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1. Bidders announced for the second IPP Office energy storage procurement round
On 30 August 2025, the IPP Office of the Department of Energy and Electricity announced the list of bidders that responded to the second round of its Energy Storage Independent Power Producer Procurement (ESIPPP2) programme. This follows the closing date for bids under ESIPPP2 of 29 August 2024. The ESIPPP2 bid round comprises a total of 615 MW of 4-hour battery energy storage systems (BESS), spread over eight substations, each rated at about 77 MW / 308 MWh. Although it would appear from the list of bids submitted that, behind the IPP companies listed, there were only about four independent developers, the bid round was nearly 4x oversubscribed. The ESIPPP2 bid round follows an earlier ESIPPP1 bid round of 513 MW 4-hour BESS, which has already been awarded to the announced preferred bidders, pending financial closure. A third energy storage bid round ESIPPP3 for a further 615 MW 4-hour BESS is expected to be announced shortly. These IPP Office procurement rounds are in addition to the direct Eskom BESS procurements funded through concessional loans from the World Bank, African Development Bank and the New Development Bank. Phase 1 of Eskom’s BESS project, which includes the installation of approximately 199 MW / 833 MWh of distributed battery storage plants at eight Eskom Distribution substation sites throughout the country. Phase 2 of Eskom’s BESS project includes a further 144 MW / 616 MWh at four Eskom Distribution sites and one Transmission site. With the announced procurements of stationary, utility-scale BESS projects now totalling 2086 MW / 8344 MWh, South Africa has become a significant market for BESS on the word stage.
2. Eskom summer outlook – the good news and the concerns.
Funding from National Treasury, reduced demand for Eskom generated electricity, and unplanned outages in Eskom’s generation fleet now consistently down from about 16 GW to 12 GW, has allowing increased maintenance of Eskom’s generation fleet, unhindered by capacity and budget constraints. As a result, load shedding in South Africa has come to an end for the last 158 days since March 2024. At a media briefing on 26 August 2024, Eskom Chairman Mteto Nyati and CEO Dan Marokane presented Eskom’s summer outlook for the period from 1 September 2024 to 31 March 2025. They indicated that if Eskom Generation can keep unplanned outages at or below a baseline of 13 GW, then no load shedding may be expected. However, in the unlikely event that unplanned outages rise to 15 GW, then intermittent load shedding up to Stage 2 may occur. Some concerns were expressed, however, in respect of execution delays of major Eskom generation projects. The expected first synchronisation of the 800 MW Kusile Unit 6 has been delayed from October 2024 to December 2024, with commercial operation only likely now by June 2025. The return-to-service of the 800 MW Medupi Unit 4 following a hydrogen explosion in August 2021 has been delayed from August 2024 to March 2025. The return-to-service of the 900 MW Koeberg Unit 2 after replacement of its three steam generators has been delayed from July 2024 to December 2024. Shortly thereafter the 900 MW Koeberg Unit 1 will have to shut down in January 2025 for an unknown period for containment building overpressure leak testing. Kusile Units 1, 2 and 3 (3 x 800 MW) will have to shut down in sequence over a six-month period commencing December 2024 to put the flue gas desulphurisation plant back into service. For the above reasons, the Eskom CEO was reluctant to officially announce that loadshedding has been brought to an end just yet.
3. National Energy Crisis Committee (NECOM) shifts focus with new workstreams.
With Eskom getting a handle on its generation plant performance, the focus of the National Energy Crisis Committee (NECOM), established by President Ramaphosa under the leadership of Energy and Electricity Minister Kgosientsho Ramokgopa, has shifted from primarily implementing the Eskom generation recovery plan to new priorities. On 29 August 2024, Energy Council of South Africa CEO James Mackay presented an overview of progress achieved to date, and outlined the new focus of NECOM, which he referred to as “NECOM 2.0”. While the workstreams on improving Eskom plant performance, accelerating public and private procurement of new generation capacity, and safety and security, continue, additional workstreams have been added to reflect the new focus areas. The strengthening and expansion of the transmission grid to remove constraints to new generation capacity is a new focus area with a dedicated workstream. Electricity market reform, as reflected in the new Electricity Regulation Amendment Act, has also now been given a dedicated workstream. Finally, reforming the significantly dysfunctional electricity distribution industry to deal with non-performing and financially distressed municipal electricity distributors, revenue collection, and increasing levels of municipal arrear debt to Eskom, has become a priority area with a new dedicated workstream. The task of this workstream includes relooking at the way in which municipal electricity distributors are funded to meet their service delivery obligations, and the associated issues of energy poverty, access and affordability.
