Pioneering Change: Eskom’s New Initiatives And The African Energy Transition

African Utility Week and POWERGEN Africa Agenda 2020 was launched on the 24 November with a keynote interview featuring Andre de Ruyter, group chief executive at Eskom South Africa, as he described the energy company’s future directive
After David Ashdown, managing director of Clarion Events Africa, had welcomed all attendees and officially opened the festival, financial journalist at CNBC Africa, Fifi Peters, sat down with Ruyter and questioned how Eskom planned to deal with and take advantage of the growing calls for energy transition after several troubled years for the company. Ruyter provided an honest answer, acknowledging the organisation’s issues with corruption, mismanagement and electricity theft and outlined five short term key focus areas that the company was pursuing. These were returning to operation stability by catching up on maintenance with aims to substantially reduce the risk of load shedding by September 2021; addressing the income statement; harmonising the balance sheet; restructuring the company into three separate legal divisions of generation, transmission and distribution by December 2021; and combating legacy capture and corruption in the hopes of turning around the low morale of his employees.
The chief executive also highlighted his belief that Eskom needed to embrace the energy transition and proposed that his plans for future projects were concentrated on adapting current infrastructure into new cleaner facilities. He noted that a benchmark study in the USA repurposed a coal fired power station to natural gas and estimated that there was a cost saving of 30-35% as opposed to constructing a new greenfield gas fired power station.
After Ruyter’s interview, Peters hosted a panel featuring Lisa Pinsley, director of energy at Actis; Simon Hodson, CEO of Gridworks Partners; Clinton Carter-Brown, energy centre manager at the South African Council for Scientific and Industrial Research (CSIR); and Abel Didier Tella director general at the Association of Power Utilities of Africa (APUA) who unanimously welcomed Ruyter’s bold leadership and promising comments.
Hodsdon picked up on Ruyter’s emphasis on reflective tariffs which he believed were the key to achieving investment and sustainability. Hodson commented, “While they have segmented the business, it’s the fact they are heading towards reasonable cost-effective tariffs which will make it investable.”
These positive comments were reciprocated by Pinsley who said for her company, who have invested around US$2bn in 12 South African projects producing more than 1GW in wind and solar power, Eskom’s new initiatives were incredibly promising and would pave the way for more partnership opportunities.
The panel were also impressed by the new Eskom just energy transition office, the first of its kind in South Africa, to address the legitimate concerns of workers and investors embedded in the coal industry. The transition to renewable energy is only growing in momentum and the coal industry will be increasingly left behind with 10.5 GW to be decommissioned by 2030 in South Africa alone. Understandably jobs in this sector will be lost, 2000 employees have been let go by Eskom recently, but the just energy transition office had been established to ensure these concerns were recognised and properly addressed. Additionally, Carter-Brown projected that by 2030 at least 35,000 new jobs would be created in emerging industries like gas, wind and PV.
Despite Covid-19 Africa was still heading in the right direction, the panel stressed, but needs continued determination and greater clarity within the sector to drive the energy transition, as Eskom has started to do. Continued public and private emphasis on this development will lead to sustainable energy which will hopefully tackle the 680 million people currently suffering from electrical poverty across the continent.