Mantashe: Grid capacity biggest challenge in dealing with energy crisis

Mineral resources and energy minister Gwede Mantashe says the lack of grid capacity is the biggest challenge the government faces in its attempts to deal with the energy crisis.

“You can increase the generation but if there is no grid capacity, the impact is not the same, so we must pay attention to the grid capacity,” said Mantashe while delivering his department’s budget vote in parliament on Tuesday.

Mantashe said over the medium-term expenditure framework of this administration, with 2023 being the last full year, a confluence of domestic and global factors impacted the performance of the mining and energy industries.

In its programme to ensure universal access to electricity for poor and indigent households, his department was aiming to connect 917,000 households to the grid.

To date, 673,946 households have been connected. The other 243,054 will be connected in this financial year, which will bring South Africa closer to the UN’s Sustainable Development Goal on ensuring access to affordable, reliable, sustainable and modern energy for all.

“We have been given lots of advice in this regard and one was we should not be connecting more people because there is a shortage of electricity,” said Mantashe.

“In our view, connectivity and universal access to electricity is necessary. It can’t wait for the grid. We must deal with grid problem but connect our people.”

He said 3,200MW wind capacity of the 4,200MW procured under bid window 6 could not be allocated due to grid unavailability.

“As our [independent power producers] office notes, grid availability is critical to securing electricity supply in the future. It impacts not only on the public procurement programmes, but also on private embedded generation initiatives.

“We have removed the ceiling on embedded generation but if there is no grid window the impact is going to be minimal,” said Mantashe.

In efforts to narrow the electricity supply and demand gap, the Integrated Resource Plan 2019, the blueprint policy for electricity generation, is under review. Mantashe said the government intends to present the draft to the cabinet in the second quarter of this financial year.

“While this review is under way, we continue to procure additional electricity informed by the existing policy. Accordingly, in this financial year, we will procure the following additional generation capacity:

• Bid windows 7 and 8, which will provide 5,000MW each of renewable energy. The requests for proposals for the procurement of this capacity will be issued to the market in the second and fourth quarter of this financial year respectively.
• In the second and fourth quarter of this financial year, we will issue further requests for proposals for the procurement of battery storage with a capacity of 1,230MW.
• In the second quarter, we will issue a request for proposals for the procurement of gas-to-power of 3,000MW.
• In the fourth quarter, we will issue a request for proposals for the procurement of 2,500MW of nuclear energy.”

Mantashe said in line with the reform of the electricity sector called for by President Cyril Ramaphosa, the department has amended the Electricity Regulation Act to enable the creation of the transmission systems operator, which is establishing transmission as a market and a wheeler of energy. The legislation is before parliament.

Coupled with the intention to create a competitive supply and demand electricity market, the government is working to create a “green economy”.

“Through the risk mitigation independent power producer procurement programme and the renewable energy independent power producer procurement programme, we have procured 7,786MW through bid windows 4, 5 and 6,” he said.

“A total of 2,130MW is connected to the grid. A total of 150MW and 784MW is to be operationalised in November 2023 and August 2024, respectively.”

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