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HomeBusinessR400 Billion Needed For Grid Expansion To Accommodate Renewable Energy Projects, Says...

R400 Billion Needed For Grid Expansion To Accommodate Renewable Energy Projects, Says Minister Ramokgopa

The energy crisis has had a significant impact on the country, with Ramokgopa recently stating that load shedding costs the economy R1 billion per day. As a result, various sectors, including mining, have turned to alternative sources of energy.

Minister of Electricity, Kgosientsho Ramokgopa, has emphasized the need for approximately R400 billion to fund the expansion of the grid in order to accommodate renewable energy projects and improve energy supply in the country.

Ramokgopa stated that Eskom’s balance sheet is not equipped to finance the grid expansion project, necessitating additional funding.

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He further highlighted the urgency of ramping up the expansion of the grid, increasing it almost tenfold from the current rate. This would entail building 2,300km of transmission lines per year, compared to the current 300km.

The energy crisis has had a significant impact on the country, with Ramokgopa recently stating that load shedding costs the economy R1 billion per day. As a result, various sectors, including mining, have turned to alternative sources of energy.

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South African Reserve Bank Governor, Lesetja Kganyago, and the National Treasury have also acknowledged that the economy could have grown higher than 2% last year if it weren’t for the adverse effects of load shedding, which led to low economic growth.

In response to a written parliamentary question from DA MP Ghaleb Cachalia, Ramokgopa explained that the aim is to expand the grid to meet the demand for renewable energy projects.

He stated, “It is estimated that more than R390 billion will be required over the next decade to meet the demand for grid capacity, largely due to the increase in generation capacity through renewable energy projects and insufficient grid capacity following the various Bid Windows.”

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Ramokgopa acknowledged that Eskom’s current financial position imposes significant limitations on its ability to attract sufficient capital for expanding the transmission grid. The delivery of transmission infrastructure typically takes between seven to ten years.

To ensure energy security by 2030, the delivery rate needs to be scaled up by eight times to connect the required energy generation.

Additionally, it is anticipated that the transmission grid build rate needs to increase from 300km to 2,300km per year, with a greater rate of investment and delivery required until 2050.

The minister announced that he will soon be presenting a financing model to Cabinet for the construction of transmission lines. This follows a summit held in Sandton with business leaders to discuss the financing of transmission lines over the next few years.

The expansion of the grid to accommodate renewable energy projects is crucial for South Africa’s energy security and economic growth. By investing in the necessary infrastructure, the country can reduce its reliance on fossil fuels and transition towards a more sustainable energy future.

However, securing the required funding remains a significant challenge that needs to be addressed to ensure the successful implementation of these grid expansion projects.

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Florence Sibiya for SurgeZirc SA
Florence Sibiya for SurgeZirc SA
Florence Sibiya is a highly dedicated and talented reporter for SurgeZirc SA Business News. With her passion for business and her commitment to delivering accurate and reliable news, she has become an invaluable asset to the team.
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