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The National Treasury has confirmed that South Africa is moving to pilot a model that will enable the private sector to participate directly in the development and operation of transmission grid infrastructure, drawing lessons from the country's experience in procuring generation capacity from independent power producers (IPPs).
Deputy director-general Mmakgoshi Lekhethe reports that the model, which has been mooted by Electricity Minister Kgosientsho Ramokgopa for some time, is receiving priority attention in light of the scale of the investment required to unlock grid capacity for new renewables investment.
Speaking at the launch of a new report on mobilising clean energy, Lekhethe said that Eskom had been given permission to raise funding for grid investment despite still being bound by the terms of a debt-relief package that constrains its ability to raise new debt more generally.
However, government had also concluded that private finance and capacity would be required if South Africa was to add the grid infrastructure needed to unlock more renewables, including 1 400 km a year of new power lines by 2032.
"Given this, we are working very hard across the government to pilot a model that can bring in the private sector to help us scale up that much needed investment.
"This means that we may have to use the same model that we use for generation for transmission, while obviously making sure that it speaks to the unique set of circumstances faced by transmission," she said.
Speaking on the same platform ahead of the new governance arrangements that would follow South Africa's 2024 elections, during which no party emerged with an outright majority, special adviser to the Electricity Minister, Silas Zimu, expressed confidence that the Energy Action Plan (EAP) would continue, including reforms to enable private participation in the grid.
"We're not going to change it [the EAP]," Zimu insisted.
NOT A 'CUT & PASTE' EXERCISE
Meanwhile, IPP Office head Bernard Magoro argued that the IPP programme had proved it was possible to procure electricity infrastructure from the private sector. However, he said it would not be possible to simply "cut and paste" the model for the deployment of independent transmission projects (ITPs).
Magoro stressed that servitude acquisitions posed a distinct challenge to ITPs and South Africa would have to clarify upfront whether or not the National Transmission Company South Africa (NTCSA), which is in the process of being vertically separated from within Eskom, would be expected to lead land acquisitions and/or expropriations for such projects.
In addition, the fact that the ITPs would be transferred back to the NTCSA after a period of private operation would add another layer of complexity and risk that would have to be addressed.
Magoro argued, though, that some of the generic lessons from the IPP experience relating to risk allocation and the need for ongoing stakeholder buy-in and convergence, including with the National Energy Regulator of South Africa, could be transferred to ITP programme.
That said, he also cautioned that it could take some time to establish a procurement rhythm, noting that an entirely new "ecosystem" of participants would have to be created, as very few IPPs saw themselves as grid operators.
Meanwhile, Lekhethe reported that the National Treasury was also prioritising other initiatives to improve the environment for higher levels of clean-energy investment and to ensure that limited government resources were used to stimulate such investments.
While describing the R300-billion in contingent liabilities arising from government guarantees extended to support IPP procurement as "unsustainable", she revealed that work was under way with the African Development Bank and the World Bank to assess prospects for a "credit guarante

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A new benchmarking assessment of South Africa's electricity grid access queueing mechanisms indicates that Eskom's systems are slower and less transparent than those being implemented in developed and developing countries analysed as part of the study.
Published by the RES4Africa Foundation, the report includes case studies of the grid management frameworks being implemented in Brazil, Chile, Italy and by PJM Interconnection in the US.
These systems have been assessed against five key performance indicators, namely: grid connection timeframes, the cost of connection, regulatory requirements, queue management, and transparency.
South Africa's framework is in flux and is being governed currently by Interim Grid Capacity Allocation Rules (IGCAR).
These were introduced following the failure of the sixth public renewables round when none of the wind projects vying for a 3 200 MW allocation were selected because the capacity on which the projects were based had been absorbed by independent power producers being pursued on the back of private power purchase agreements.
Eskom argued that the new rules would prevent so-called grid hogging as they were based on prioritising shovel-ready projects rather than processing applications on a 'first come, first served' basis.
Separately, Eskom has also applied to the National Energy Regulator of South Africa (Nersa) for permission to preserve/reserve grid capacity for the public Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) rounds so as to prevent any repeat of the failure of bid window six (BW6).
As a consequence, the bid submission deadline for BW7 was recently postponed to August 15 from May 30, a deadline that had itself been extended from the initial submission date of April 30.
RES4Africa Foundation Southern Africa project officer Mohau Nei reports that the IGCAR and Eskom's proposed Gated Generator Connection Process, which still requires Nersa approval, were also tested against the five performance indicators.
When benchmarked, the selected countries and South Africa all had strengths and weaknesses, but South Africa lagged on grid connection time, regulatory requirements, queue management, as well as communication and transparency.
The study recommends that South Africa ratifies its rules as soon as possible to provide investors with predictability.
It also recommends that best practices be integrated, including through creating online systems for grid applications and to provide real-time visibility of queuing progress.
Nei adds that the study's outcomes also point to the desirability of migrating to a clustered assessment methodology rather than case-by-case approvals so as to enable an analysis of the whole cluster's impact on the grid.
This, she says, will facilitate equal access between REIPPPP projects and private projects as well as enable Eskom to revoke capacity allocated to projects that are failing to advance to construction.

