South Africa Announces Bold Shift to Renewables and Nuclear

Emerging from a historic election that stripped the African National Congress (ANC) party of its majority, South Africa’s new government has indicated it will accelerate the transition to renewable power to strengthen its position in the global energy market. The effort will mark a major shift for Africa’s most industrial nation, which has long grappled with frequent power outages.

The most significant development pertaining to the finalization of President Cyril Ramaphosa’s seventh administration has been to restructure the Ministry of Mineral Resources and Energy into two separate ministries: the new Ministry of Electricity and Energy, headed by a new minister, Kgosientsho Ramokgopa, and the Ministry of Mineral Resources and Petroleum, which Minister Gwede Mantashe will continue to lead.

A Notable Triumph: 100 Days With No Load Shed

In July, notably, South Africa celebrated a 100-day milestone of no power cuts, marking the longest period of energy stability in the country since 2021. South African utility Eskom in April also celebrated an energy availability factor of 65.5%, exceptionally higher than just three years ago.

Industry observers suggest the considerable achievements stem from improved consultation and collaboration with the utility’s new leadership and several new measures. These include new grid access rules and capacity allocation rules, which changed capacity allocation from “first come, first served” to “first ready, first served,” creating more competitive pressure for independent power producers (IPPs) to complete their projects faster.

In addition, momentum is building to enact the 2023 Electricity Regulation Amendment Bill, which proposes a shift away from a predominantly single-buyer electricity market, currently dominated by state-owned Eskom, toward a more diverse and competitive electricity market. The bill also extends the powers of the National Energy Regulator of South Africa (NERSA).

“The intention is to ease the ability of alternative suppliers to generate, transmit, and distribute electricity,” suggested law firm Baker McKenzie in May, after the National Council of Provinces in South Africa—one of South Africa’s two parliamentary houses—passed the bill.

South Africa’s efforts to boost its supply profile, meanwhile, were set to rely on a January 2024–proposed integrated resource plan (IRP) covering a period through 2030, which aimed to increase total planned capacity to 84 GW, up from 76 GW from the 2019 IRP. The draft IRP prominently called for completing 1.4 GW of new coal projects (Figure 3) and enhancing the “grid-stabilizing” group—mostly gas generation—with 19 GW. The draft IRP, however, called for a 17% decrease in “variable” generation, primarily from solar and wind.

3. On June 30, Eskom declared the 800-MW Kusile Unit 5 near eMalahleni in Mpumalanga province commercially operational, bringing the South African utility closer to completion of the 4.8-GW, six-unit Kusile Power Station. When fully operational, likely in 2025, the massive facility will stand as the world’s fourth-largest coal plant. Kusile 6 is expected to be synchronized to the grid in November 2024. Courtesy: Eskom

A Vastly Improved Generation Profile

During a July 8 press briefing, Ramokgopa suggested South Africa’s generation profile was vastly improved owing to the success of its Energy Action Plan, initiated by President Ramphosa in July 2022. The plan, crafted with engagement with various stakeholders in the South African economy, including business, labor, and community, focused on transparency, milestone adherence, and significant improvement in Eskom’s generation performance.

“When we went into December 2023 and transitioned into January 2024, we took out 18% of the total generation capacity for maintenance—about 9 GW. The units then began to return healthier and more reliable, which is why you are seeing the kind of performance we have today,” said Ramokgopa. “We made a compelling argument that in the midst of an energy deficit, it is irrational to close the power stations as long as they continue to perform. We must delay the decommissioning, and the cabinet agreed.” In addition, policymakers agreed on “priority interventions—what you might call the low-hanging fruit—to see what we could do quickly to improve the energy generation picture,” he said.

But looking ahead, the country will focus heavily on clean power. “I am going to be ultra-aggressive on the renewable energy side,” Ramokgopa said. As a first step, the new ministry will begin engaging key players in the power ecosystem and renewable energy space to identify hurdles related to bid windows. “We need to signal to the market our intention to go that route, and it must materialize because it’s one thing to go out on a bid window and have 2,000 MW unallocated,” he said.

A Firm Commitment to New Nuclear

Ramokgopa also underscored a firm commitment to advancing South Africa’s nuclear procurement program for 2.5 GW of new nuclear capacity, as outlined by the previous administration in 2019.

South Africa runs Africa’s only nuclear plant—the 1.9-GW two-unit Koeberg plant, which began full commercial operation in 1985 near Cape Town. In mid-July, Eskom garnered the National Nuclear Regulator’s approval to continue operating the 930-MW Unit 1 for another 20 years, until July 21, 2044.

However, the financially strapped utility’s capability to support new nuclear poses a sizable limitation, Ramokgopa suggested. Ramokgopa said his ministry and the Department of Mineral Resources and Energy “are getting to the stage” of putting together a framework on nuclear procurement that will consider a financing instrument while retaining Eskom as an operator. “We’ll ensure that any nuclear procurement framework we come up with is credible and transparent,” he said. And while he said the procurement process has been politically challenged, the new government is prepared to defend it in courts.

Ramokgopa stressed that every one of the new ministry’s interventions—the need to address energy poverty, improve reliability and the capacity of the distribution infrastructure, and expand renewables and new nuclear—is urgent. “We must resolve this question with the urgency that it deserves, and that’s the kind of attention that we’re going to give to this question,” he said. “We’ve got a track record of attending to complex questions with speed and decisiveness, but [with the determination] that our interventions are efficacious—that they achieve the kind of efficacies that we want.”

—Sonal Patel is a POWER senior editor (@sonalcpatel, @POWERmagazine).