Abstracts

4 Global Energy Awards accolades, Eskom found itself at the center of a national emergency. The utility was forced to introduce load shedding in January 2008, after the reserve margin—the ratio of excess electrical capacity to peak demand—had fallen from 27% in 1999 to 5% ten years later (Chettiar et al., 2009). No significant additional electrical capacity had been added to the South African grid after the end of apartheid. Misalignment between the government entities responsible for the execution of a well-intentioned plan to restructure Eskom and to transform the electricity sector contributed to this decline in supply reliability. The Department of Minerals and Energy (DME) 1998 White Paper on the Energy Policy of the Republic of South Africa , the seminal post-apartheid government policy on energy, was a visionary guideline that highlighted how South Africa’s energy sector ought to adapt for the twenty-first century. The White Paper envisaged the unbundling of Eskom, discussed the introduction of competition into generation, and predicted supply shortages by 2007, barring the installation of additional capacity. In 2001, the Cabinet of South Africa followed up on the White Paper with a mandate that sought to commence private sector participation, by completely disallowing Eskom from making further investments in generation (Newbery & Eberhard, 2008). Responsibility for new electrical capacity was given to the DME to apportion to independent power producers (IPPs). The DME, however, did not have the ability to successfully contract IPPs. It did not even have direct access to the grid or institutional authority to influence Eskom and hold it to account. Eskom is managed by the DPE not the DME. Although it recognized the need for additional capacity, Eskom had no incentive to support IPPs, which it tacitly resisted. Yet, its dominant position and control of the transmission grid meant that its participation was crucial for IPPs to be successful. Ultimately, the DME failed to set up the requisite legal and regulatory framework to facilitate the procurement of IPP power purchase agreements (PPAs) in time (Trollip et al., 2014). Just as more South Africans were being connected to the electricity grid and demand was rising, no new capacity was added. The Cabinet ultimately had to reverse its mandate and reauthorize Eskom to manage new generation projects in 2004. After it regained responsibility for capacity expansion projects, Eskom rushed to resolve South Africa’s falling electricity reserve margin and began construction on two new coal-fired power stations, Medupi in 2007 and Kusile in 2008. Medupi and Kusile are among the world’s largest coal power stations; they were planned to have a combined installed capacity of about 10,000 MW, expected to cost R160B ($11B), and scheduled to be completed by 2014 (Donnelly, 2019). The mismanagement of this investment after the inauguration of Jacob Zuma as President, in 2009, worsened Eskom’s crisis. Zuma allegedly used his powerful position to place corrupt officials in government-owned entities, including at Eskom, and to forward government contracts to the controversial Gupta family and their associates for a cut of the proceeds (Madonsela, 2016; Hofstatter, 2018). Owing to state capture and mismanagement, Medupi and Kusile have Table 1 Share of Electricity Generation by Source in 2016 (%) Coal 85.7 Nuclear 5.2 Gas 4.9 Other renewables 2.7 Pumped storage 1.2 Hydro 0.3 Source: Leprich (2019, p. 9).