ROUNDTABLE Discussion: FINANCE MODELS FOR SOUTH AFRICA’S GRID INFRASTRUCTURE

One of the major challenges South Africa faces with regards to transitioning to a competitive and secure electricity system is the availability of transmission infrastructure. The country urgently needs a massive expansion of transmission infrastructure, estimated at 14,200 km of new transmission lines in Eskom’s Transmission Development Plan. However, constraints in the balance sheet of Eskom and the future NTCSA make financing these upgrades a challenge. Financing grid infrastructure will require mobilising substantial private capital to build, maintain, and upgrade the electricity transmission networks.

Appropriately structured Independent Power Transmission projects (IPTs) are one way of supporting such an extensive roll out of transmission infrastructure. There are various financing models being explored, for instance Independent Power Producer (IPP)-backed IPT models. South Africa will benefit from adopting multi-pronged but complementary financing models. It is crucial that grid infrastructure financing models demonstrate an in-depth understanding of the techno-economic characteristics of power transmission networks that must be resolved whilst ensuring broader public interests (e.g. fair pricing, grid stability, development impact) are served.

This roundtable discussion forms part of the detailed studies the PCC is conducting to understand the structural reforms required in the power sector from a financing, energy security and climate mitigation perspective, it also builds on initial engagements hosted at the JSE by the Ministry of Electricity (now Department of Electricity and Energy) on transmission financing mechanisms.

Therefore, this roundtable discussion seeks to:

• Explore alternative approaches to the ownership, operation, and financing of transmission infrastructure in the power sector.
• Examine regulatory, governance and financing issues in relation to transmission infrastructure delivery mechanisms.
• Understand how ITP models fit into overall grid management and transmission rollout.
• To facilitate consensus and steer direction towards the roll out of transmission infrastructure at the pace and scale that is required.