The Generation of Electricity

State-owned utility Eskom, which supplies 95% of the country’s power, has been plagued with negative publicity relating to increasing electricity costs, corruption and mismanagement. Credit ratings downgrades, financial instability and declining electricity sales have made the utility heavily reliant on government funding and despite the high upfront capital costs of nuclear projects, government plans to go ahead with the nuclear build programme.

Difficult Times

Although Eskom reported in July 2017 that its total revenue increased 7.9% to R177bn for the year ended March 2017, the utility’s profit declined drastically by 85%, from R8bn to R1bn. Net finance costs increased 82%, from R8bn to R14bn, over the year and the amount of money owed to Eskom increased from about R1.2bn in 2012 to R11.3bn in 2016. Overall electricity sales declined 0.2% with large decreases in the industrial and agricultural sectors of 3.7% and 5.7% respectively.

Progress in the Renewable Energy Sector

Despite delays in the awarding of contracts to Independent Power Producers (IPPs), the Renewable Energy Independent Power Producer Programme (REIPPPP) has to date attracted more than R195bn in private investment. In 2016 a record 161GW of newly installed renewable power capacity was added, an increase of almost 9% compared to 2015. Solar PV accounted for approximately 47% of the total additions, with the equivalent of more than 31,000 panels installed hourly. Wind power accounted for 34% and hydropower 15.5% of the total.

Report Coverage

The report on the Electricity sector examines current conditions and describes the developments in the generation of electricity in South Africa. Profiles for 13 companies are provided, ranging from state-owned companies Eskom and the Central Energy Fund to small renewable producers such as Avon Peaking Power (RF) (Pty) Ltd which focuses on thermal energy, and Cennergi (Pty) Ltd, active in the solar sector.