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The World Bank expects the global economy to stabilise for the first time in three years, but at a level that is still weak by historical standards.
In its latest 'Global Economic Prospects' report, the World Bank says global growth will reach 2.6% this year and 2.7% in 2025 and 2026, compared with the 3.1% average in the decade before Covid-19.
The forecast implies countries that collectively account for more than 80% of the world's population and global GDP will be growing slower than it did in the ten years before 2020.
Developing economies are expected to grow by 4% over 2024 and 2025, which is slightly lower than in 2023.
The World Bank says growth in low-income economies is expected to accelerate to 5% this year, compared with 3.8% in 2023.
However, the forecasts for this year's growth reflect downgrades in three out of every four low-income economies since January.
In advanced economies, growth is set to remain steady at 1.5% this year before. rising to 1.7% in 2025.
"Four years after the upheavals caused by the pandemic, conflicts, inflation and monetary tightening, it appears that global economic growth is steadying," says World Bank chief economist and senior VP Indermit Gill.
"However, growth is at lower levels than before 2020. Prospects for the world's poorest economies are even more worrisome. They face punishing levels of debt service, constricting trade possibilities, and costly climate events.
"Developing economies will have to find ways to encourage private investment, reduce public debt and improve education, health and basic infrastructure," Gill explains.
The poorest among them - especially the 75 countries eligible for concessional assistance from the International Development Association - will not be able to do this without international support.
This year, one in four developing economies is expected to remain poorer than it was on the eve of the pandemic in 2019.
This proportion is twice as high for countries in fragile- and conflict-affected situations.
Moreover, the income gap between developing economies and advanced economies is set to widen in nearly half of developing economies over 2020 to 2024 - the highest share since the 1990s.
World Bank reports that per capita income in these economies, which is an important indicator of living standards, is expected to grow by 3% on average through to 2026 - well below the average of 3.8% in the decade before Covid-19.
Global inflation is expected to moderate to 3.5% this year and 2.9% in 2025, but the pace of decline is slower than was projected just six months ago.
Many central banks, as a result, are expected to remain cautious in lowering interest rates.
The World Bank further reports that global interest rates are likely to remain high by the standards of recent decades, averaging about 4% over 2025 and 2026, which is nearly double the 2000 to 2019 average.
"Although food and energy prices have moderated across the world, core inflation remains relatively high, and could stay that way; that could prompt central banks in advanced economies to delay interest rate cuts," says World Bank deputy chief economist and prospects director Ayhan Kose.
Kose adds that an environment of 'higher-for-longer' rates would mean tighter global financial conditions and much weaker growth in developing economies.
PUBLIC INVESTMENT
The 'Global Economic Prospects' report also features two analytical chapters of topical importance. The first outlines how public investment can be used to accelerate private investment and promote economic growth.
It finds that public investment growth in developing economies has halved since the global financial crisis, dropping to a yearly average of 5% in the past decade.
Yet, public investment can be a powerful policy lever, World Bank states.
For developing economies with ample fis

