Electricity + Control December 2019

TRANSFORMERS + SUBSTATIONS

Generation With regard to generation, consideration is being given to creating two or more generation subsidiaries to introduce intra-company competition and drive efficiencies. This will also include Eskom’s participation in renewables. Currently Eskom generates power from 15 or 16 power stations. Gordhan said, retaining its current fleet, it is envisaged that each power station will have a power purchase agreement – per plant – with the transmission subsidiary. “What Eskom lacks as a monopoly is competition,” Gordhan said. “As a result, we do not get the most effective pricing on the generation side of supply. The proposal that government will be exploring with Eskom is the creation of two or three clusters of coal-powered plants, with five or six power stations in each cluster. Each cluster will act as a business unit and that business must produce power as cost-effectively as possible so that businesses and consumers get the lowest possible price available.” he said. “This kind of intra- company competition is good for business, spurring greater efficiencies, and it is good for consumers of electricity – as businesses, or households.” Distribution The future distribution model will take into account municipalities’ reliance on electricity as a significant source of revenue. However, the paper notes that many municipalities do not have the technical capacity to reticulate electricity, even though this is a constitutional mandate for municipalities.

The new Roadmap for Eskom identifies four key elements critical to resolving the utility’s financial challenges: significantly improving operations; cutting costs; increasing revenue collection; and managing debt. It says the utility has already initiated discussions withcoalproducersandparticipantsintherenewables programme to reduce their burden on Eskom. Furthermore, there is an ongoing dialogue with labour and business to implement a just transition that can ensure minimal impact on communities and workers affected by the restructuring of Eskom. Partnerships between government, labour, civil society and business, as agreed to at NEDLAC through the PresidentialWorking Group on Jobs, will support the just transition. The actionable steps set out in the roadmap to mitigate electricity supply risks and to put Eskom and the industry on a new path include the following: - Immediately establish a transmission subsidiary within Eskom Holdings (this to be in place by 30 th March 2020) and complete the current planning for the establishment of the generation subsidiaries; - Eskom to appoint a new executive to drive the implementation of the transformational plan; - Reinforce the existing Eskom transformation team with the necessary skills; - Establish a separate Eskom transformation unit reporting directly to the Board; - Strengthen the Board and appoint a new CEO (within the coming weeks, at the time of the release of the special paper); - Radically improve operations, including maintenance of generation plant, through strict oversight and consequence management; and - Introduce radical cost-saving initiatives including renegotiation of coal and IPP contracts. The roadmap indicates that appropriate structures and processes are being put in place to ensure the effective implementation of the plan. This will demand higher levels of accountability and transparency from Eskom. The minister said, while some specific deadlines are already in place, the reform process will be implemented over several years and will ensure that South Africa has an electricity supply system that enables it to compete in and respond to a rapidly evolving world.

For more information visit: http://www.eskom.co.za or www.dpe.gov.za

24 Electricity + Control

DECEMBER 2019