4. Division of responsibilities between Ministers Ramokgopa and Mantashe.
On 3 June 2024, President Ramaphosa announced his new cabinet, and the separation of the former Department of Mineral Resources and Energy (DMRE) into two separate ministries, namely the Department of Mineral and Petroleum Resources (DMPR) and the Department of Energy and Electricity (DoEE). Then, on 30 August 2024, the President formally divided the legislation and the associated ministerial powers embedded therein, that were previously administered by the DMRE minister, and allocated these to the DoEE and DMPR ministers respectively. This hopefully clarifies and puts an end to reported territorial battles for oversight responsibilities between the two ministers. Minister Ramokgopa now takes responsibility for policy, regulation and planning of midstream and downstream gas supply, and for coal-fired, gas-fired and diesel-fired, nuclear, hydro and renewable power generation, transmission and distribution. This includes oversight of Eskom and municipal electricity distribution. The legislation transferred to the Minister of Energy and Electricity includes: the Nuclear Energy Act; National Nuclear Regulator Act; Gas Act; Gas Regulator Levies Act; National Energy Regulator Act; Electricity Regulation Act; National Energy Act; and National Radioactive Waste Disposal Institute Act. The legislation transferred to the Minister of Mineral and Petroleum Resources includes: The Central Energy Fund Act; Petroleum Products Act; Petroleum Pipelines Act; Petroleum Pipelines Levies Act; Mines and Works Act; Mining Titles Registration Act; Diamonds Act; Mineral Technology Act; Geoscience Act; Mine Health and Safety Act; Mineral and Petroleum Resources Development Act; and the Precious Metals Act.
5. Apparent lack of cohesion between the Electricity Regulator and the NERSA board.
An apparent lack of cohesion is emerging among the full-time board members of the National Energy Regulator of South Africa (NERSA). At the recent NERSA public hearings from 24 to 27 June 2024 to consider the applications by about 180 municipal electricity distributors for electricity price increases on 1 July 2024, the full-time NERSA board member responsible for electricity regulation, Mr Nhlanhla Gumede, voted against approval of the municipal price increases in virtually all of the applications. However, he was consistently outvoted by the other three full-time NERSA board members considering the applications, namely NERSA CEO Adv. Nomalanga Sithole (who chaired the hearings) and the other two full-time board members present, Mr Muzi Mkhize and Ms Nomfundo Maseti. The Pretoria High Court subsequently ruled on 28 June 2024 that the price increases of more than 100 of the municipal electricity distributors that had been approved by NERSA without a cost-of-supply study were unlawful and set aside. NERSA has since indicated its intention to appeal the judgement. Then, in an interview by Sunday Times columnist, Chris Barron, published on Sunday 25 August 2024, Mr Gumede went out on a limb and stated that for years the Regulator “has been using an inappropriate pricing methodology which is not founded in the Electricity Regulation Act (ERA)”. NERSA promptly issued a media release on 28 August 2024 distancing itself from the views expressed by Mr Gumede as not representing NERSA’s interpretations and decisions relating to price regulation in the electricity industry. “The views expressed in the article remain Mr Gumede’s personal opinion”, stated NERSA. In light of the above, some observers have expressed the view that Mr Gumede’s position at NERSA may be becoming increasingly untenable.
6. New Electricity Regulation Act in limbo as SALGA and munics consider legal action.
On 16 August 2024, the Presidency announced that the new Electricity Regulation Amendment Act (ERA Act), had been assented to by President Ramaphosa, but that the Act would only come into effect and become operational on date(s) still to be announced by the President. Usually, such arrangements are made in order to phase in legislation so that government and the industry are given time to prepare for the changes envisaged. In this case, however, it appears that the delay in bringing the Act into effect may be a result of threats by the South African Local Government Association (SALGA) and certain municipalities to launch a Constitutional Court challenge in respects of certain aspects of the new ERA Act. The problem that SALGA has appears to be the definition of the terms “Reticulation” and “Distribution” in the Act, which are defined separately and mutually exclusively in a way that municipalities say infringes on their constitutionally protected and exclusive rights to the reticulation of electricity. In the Act, “reticulation” is defined as network operation and electricity supply at voltages levels less than or equal to 11 kV, as opposed to the higher voltages, up to and including 132 kV, at which some municipalities distribute electricity. SALGA and municipalities also believe that the offending definitions were quietly slipped into the Act by the Minerals and Energy Portfolio Committee, and that SALGA and municipalities were unaware of the offending definitions, which they consider to be poorly conceived, not properly thought through, and introduced without a proper stakeholder and public participation process. In the meantime, the new ERA Act remains in limbo as the industry waits to see how the Presidency intends to deal with the potential legal challenge by SALGA and a number of municipalities.
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