South African Electricity Market—2016 Snapshot

Changing Economy and Expanding Renewable Energy Set to Alter Future of the Electricity Supply Industry

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The electricity sector in South Africa has witnessed dynamic changes over the past few years. Sharp increases in electricity tariffs have been a prominent feature of the electricity supply industry in South Africa. Declining global commodity prices and increasing electricity prices have had a detrimental impact on the mining and manufacturing industry, which have experienced sluggish growth. The economy of South Africa is witnessing a gradual change with increased contribution from the services sector. As such, the demand for electricity has reduced. Decreasing costs of renewable energy technologies, regulatory reforms, market restructuring, coupled with the risks and delays associated with base-load coal and nuclear power will largely determine the future of the electricity sector in South Africa.

Table of Contents

1. Executive Summary
Key Findings
2. Introduction
Scope of Study
3. South Africa—Introduction
South Africa—Country Overview
Economic Outlook
GDP Contribution by Sector
4. Regulatory Framework and Organisations
Electricity Supply Industry—Market Structure
Sector Overview
Key Organisations
Department of Energy (DOE)
National Energy Regulator of South Africa (NERSA)
5. Electricity Generation
Current Installed Capacity—Technology and Ownership
Current Installed Capacity—Fuel Type and Owner
Evolution of Installed Capacity
Electricity Generation
Introduction to REIPPPP
REIPP Procurement Programme
REIPPPP—Procured and Operational Capacity
REIPPPP—Technology-wise Capacity Allocation per Bid Window
Current Installed Capacity Under REIPPP (Feb 2016)
Declining Prices of RE Power Projects per BW
Comparison of Power Generation Technologies Based on Unit Cost of Energy
Concerns Surrounding REIPPP and Future Build
Future Generation Mix as per IRP
Future Generation Plan for TDP 2016–2025
IRP 2016 in Numbers (New Build Options 2021–2050)
IRP 2016 Update—Frost & Sullivan Analysis
6. Electricity Transmission
Existing Transmission Infrastructure
Transmission Development Plan—Major Planned Projects
Future Transmission Assets
7. Electricity Distribution and Supply
Distribution Responsibilities (Eskom and Municipalities)
Electricity Sales and Peak Demand Trends
Electricity Sales per Customer Category
Electricity Sales in Southern Africa (Export)
8. Peak Demand and Energy Projections
IRP Projections 2010 and Update Base Case 2013
IRP Projections 2010 and 2013 Update (Anticipated Energy Consumption)
IRP Projections and Actual Situation
Understanding Various IRP Scenarios
CSIR Forecasts Using Sectoral Regression Model—Basis for IRP 2016 Base Case
Need for Annual IRP Updates
9. Electricity Tariffs
Eskom Tariff and Inflation
Evolution of Electricity Tariffs (Eskom Tariffs as per Consumer Category)
Evolution of Electricity Tariffs
10. Drivers and Restraints
Renewable energy potential of South Africa
Decreasing costs of RE technologies
Opportunities for localisation and job creation
Shrinking economy and a reduced demand for electricity
No level playing field for private participants
Initial progress problems with the industry
11. Growth Opportunities and Companies to Action
Growth Opportunity 1—Power Generation
Strategic Imperatives for Success and Growth
12. The Last Word
The 3 Big Predictions
Legal Disclaimer
13. Appendix
14. The Frost & Sullivan Story

List of Figures & Charts

1. Macroeconomic Indicators, South Africa, FY2016
2. Ministerial Determination for Development of Renewable Energy Projects, South Africa, 2011–2015
3. Future Requirements for Transmission Equipment, South Africa, 2016–2025
4. Electricity Market: Market Drivers, South Africa, 2017–2022
5. Electricity Market: Market Restraints, South Africa, 2017–2022

1. Quarter-on-Quarter Economic Growth, Real GDP Growth, South Africa, Q1 2012–Q3 2016
2. GDP Contribution and Growth Rate, South Africa, Q3 2016
3. Sector-wise Contribution to GDP, South Africa, 2014
4. Nominal Capacity Available to Grid by Technology, South Africa, 2016
5. Nominal Capacity Available to Grid by Ownership, South Africa, 2016
6. Eskom Nominal Capacity, South Africa, 2016
7. IPP Nominal Capacity, South Africa, 2016
8. Installed Capacity and Peak Demand on Eskom Network, South Africa, 2011/12–2015/16
9. Electricity Output by Fuel Type, South Africa, 2011/12–2015/16
10. Status of REIPPPP, South Africa, 2016
11. Operational Capacity Under REIPPPP, South Africa, Q3 2014–Q4 2016
12. Technology-wise Capacity Allocation for Renewable Energy, South Africa, 2016
13. Commercial Capacity Operational by Technology, South Africa, 2016
14. Commercial Capacity Operation by Region, South Africa, 2016
15. Renewable Energy Price Path, South Africa, 2011–2016
16. Lifetime Cost per Energy Unit for Different Generation Technologies, South Africa, 2016
17. Proposed Generation Capacity by 2030 as per IRP 2010, South Africa, 2016
18. Proposed Generation Capacity by 2030 as per IRP 2013 (Updated), South Africa, 2016
19. New Generation Capacity as per Eskom TDP, South Africa, 2016–2025
20. Planned Power Station Capacity, South Africa, 2025
21. Proposed New Build Power Generation as per IRP 2016 Draft, South Africa, 2021–2050
22. Contribution by Installed Capacity, South Africa, 2020–2050
23. Contribution by Generating Capacity, South Africa, 2020–2050
24. Planned Transmission Infrastructure, South Africa, 2025
25. Electricity Sales and Peak Demand, South Africa, 2006/07–2015/16
26. Electricity Sales by Customer Category, South Africa, 2011/12–2015/16
27. Electricity Export by Country, South Africa, 2011/12–2015/16
28. Peak Demand Projections as per IRP 2010 Scenario, South Africa, 2010–2030
29. Peak Demand Projections as per IRP 2013 Scenario, South Africa, 2013–2030
30. Energy Consumption as per IRP 2010 and IRP 2013 Scenarios, South Africa, 2010–2030
31. IRP Projections vs. Actual Energy Consumption, South Africa, 2010–2016
32. Energy and Peak Demand Forecasts as per IRP 2016, South Africa, 2016–2030
33. Average Eskom Tariffs, South Africa, 2011/12–2015/16

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