. STATE OF THE INDUSTRY 8
    4.1. Local 8
    4.1.1. Corporate Actions 16
    4.1.2. Regulations & Government Programmes 16
    4.1.3. Enterprise Development and Social Economic Development 18
    4.2. Continental 20
    4.3. International 21
    5. INFLUENCING FACTORS 23
    5.1. Economic Environment 23
    5.2. Government Intervention and Policy 23
    5.3. Labour 25
    5.4. Rising Input Costs 28
    5.5. Supply and Quality of Coal 29
    5.6. Electricity Theft 30
    5.7. Technology 30
    5.8. Environmental Concerns 31
    6. COMPETITION 31
    6.1. Barriers to Entry 32
    6.2. Research and Development (R&D) and Innovation 32
    7. SWOT ANALYSIS 33
    8. OUTLOOK 34
    9. INDUSTRY ASSOCIATIONS 35
    10. REFERENCES 35
    10.1. Publications 35
    10.2. Websites 36
    ORGANOGRAM 37
    COMPANY PROFILES 39
    ALLIED ELECTRONICS CORPORATION LTD 39
    ASSOCIATED ENERGY SERVICES (PTY) LTD 43
    CEF (SOC) LTD 45
    CENNERGI (PTY) LTD 48
    CREST OPERATIONS (PTY) LTD 51
    CURRENT AUTOMATION (PTY) LTD 53
    DARLING WIND POWER (PTY) LTD 55
    EDISON POWER ELECTRICAL (PTY) LTD 57
    ESKOM ENTERPRISES SOC LTD 59
    IPSA GROUP PLC 62
    KELVIN POWER (PTY) LTD 64
    KGE TECHNOLOGY TWO THOUSAND CC 66
    KWIKOT (PTY) LTD 68
    NATIONAL ENERGY REGULATOR OF SOUTH AFRICA 70
    PLAN-MY-POWER (PTY) LTD 73
    SELECTED ENERGY (PTY) LTD 75
    SINETECH CC 77
    SOLARZONE (PTY) LTD 79
    SOLSQUARE SOLAR HEAT (PTY) LTD 81
    SUNFLARE RENEWABLE SYSTEMS CC 84

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