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Business Leadership South Africa (BLSA), whose members are drawn from the largest domestic and multinational businesses operating in the country, has backed the African National Congress' (ANC's) proposal for the formation of a government of national unity (GNU) to end the electoral stalemate that has arisen after no single party secured an outright majority in the May 29 poll.
In a statement published following ANC president Cyril Ramaphosa's late night announcement that the party's national executive committee had agreed that a GNU was "the best option to move our country forward", BLSA urged parties to act with urgency to form a stable government.
"We need to quickly form a stable GNU that will assure all South Africans as well as businesses and investors, both locally and internationally, that government will be committed to our constitutional democracy and the institutions that it rests on, including a well-managed National Treasury and the rule of law," BLSA said.
While recognising that a coalition would require sacrifices, BLSA urged parties to put narrow interests aside and find a way to agree.
It made no comment regarding the form that the GNU should take nor on its composition, which Ramaphosa said should be underpinned by written agreements committing participants to pursue a "common minimum programme that focuses on measurable targets for economic growth and inclusion, service delivery and development".
BLSA did, however, emphasise the need for parties to commit themselves to respecting the Constitution and to prioritise the continuation of economic reforms being implemented to address loadshedding, the underperformance of the country's ports and railways, and to rebuild the criminal justice system.
"The structural reforms under way to address these and other challenges are critical to turn the tide on unemployment and restart economic growth."
It also called for the agreements reached to be capable of holding for the full five-year term of the administration.
The ANC said it would be pursuing talks across the political spectrum and confirmed that discussions had already been held with the Democratic Alliance (DA), the Economic Freedom Fighters (EFF), the Inkatha Freedom Party (IFP), the National Freedom Party and the Patriotic Alliance.
The DA indicated its willingness to entertain a GNU, and has underlined that it, too, wanted the economic reforms initiated by government to continue. However, it had also indicated on several occasions that it was unwilling to enter into governance arrangements with the EFF and the uMkhonto WeSizwe Party (MKP).
The MKP, which continues to dispute the election results and has called for the scrapping of the Constitution, indicated that it would talk to the ANC but remained hostile to Ramaphosa as the party's leader.
The EFF, meanwhile, gave the GNU concept a cool reception, indicating its unwillingness to work with the DA, while the IFP indicated that, while it was not averse to the GNU, the "devil is in the details".

Engineering News editor Terence Creamer reflects on Dan Marokane's first 100 days in office as Eskom CEO and the direction Eskom is taking under his leadership.

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Eskom CEO Dan Marokane reports that a decision has been made to "decouple" the closure of its coal stations from the building, in partnership, of new renewable energy generation capacity linked to its goal of being a net-zero emitter by 2050 and the just energy transition strategy.
In an address to members of the South African National Energy Association, Marokane also revealed that a board decision had been made for Eskom to participate directly in renewables projects on land adjacent to its existing power stations rather than releasing those grid-ready sites to private generators.
He said the first such project was under way alongside the Lethabo power station, in the Free State, where Eskom was aiming to build a 75 MW solar PV facility. A tender, which closed on June 4, had been issued for a bidder to design, engineer, construct, commission and maintain the solar facility.
"We have had to do some rethinking in terms of the strategy that we may have articulated before and that is to decouple the implementation of renewables programme from the shutting down of power stations," he said, indicating that Eskom would be aiming to implement projects ahead of any closure.
The board had approved the Lethabo solar facility as the first project and there was an intention to pursue a similar strategy "alongside our existing fleet in Mpumalanga, in particular, on our land in close proximity to grid access".
He said the projects would be pursued in partnership with the private sector in a way that leveraged their expertise in a specific technology, as well as their balance sheets and skills.
Reflecting on his previous tenure at Eskom, Marokane said Eskom had developed a strategy to develop a sizeable renewables project pipeline in partnership with others, but the plan failed to secure the necessary approvals.
"We believe it's still possible [and], for that reason, we have adjusted the approach that we had taken to the market two years ago of availing the land adjacent to a power stations to others to implement renewable projects," he reported, highlighting that the properties would not face the grid-access constraints being experienced elsewhere.
The strategy is likely to raise questions about whether Eskom's renewables projects will crowd-out independent power producers from securing allocations outlined in the Integrated Resource Plan, or whether Eskom will be required to apply for an IRP exemption to proceed.
Questions will also be raised about whether the new generation will need to replace the equivalent coal generation capacity to secure concessional Just Energy Transition Partnership funding.
Regarding the just transition, Marokane argued that the new approach would help Eskom manage the transition away from coal such that the new generation was commissioned ahead of closures, so as to avoid the problems that arose at Komati where alternatives for workers and communities were not in place at the time of retirement.
"So we going down that route and we have approved that path," he said, indicating the intention was to replicate the Lethabo project across other sites.
He also reported that Eskom had secured an environmental impact assessment authorisation for the Tubatse pumped-hydro project and that "we have every intention to go ahead".
On how Eskom Holdings' subsidiary, the National Transmission Company South Africa (NTCSA), would fund and implement its ambitious expansion of the transmission grid, Marokane said a model for introducing private sector finance and skills was close to being finalised.
Announcements in this regard would be made once the NTCSA began operating as an independent entity in July.