Corruption stalls SA’s renewable program?

South Africa is half way into a program that will see 96 privately owned and run utility-scale renewable energy plants built across the country. The project has been hailed for the speed of its rollout, its transparency, and for bringing the cost of solar and wind power down to well below that of new-build coal or nuclear. Already, the first plants are feeding at least a third of the project’s intended energy contribution into the grid. So why has the planned construction on the last few plants ground unexpectedly to a halt? Leonie Joubert asks.

the coal-powered Kelvin Station in South Africa

The Eskom-run Kelvin Station; Eskom is deliberately stalling in building renewable plants (Photo by Rute Martins, edited, CC BY-SA 3.0)


There’s a messy standoff currently between South Africa’s state utility, Eskom, and the embryonic private renewable energy (RE) sector here. Our Ministry of Energy kicked off a huge renewable initiative in 2011 which allowed private energy companies to put in their bids to build a suite of renewable energy plants, including concentrated solar power, PV, biomass, landfill, wind, and small hydro. The total package is set to add just over 6 500 megawatts (MW) of power to the continent’s largest grid system, and about half of all these plants are already operational.

The project has been so successful, in terms of the speed with which it has happened, and the transparency around procurement and financing, that it’s being hailed as an example of how the global south can alter its energy development paths with remarkable speed.

But our national utility, Eskom, recently slammed on the brakes, stalling the approval of the final batch of proposed plants, because it had concerns about the ‘financial sustainability’ of the total programme.

Local industry magazine Engineering News reported this week that Eskom claimed a ‘37% rise in costs associated with renewable energy’ from these private firms, ‘despite an overall primary energy cost decrease of 1.5%’. It isn’t clear how the utility came to these figures.

This hold-up means that the paperwork for 13 RE projects, most of which are ‘shovel ready’ (meaning the construction teams’ engines are idling, as they wait for the go-ahead to start building), is sitting on the desk of Eskom’s chief executive, who won’t approve them, so they can’t have the financial side wrapped up and building can’t begin. According to Stephen Forder, editor of the RE information portal  Energy Blog, the cumulative capacity of these 13 projects amounts to 1 121 MW.

But the RE sector is having none of it, rallying together under various industry groupings to challenge Eskom. The South African Wind Energy Association (SAWEA) has taken the issue to the energy regulator NERSA, accusing Eskom of obstructionism and driving a deliberate anti-RE campaign in order to protect its own coal investments.
SAWEA CEO Brenda Martin  issued a press statement this week, saying that Eskom is ‘engaged in a sustained attack on the renewables industry, in an attempt to undermine renewable energy and protect their own narrow interests.’

RE industry calls government on corruption

In the same week, the South African Renewable Energy Council (SAREC), made a link between a corruption scandal at the highest level of government, and these deliberate delays by Eskom.

Last month, a searing report was released by the Office of the Public Protector, which is tasked by our constitution to investigate state misconduct. The report, entitled the State of Capture, tracks ‘improper and unethical conduct by the president (Jacob Zuma) and other functionaries’ relating to a wealthy and influential family from India, the Guptas, including the ‘improper and possibly corrupt award of state contacts and benefits’ to them. And the ‘playground’ in which their dodgy deals are taking place, involves coal mining interests.

Investigative journalists have been trickle-feeding the unfolding chapters of the story through to the public for years now, and the Public Protector’s report confirms their findings.

Now, as these 13 RE projects are bogged down on a senior manager’s desk at Eskom, it looks as though the national utility is deliberately sidelining the RE projects, so that private coal salesmen with strong government connections can keep their business interests intact.

The cost to the RE sector is considerable. In her media release this week, SAWEA’s Brenda Martin estimated that there was a combined investment value of R50 billion hanging in the balance as these delays continue. The final batch of RE projects is expected to generate 13 000 construction jobs, and nearly 2 000 operational jobs annually over the next two decades.

The industry and civil society now wait, bated breath, to see if the energy regulator will discipline Eskom and require it to step back in line with what SAWEA says are the ‘ministerial determinations’ which require it to assist and enable the rollout of this renewable programme.

Leonie Joubert is a science writer and journalist based in Cape Town, South Africa. Her work focuses on climate change, energy policy, urban food security, and giving communications support to various academic and civil society organisations.

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Leonie Joubert

Leonie Joubert is a science writer and journalist based in Cape Town, South Africa. Her work focuses on climate change, energy policy, urban food security, and giving communications support to various academic and civil society organisations.

4 Comments

  1. Mike Parr says

    There is a master development plan waiting to be released – it has the following “unfortunate” numbers (unfortunate if you are in the coal business):
    -1850 MW/year of new wind with a target of 40,000MW
    – Projected installed capacity by 2020 of 6,000 MW
    – New Eskom coal power Medupi approx. ZAR 1.10/kWh
    – Price cap for coal IPP’s 82c/kWh (Independent Power Producer)
    – Average selling price electricity approx. 87c/kWh
    – Average price of wind power in REIPPP round 4(a) 62c/kWh
    – In the expedited round, prices around 55c/kWh are expected
    Oh dearie me – it does look like an extinction event is looming for coal in S.A & with it – all the possibilities for brown envelopes – which is probably why Escom is sitting on its hands.

  2. James Wimberley says

    Eskom is a old-fashioned silo monopoly utility. Its opposition to renewables is as predictable as that of Nevada Power and Light. A level playing field requires a new market structure, splitting the monopoly grid from generation. Thatcher got that one right, as the EU eventually saw. The European country most resistant to the new model is France – and the giant silo EDF, which controls the fictitiously autonomous grid manager RTE, is in deep trouble, as Craig reported here.

  3. Mike Parr says

    “Thatcher got that one right” – James, as somebody that worked for one of the DNOs in the UK, pre-privatisation – they tended to do their own thing – & were far more independent than for example RTE or ERDF. Of course now the UK DNOs are rent seeking (increase asset base and get more money) – with a regulator that does little to curtail this. WPD – 41% profit margin (but 7% return on asset base – arguably far too high in a low interest era – perhaps why they are owned by a US compay).

  4. Pingback: Renewable energy calls for stable energy policy environment - FueladdictsFueladdicts

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