CASE STUDY Construction of wind farm cluster in Eastern Cape for industrial offtake In late February 2024, Enel Green Power South Africa (EGP South Africa) and its operating subsidiary Impofu Cluster Investment SPV (RF) (Pty) Ltd, reached financial close on a cluster of three 110MW wind plants at Impofu in Eastern Cape province. The wind farms: Impofu East, Impofu West, and Impofu North will provide renewable electricity to Air Liquide Large Industries South Africa (Air Liquide) and Sasol South Africa (Sasol)’s facilities in Secunda via a wheeling agreement with Eskom. Air Liquide operates the world’s largest oxygen production facilities in Secunda, with 17 air separation units. In January 2023, EGP South Africa signed two long term power purchase agreements (PPA) with the two companies to supply a total capacity of 220 MW of renewable energy. The partners signed a third 110MW PPA in February 2024, taking the full amount to 330MW. Sasol plans to secure 1,200MW of renewable energy capacity from IPPs by 2030. Nedbank CIB was the co-lender, arranger, facility agent, account bank, and hedge provider of the finance facility for the projects. It provided a ZAR11.3bn ($620.3m) finance facility.
Northern Cape and Western Cape. A further 25 projects have been identified to add transformers at existing substations that could unlock 13GW of new generation in the next five years, and 22 other transmission projects to unlock 24GW by 2033. Grid financing requirements The first 26 projects in this wider transmission procurement plan will deliver a little over one- tenth of the additional high voltage power lines that South Africa needs. According to Eskom’s 2022 Transmission Development Plan (TDP), to unlock new grid capacity it needs around 14,218km of additional extra-high-voltage lines and 170 transformers to bring around 106,000MVA of transformer capacity online over the next ten years. Over ZAR390bn will be required over the next decade to fund grid expansion to accommodate new generation capacity from renewable energy projects. Eskom had a ZAR254bn ($14bn) debt relief package, approved by the government in April 2023, which prevented the utility from borrowing further during the three-year relief period (2024-2026), severely limiting its ability to attract investments. With the delivery of transmission infrastructure taking, on average, between seven to 10 years, it is estimated that the delivery rate needs to be scaled-up by eight times to connect the energy generation required for energy security by 2030. The transmission grid build rate would also need to increase from 300km to 2,300km per year with a greater rate of investment and delivery required through to 2050.
Future grid expansion Despite its precarious financial position, Eskom has been using a mix of debt and its own cash to finance transmission infrastructure projects to unlock more this badly needed grid capacity. When Eskom transferred its transmission assets in July 2024, it signed an equity subscription agreement with NTCSA. At the same time, the government put in place ZAR3.8bn of relief with Eskom to cover the portion of the utility’s debt linked to these assets. In the 2024 Transmission Development Plan (TDP), the NTCSA said it required ZAR112bn to fund its projects in the first five years of the plan. A budget is in place to cover this. More capital will be required to fund the subsequent five-year plan and NTCSA’s capacity is limited by its balance sheet and revenue. It is also not yet able to raise its own debt. The start of operations at NTCSA is hoped to accelerate this process. Already prior to the formal launch of NTCSA, Eskom had initiated 46 transmission projects, of which an initial batch of 26 will deliver 1,632km of transmission lines, 11,290 megavolt ampere (MVA) of transformer capacity and facilitate over 15GW of new capacity connections to the grid by 2028. Construction has started on half of this initial batch. These projects should enable more than 10GW of generation to be added to the grid. The remaining 13 projects are in different stages of procurement, covering 435km of lines with 8,000MVA of capacity and enabling a further 4,975MW to be connected to the grid, mainly in
South Africa’s Energy Prospects
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