South Africa’s Just Energy Transition: Funding and Commitments

South Africa’s electricity supply has been plagued with rolling blackouts known as load shedding due to decades of underinvestment and mismanagement of the public utility Eskom. However, according to the official source, SAnews.gov.za, all hands are on deck to ensure the severity and frequency of load shedding is reduced in the immediate term and eventually brought to an end. President Cyril Ramaphosa addressed this issue in his recent remarks to Members of Parliament.

Key Points

  • The Minister of Electricity is responsible for driving the various actions being coordinated by the National Energy Crisis Committee to end load shedding. The Minister’s work is reportedly focusing on improving the performance of the existing Eskom base load fleet, maximizing the performance and output of peeking stations, reducing demand through aggressive demand-side management, and increasing the construction of new generation capacity.
  • No evidence of corruption at Eskom by members of the Cabinet or other senior government officials has been presented to President Ramaphosa. Anyone with evidence should provide it to relevant authorities for a thorough investigation.
  • The International Partners Group (the United States, United Kingdom, France, Germany and the European Union) has pledged around $8.5 billion in financing to support South Africa’s Just Energy Transition, and work is underway to deploy these funds. The financing will not be used for investment in coal-fired power generation.
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What Is Being Done?

Minister Kgosientsho Ramokgopa conducted a diagnostic assessment of Eskom’s installed generation capacity to identify a set of critical interventions to maximize the energy availability factor of the generation fleet. A wide spectrum of stakeholders, including industry, labor, original equipment manufacturers, and the diplomatic community, were engaged. They have all pledged their support for strategic interventions to reduce the intensity and frequency of load shedding.

The Ministry of Electricity is working alongside measures to construct new generation capacity urgently while improving the performance of the existing Eskom fleet. President Ramaphosa has stated that the reforms the government has implemented have resulted in a significant increase in investment in new generation projects, with many more in the pipeline.

Tackling Corruption

Although allegations of corruption in Eskom have been reported in the South African media, President Ramaphosa has indicated that he has not been presented with any evidence of members of the Cabinet or other senior government officials involved in such corruption. He has encouraged anyone with evidence to provide it to the relevant authorities for investigation.

Just Energy Transition

South Africa formulated the Just Energy Transition Investment Plan in 2022, which details the investment required to meet the country’s international carbon emissions reduction commitments. The pledges by the International Partners Group are contained in this investment plan, consisting of a combination of concessional and commercial loans, grants, and guarantees.

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Most of the financing is designated for the energy sector, including repurposing of identified coal power stations, investments in new generation capacity, transmission grid, and distribution network, and supporting vulnerable workers, reskilling and providing new diversified economic opportunities and jobs.

Conclusion

President Ramaphosa has noted that all stakeholders are committed to ending load shedding in South Africa. The Ministry of Electricity is reportedly implementing a comprehensive action plan to ensure that not only the severity but also the frequency of load shedding is reduced with the aim of eventually ending load shedding. The South African government’s commitment to the Just Energy Transition is part of the country’s strategic plan to move away from fossil fuels and provide diversified economic opportunities for vulnerable communities and workers affected by the transition.