After officially starting operations in the electricity transmission market, the National Transmission Company of South Africa (NTCSA) needs President Cyril Ramaphosa to sign the Electricity Regulation Amendment Bill for South Africa’s wholesale energy trading market to take shape.
This is according to NTCSA chair Priscillah Mabelane, who recently spoke to Business Times on the sidelines of Standard Bank’s inaugural Africa Unlocked Business and Commercial Banking Conference in Cape Town.
The bill was passed by both houses during the sixth parliament. It is one of about 29 different bills from the previous administration of the legislature that is waiting for the president’s signature to become law.
Mabelane said all that is left for the NTCSA to come into its own as the transmission market operator from a legislative and a regulatory perspective was for the Electricity Regulation Amendment Bill to be signed into law.
“When the bill is finalised, we will move into a clearly competitive environment where we will become a transmission market operator, creating a platform for trading for both the customers and the suppliers of the energy.”
Former public enterprises minister Pravin Gordhan told Business Times last year that the bill was a critical piece of legislation to allow the transformation of Eskom and more private sector participation in the energy sector.
The bill provides for an open market platform with competitive electricity trading, the delegation and assignment of duties to the NTCSA, and the provision of offences and penalties connected with an electricity trading market.
Mabelane said the beginning of operations for the NTCSA was a major step in the government’s plan to unbundle Eskom into three separate entities: one each for generation, transmission and distribution.
“We have announced that we are now operationalised as a separate legal entity, still a subsidiary of Eskom. At the back of that, the intention is that we will basically be having a transmission system operator that will be independent, providing grid access to Eskom Generation, but also the IPPs (independent power producers).”
Another major priority for the NTCSA, once the bill is signed, is to introduce changes to the transmission network of the country from its now inland-dominated shape to coastal areas where renewable energy infrastructure will be developed.
“As Eskom starts to unbundle, issues of distribution and how they engage with municipalities ... Eskom will handle that. But for us, it’s to ensure that we shift the network, which was predominantly inland where most of the power stations were, into where we see new sources of power such as renewables in the coastal [areas].”
“A significant part of our projects are focusing on upgrading the existing network to be able to ensure that we can get the infrastructure, particularly in substations, where we will be bringing in new transformers to expand and then we need to build, rapidly, the new networks to be able to connect the other sources of energy going forward.”
We will basically be having a transmission system operator that will be independent, providing grid access to Eskom Generation, but also the IPPs
— NTCSA chair Priscillah Mabelane
Eskom group CEO Dan Marokane said the power utility learnt its lesson from the failed repurposing of Komati Power Station from coal to renewables and these lessons would be applied to other plant.
“Komati was a situation of putting the cart before the horse. You need to put all the transition interventions in place as you go towards the switchover.
“That is what we are trying to do now. In Komati’s case, we are now doing it retrospectively, but for the rest of the stations that are coming next, we actually have to do all of that now.”
He told Business Times that Eskom and the NTCSA were working together to develop a model for building new generation and transmission capacity.
“The network of transmission will remain with the National Transmission Company and the model to be used for building new capacity will be defined and shared. But it’s very likely to be one which allows private capital for some time and eventually assets revert to the state.
“The transmission company is now operational. In the next two, three months, they will actually do a lot of announcements [in that area].”
South African Independent Power Producers Association (SAIPPA) chair Brian Day said the NTCSA’s implementation was an important step in implementing reforms in South Africa’s energy system.
“The actual trading of the NTCSA started on July 1. The precursor has been the standing offer PPA [power purchase agreement] to procure outside a procurement programme of private PPAs. This is going to be key, and a market will enable and facilitate trade, sort of like the JSE does for shares.”
Day said parallel with the NTCSA’s operationalisation, transmission market rules were being developed with contributions from businesses and Eskom.
“What has happened legislatively, and the market programmes, is a massive step forward. Long overdue, but let us celebrate the fact that this will make wholesale trade of electricity as normal in South Africa as it is elsewhere in the world.”
Day said SAIPPA’s only misgiving has been the amount of time taken, adding that the establishment of a fully-fledged energy trading market should be expedited.
“It should have happened a long time ago. The Eskom guys did this work 25 years ago with Keith Bowen. The challenge is not what’s happening, it’s the fact that it should have happened decades ago and there is an urgency to get it in place. The quicker it ramps up, the sooner you can get capacity for generation infrastructure.”
