The grid and the outlook for its development
operator and international trader. The network comprises some 28,000km of high voltage power lines that transmit electricity to cities and towns and 325,000km of lower voltage lines that transmit electricity to homes and businesses. Benefits of the transition The division of Eskom’s transmission division into a separately managed body will help resolve some of the main structural challenges confronting the South African power sector. Becoming an entity in its own right will allow NCTSA to pursue an independent business model, separating it from some of Eskom’s financial constraints. During the 2022/23 financial year, Eskom’s gross debt peaked at ZAR424bn. The largest part of the utility’s deficit is caused by the immense difficulties it faces in managing its fleet of coal-fired generation plants. These problems have reverberated through every other part of Eskom’s activities, preventing it from funding other operations – such as the construction of new transmission. The unbundling is expected to be an important step in establishing the conditions for a fully competitive electricity market, enabling much greater contributions from private players in the generation space. This is critical to enable diverse energy generating sources to contribute to South Africa’s power mix. But most importantly, the NTCSA’s role will be to accelerate maintenance, refurbishment and expansion of the national grid infrastructure – a crucial precondition for the connection of more generation capacity – especially wind and solar projects. At present, network constraints in many parts of the country including Eastern, Western, and Northern Cape provinces mean that opportunities for adding clean, sustainable generation are limited. It will further open up new possibilities for financing the construction of badly-needed transmission infrastructure.
Electricity market and grid reforms
South Africa’s electricity supply market is being restructured in an exercise that started in 2019, and which reached a key turning point in July 2024. In that month National Transmission Company of South Africa (NTCSA) started officially trading as an independent and wholly owned subsidiary of state- owned utility Eskom Holdings SOC. This reform was followed almost immediately by the signing of the Electricity Regulation Amendment (ERA) Act into law in August, giving impetus to the unbundling of Eskom into three separate entities for generation, transmission and distribution, creating a new, competitive electricity market. The reforms in the law broke down Eskom’s traditional monopoly as the supplier of electricity, allowing the private sector to play a leading role in supplying new build renewable electricity and building transmission infrastructure. Then in March 2025, Electricity and Energy minister Kgosientsho Ramokgopa gazetted a determination for independent transmission companies to build, own, and transfer pilot transmission lines to the National Transmission Company of South Africa (NCTSA). 1 This was followed in April by the release of draft transmission regulations, under the ERA Amendment Act, outlining how private investors can be involved in building the transmission network. The changes had been a long time in coming. NTCSA was incorporated at end-2021. Its transmission license was approved by the National Energy Regulator of South Africa (Nersa) on 27 July 2023 while the import/export and trading licenses followed on 18 September 2023. The licence is for five years to allow the transition from exclusive trading and integration of any changes arising from price changes and the application of the ERA Act. NTCSA will operate and manage the transmission grid, while acting as the system and market
1 Unlocking Private Capital for Expanding & Modernising Transmission Infrastructure 4 April 2025: https://cdn.nowmedia.co.za/nowmedia/ energize/landingpages/MOEE/MOEE%20Presentation-V2.1.pdf.
13
South Africa’s Energy Prospects
Made with FlippingBook - Share PDF online