Eskom, South Africa's major electricity provider, is in discussions with government ministries to secure funding for a R390-billion expansion of its transmission network. This expansion is deemed necessary as more renewable energy generation comes online, contributing to the country's energy transition.
Eskom Aims to Construct 14,000 Kilometers of Power Lines
Currently supplying over 80% of South Africa's electricity, Eskom has struggled to meet demand, resulting in debilitating blackouts that have adversely affected the economy.
As part of its plans, Eskom aims to construct 14,000 kilometers of power lines over the next decade, a significant increase from its previous installations over the past decade.
The utility is engaging in ongoing talks with government ministries regarding funding options for the transmission capital expenditure requirements.
These discussions include exploring the possibility of utilizing
funds pledged by wealthy nations toward South Africa's energy transition, as
well as tapping into private sources for financing.
South Africa's Transition Away from Coal
Foreign nations, including France, Germany, the US, UK, and the EU, have pledged over US$9 billion in climate financing to support South Africa's transition away from coal, which currently accounts for more than 80% of the nation's power generation.
However, political challenges and lobbying from coal-dependent businesses have complicated the implementation of these pledges, highlighting the complexities surrounding the energy transition process.
Eskom is also required to obtain permission from the national treasury to take on new debt, a condition of the latest bailout provided to the utility. While the government has allocated substantial funds to Eskom in the current fiscal year and the next, Eskom has not indicated whether it intends to seek permission for additional debt.
Facilitating Private Sector Participation
In parallel efforts, the Electricity Ministry is spearheading the establishment of an independent transmission project office aimed at facilitating private-sector participation and expediting the procurement, planning, and financing of the grid.
This initiative is designed to fast-track the development of the transmission network expansion and ensure its alignment with South Africa's energy transition goals.
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