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South Africa Power Report 2021/22

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  • 161 Pages
  • June 2021
  • Region: South Africa
  • Cross-border Information (London) Ltd
  • ID: 5457758

South Africa Faces Major Power Sector Challenges as It Looks to ‘Just Transition’

South Africa Power Report 2020/21 assesses the causes and symptoms of South Africa's electricity crisis from political power struggles, governance issues and the long list of policy documents that are supposed to guide the ESI's future direction - but where in many cases ambitions are unfulfilled - to the country’s huge potential for renewable energy and the pressures of ensuring a ‘just transition’ away from coal.

Our five-year supply and demand projection shows that dispatchable generation may be insufficient to meet peak demand by the middle of the decade. An improvement in the performance of Eskom’s fleet, or a glut of new renewable generation, will be required if load shedding is to be avoided in the medium term. However, new rules on licensing could lead to a boom in the distributed generation market and the closing of the supply and demand gap.

Key features

  • Critical analysis of power market structure, procurement programmes and the governing policies and regulations.
  • Detailed demand and supply analysis - including an assessment of energy availability vs installed capacity and a detailed five-year outlook.
  • In-depth look at the C&I market.
  • Comprehensive information on in-development generation projects and profiles of key players in the sector.
  • Independent power generation forecasts based on the actual project development pipeline, with data drawn from the African Energy Live Data database of more than 6,700 power projects and plants.
  • Resource availability assessment - including coal, gas (domestic and imported), solar, wind and hydrogen potential.
  • Analysis of South Africa’s T&D sector - extent of grid, reforms, plans plus interconnections and SAPP competitive market.
  • Examination of the political environment including profiles of leading ANC and opposition figures.Assessment of governance, including ongoing actions to tackle historic and systemic political corruption scandals.
  • An overview of the macroeconomic climate and outlook, including the impact of Covid-19, the country’s ‘junk’ Sovereign rating status and its long road back to investment grade.

Reasons to buy

Understand the main legal requirements project developers and investors in South Africa’s ESI need to consider.

Identify the risks - Many of the issues confronting the South African polity, its business environment and society are systemic. The report examines political power struggles, corruption and governance issues, plus the impact of Covid-19, the country’s ‘junk’ sovereign credit rating status and its long road back to investment grade.

Evaluate the progress of sectoral reform - The South African ESI has had a long list of policy documents that are supposed to guide its future direction. In many cases their ambitions are unfulfilled. The report examines each policy to provide context to the current direction of the sector and underline the major gaps in policy.

Recognise the opportunities for your business- The report outlines the strengths and weaknesses of procurement programmes, the future of coal plants as the energy mix evolves and the country’s growing C&I sector.

Understand the energy transition - the report examines the opportunities and pressures of ensuring a ‘just transition’ away from coal, putting into context the country’s huge potential for renewable energy, outlining the potential role of gas and LNG-to-power and examining the role of unions, Eskom and political players.

Clear analysis of the C&I market - providing need-to-know information on the current and potential market size, policy direction, regulatory requirements, tariffs and corporate PPAs.

Assess supply and demand scenarios- South Africa’s supply-demand balance is a top political issue. Despite the impact of the coronavirus pandemic on lowering demand, 2020 saw some of the worst load-shedding the country has seen. African Energy assesses the causes of this crisis, including energy availability, and uses its own proprietary power database - African Energy Live Data - to provide a medium-term assessment of installed capacity projections to 2025, based on projects that have already been announced and upcoming procurement rounds.

