South Africa’s energy crisis has reached critical levels. The country is experiencing its worst period of loadshedding, which is taking a significant toll on its economy and society. The focus of solving this has been on generation: how to fix the existing coal fleet and how to build new generation as quickly as possible. But transmission has been largely overlooked, and this is a mistake.

The recent power outages in Pakistan serve as a warning to South Africa. There have been outages despite excess generation, due to a lack of transmission infrastructure. In South Africa, the recent REIPPPP Bid Window 6 had no successful wind bidders despite 3 200 MW up for bid due to a lack of transmission capacity in the areas with the best wind resources and “shovel-ready projects.”

The insufficient transmission infrastructure is hampering South Africa’s efforts to end loadshedding and to meet its ambitious targets to reduce carbon emissions. 

Eskom has recognised this. Its latest Transmission Development Plan (TDP) includes massive transmission lines and substation infrastructure plans. However, past TDPs have laid out similar, though perhaps less ambitious, plans that were largely not carried out. Part of the reason for this was due to Eskom’s debt. The debt relief to Eskom laid out in the recent budget speech should help, especially as the requirements from national treasury include a focus on transmission.

The next challenge is in the execution of the plan. The massively ambitious plans from Eskom would require an enormous increase in the execution capabilities of Eskom Transmission. Eskom Transmission has typically self-executed the engineering, procurement and managed to construction by several construction contractors. The ambitious build programme and the brain drain that Eskom has suffered in the past few years mean that the targets cannot be achieved with the business-as-usual approach.

The TDP does lay out plans to put out some projects to market as Engineering, Procurement and Construction (EPC) tenders, where EPC contractors will provide turnkey projects to Eskom. This is a critical component to meeting the TDPs targets. In the renewables sector, Transition and Distribution (T&D) EPC contractors have demonstrated their capabilities in assisting Independent Power Producers with grid connection scopes, particularly the self-build scopes. These scopes are the parts of the project that get handed over to Eskom once commissioned. EPC contractors have effectively built Eskom distribution and transmission infrastructure in a turnkey manner, providing a proof of concept for their ability to play a significant role in Eskom's transmission infrastructure plan.

One of the benefits of private EPC contractors building Eskom infrastructure in a turnkey manner is improved efficiency. T&D EPC contractors can provide a more streamlined and efficient project management approach, reducing the time required to complete projects. Eskom's transmission infrastructure plan is critical for the energy transition in South Africa, and delays in implementation will jeopardise the country's energy security. EPC contractors can help Eskom to meet its transmission infrastructure targets by delivering projects on time and within budget.

Competition between EPCs will drive innovation. EPCs will offer improved implementation of projects, through technologies such as drones, Augmented Reality, and prefabrication and modular construction. EPCs can also differentiate themselves by improving their systems to ensure optimal stakeholder management and local community upliftment, improving stability in the project areas.

There is a risk that these Eskom Transmission tenders could become dominated by foreign EPCs. South African EPCs, that fully support the government's transformation targets, can build most of the infrastructure if given the necessary support by Eskom and the government. Continued application of CIDB, B-BBEE, and appropriate local content requirements is important. 

In conclusion, if South Africa is to meet its energy security and climate change goals, it must prioritise the development of transmission infrastructure. Eskom's TDP lays out an ambitious build programme, but executing it will require significant capabilities and resources. The private sector, specifically T&D EPC contractors, can play a critical role in helping Eskom to meet its targets for transmission infrastructure development. By providing turnkey projects, private contractors can offer a more streamlined and efficient approach, reducing project completion time and costs. The government must work closely with Eskom and private contractors to create a conducive environment for private sector participation in transmission infrastructure construction.

In the long term, a more resilient and efficient transmission infrastructure will not only support the country's energy needs but also create jobs and stimulate economic growth. South Africa can not only address its energy crisis, but also achieve its sustainability targets to address the transmission infrastructure challenge.

Louis Hall is currently the Group Executive for Renewables at Proconics Holdings, where he leads the company's strategic vision for renewable energy, Transmission and Distribution projects, and oversees the growth of the renewables and T&D business as one of the company's primary offerings.

https://www.proconics.co.za/