FIFI PETERS: Let’s get to the newest happenings over at Eskom proper now. The firm on Friday introduced that it had signed offers that may see 2 000 megawatts of renewable vitality added to the nationwide grid by personal producers, to assist stabilise the grid and hopefully stop load shedding – which has been chosen because the Word of the Year by the Pan South African Language Board.
The deal, nonetheless, that Eskom introduced on Friday will see four personal corporations leasing over 6 000 hectares of land from Eskom for the subsequent 25 to 30 years to construct this new clear vitality. This is going on in Mpumalanga.
For extra on this in addition to the highway to vitality stability, I’m joined by André de Ruyter, the CEO at Eskom. André, very long time no communicate. Thanks a lot for becoming a member of the present.
How a lot of a game-changer is what you introduced on Friday for Eskom – and by default the nation?
ANDRé DE RUYTER: Good night, Fifi. We are very enthusiastic about this deal as a result of what we’ve been capable of do is to make accessible Eskom land with good grid connections in Mpumalanga – the place in fact the influence of the vitality transition shall be most keenly felt – at long-term lease agreements of 25 to 30 years with out Eskom having to enter into onerous power-purchase agreements and with none obligation on National Treasury to underwrite these agreements.
So these impartial energy producers [IPPs] are going to be investing of their crops purely at their very own threat; they’re taking enterprise threat. They are going to enter into bilateral agreements, and these bilateral agreements will then be used to underwrite their challenge finance which they are going to receive from lenders to construct these crops.
So we actually assume that that is the primary of a collection of initiatives that may change the face of electrical energy era in South Africa.
FIFI PETERS: My understanding is that Eskom has been sitting on this land for some time, and also you’ve received a complete lot extra land that may be leased to assist stabilise the grid, so why is that this transfer solely occurring now?
ANDRé DE RUYTER: The first impediment that needed to be overcome was, in fact, internally at Eskom.
Eskom has some superb engineers but additionally some very conservative engineers, and these engineers stated the solar doesn’t shine and the wind doesn’t blow in Mpumalanga, and that the one manner wherein we’d be capable of appeal to impartial energy producers so as to add era capability to the grid was moderately to increase our era or our transmission grid very extensively, significantly to the Northern Cape – which we’ll nonetheless do.
But that takes time and it takes some huge cash, and the necessity is for us to have era capability accessible as quickly as doable.
So after we went out to market, we didn’t anticipate the overwhelmingly constructive response that we’ve received. We had been thrice oversubscribed on this provide.
So on the primary tranche of land, which is about 6 000 hectares, we had been capable of receive a minimum of 2 000 hectares. We assume it’s going to be greater than that; and there’s some 26 000 extra hectares to return, which we are able to make accessible to personal traders on an identical foundation. So this augurs effectively for the addition of latest era capability for the nation.
FIFI PETERS: Potentially how a lot new era do you assume the land that’s to return, that 26 000 hectares or so, might carry if you’re going to obtain 2 000 megawatts from simply 6 000 hectares?
ANDRé DE RUYTER: We assume there’s as much as 9 gigawatts of latest era capability that may be added, which in fact bridges the hole that I’ve been talking about for a very long time now of four to 6 gigawatts. And, coupled with investments in further storage capability, we actually are then capable of began addressing the vitality disaster with urgency.
FIFI PETERS: We had been quoting your COO [Jan Oberholzer], who was talking at a convention final week wherein he stated that we must always brace ourselves for 18 months extra of load shedding. I’d like your view on that, and finally what you’re doing right here as we speak, how quickly it might assist stabilise the grid and keep away from load shedding being with us for the subsequent 18 months.
ANDRé DE RUYTER: Fifi, each Jan Oberholzer and I’ve been saying successfully for the previous three years that the nation wants four to 6 gigawatts of further era capability for us to place load shedding behind us, to present us the required headroom to hold out the upkeep catch-up that we’re doing in the meanwhile, with out including to the danger of load shedding.
The threat of load shedding has been exacerbated by two main occasions.
The first one was the explosion of unit four at Medupi, which value the grid some 720 megawatts of era capability. That shall be returning to the grid solely in September 2024, because of the catastrophic nature of the explosion.
And then we even have to put in new steam mills at each items at Koeberg, which we’re doing sequentially. In impact, that signifies that we’re taking a 1 000 megawatts off the grid for a full yr.
Those two elements considerably exacerbate the danger of load shedding. So I believe what Jan was doing was to current a practical image, given the ageing standing of our fleets and the poor upkeep [and] the talents gaps that we’ve in our operations. Of course we try our greatest to beat that, however I believe we also needs to be frank and sincere with the South African public with regards to sketching an image of what’s prone to occur.
Now we all know that there’s capability coming. There are some good [Renewable Energy Independent Power Producer Procurement] Bid Window 5 offers which have now reached monetary shut. So that’s about 250/300-odd megawatts. There’s 150 megawatts from the emergency energy procurement, however in fact we’d like a complete lot extra. And that’s the place this 2 000 megawatts – in addition to the extra licences which have already been granted, or are within the pipeline with Nersa, of some 6 000 megawatts – will come into play.
But they take time to assemble, take time to connect with the grid, and that’s why for the subsequent 12 to 18 months, sadly, there’s an elevated threat of load shedding.
FIFI PETERS: How a lot time is that this present challenge that you simply introduced on Friday, these offers, how a lot time will they take to assemble and ultimately get to the grid?
ANDRé DE RUYTER: The precise development itself will be accomplished in as little as 12 months, however in fact there are numerous regulatory processes, together with environmental influence assessments, zoning necessities – rezoning from agricultural to industrial land – and so forth. These all take time.
Now, the president’s National Energy Crisis Committee has been established exactly to fast-track these processes, so we anticipate that we will speed up.
But realistically talking, we’re 18 to 24 months on the quickest earlier than we see the megawatts coming onto the grid.
FIFI PETERS: And how significant will these lease offers be to your income, even your backside line?
ANDRé DE RUYTER: We is not going to make some huge cash. We will make a small rental earnings on the land. But that was not the rationale why we did it. We did it to deal with the era shortfall. These are primarily cost-recovery mechanisms.
FIFI PETERS: All proper. Now I appear to have misplaced the CEO of Eskom there, Mr André de Ruyter, however he was simply ending his level to say that this land-leasing deal is just not essentially about rising income at Eskom, however extra about rising era capability for the financial system to stabilise the present state of affairs. But hopefully we’ll have one other catch-up with the CEO on one other day, André de Ruyter of Eskom.