Table of Contents

1. Executive summary2. Risk Management Index
3. Political overview
3.1. Structure of government
3.2. Stability of the political system
3.3. The main political parties
3.4. Elections
3.5. Corruption
3.6. Security risks
3.7. Political economy and major policy initiatives
4. Macroeconomic overview
4.1. Overview
4.2. Reform and missed targets
4.3. A very difficult outlook
4.4. Economic structure and (stunted) growth
4.5. Inflation and the central bank
4.6. Fiscal deficit and debt: compounded by Covid-19
4.7. The 2021/22 budget
4.8. Balance of payments
4.9. Foreign reserves and the rand
4.10. Credit ratings
4.11. Key lending rates
4.12. Local market liquidity
4.13. WBG Ease of Doing Business
5. Power sector overview
5.1. Overview
5.2. Market structure
5.3. Key institutions
5.4. The South African ESI: A short sector history
5.5. Main consumers of electricity
5.6. Regional electricity trade
5.7. Eskom and the ESI crisis
5.8. Independent power producers
5.9. Off-grid including SHS and C&I
5.10. Challenges facing the ESI
6. Policy
6.1. Major Legislation
6.2. ESI plans and policies
7. Regulation
7.1. Legal requirements
7.2. Procurement
7.3. Tariffs
7.4. Currency risk
8. Demand and supply analysis
8.1. Overview
8.2. Key factors influencing demand
8.3. Demand forecasts
8.4. Key factors influencing supply
8.5. Supply forecasts
8.6. African Energy medium-term capacity projection
9. Resource availability
9.1. Hydrocarbons industry overview
9.2. Key industry agencies
9.3. Legislation
9.4. Licensing
9.5. Crude oil
9.6. Natural gas
9.7. Coal
9.8. Geothermal
9.9. Solar
9.10. Wind
9.11. Hydroelectric power
9.12. Uranium
9.13. Hydrogen
10. Transmission and distribution
10.1. Overview
10.2. Critical issues facing the network
10.3. Sector reforms
10.4. Planned grid improvements
10.5. Regional trade
10.6. Electricity imports and exports
11. Commercial & industrial market
11.1. Market overview
11.2. Routes to market
11.3. Policy direction
11.4. Regulation
11.5. C&I tariffs
11.6. Corporate PPAs
11.7. C&I project profiles
12. Competitive landscape
12.1. Overview
12.2. Landmark power projects
12.3. Under construction generation projects (as of February 2021)
13. Installed capacity data14. Power generation projects



Executive Summary

South Africa’s on-grid installed capacity will reach 70.4GW in 2025, but dispatchable supply of approximately 36GW may not be sufficient to meet a peak demand of 38GW, according to research carried out for the South Africa Power Report 2021/22.

Analysis of utility supply has shown that despite nominal installed capacity increasing by 8GW over the last decade, electricity available for generation has decreased by 7%.

South Africa Power Report 2021/22 shows that action is needed if load shedding is to end by the middle of this decade, but important steps have already been taken. The Risk Mitigation IPP programme is progressing, albeit with major hurdles facing the largest bidder; the government has announced new procurement for renewable and other power; while the lifting of the threshold at which projects require a generation licence from 1MW to 100MW could unlock around 5GW of new distributed generation.

The report assesses the causes and symptoms of the crisis from political power struggles, governance issues and the long list of policy documents that are supposed to guide the ESI's future direction - but where in many cases ambitions are unfulfilled - to the country’s huge potential for renewable energy and the pressures of ensuring a ‘just transition’ away from coal.

Companies Mentioned

A selection of companies mentioned in this report includes:

  • ABB
  • AB InBev
  • Absa
  • Acciona
  • Acwa
  • Ansaldo Energia
  • Bio2Watt
  • Building Energy
  • Department of Public Enterprises
  • Enel Green Power
  • Eskom Holdings
  • G7 Renewable Energies
  • Gold Fields
  • GRS
  • Ideas Managed Fund
  • IPP Office
  • Juwi Solar
  • Karpowership
  • Mulilo Holdings
  • National Energy Regulator of South Africa (Nersa)
  • Nedbank
  • Pele Green Energy
  • Petroleum Agency of South Africa
  • Sasol
  • Sola Group
  • Southern African Power Pool (SAPP)
  • Sturdee Energy
  • Total
  • Transnet
  • TSK
  • Umbono Energy
  • Vestas