Efforts are being stepped up to alleviate electricity supply constraints, with government preparing to expand the Independent Power Producer (IPP) initiative, said National Treasury.

“Government is stepping up initiatives that will alleviate the electricity supply constraint over the medium term,” government said in the Budget Review, as Finance Minister Pravin Gordhan tabled the 2016 budget.

Co-investment with the private sector has already added 2 045MW of renewable energy to the electricity grid. Contracts have been awarded for projects that will add another 6 377MW over the medium term.

“Government is preparing a major expansion of the IPP initiative to contribute base-load energy capacity,” said the Budget Review.

Later this year, the Minister of Energy will announce preferred bidders for 1 000MW of coal projects. Private investment of about R45 billion is anticipated and a second round of coal projects is expected to add 1 500MW to the grid.

Gas-to-power IPP programme

Meanwhile, a gas-to-power IPP programme is also under preparation, with a view to contributing 3 126MW of electricity generation through investment in liquefied natural gas facilities and power plants in the ports of Richards Bay, Coega and Saldanha Bay.

This initiative will draw on investment by state-owned companies and the private sector. It will also create opportunities for upstream investment.

Over the longer term, government has identified the need to expand production of nuclear power within South Africa’s overall energy mix.

Nuclear power

“Nuclear power involves substantial upfront costs, and government will only expand such capacity at a scale and pace that is affordable after a thorough and transparent tender process,” it said.

Over the past year, electricity availability was bolstered with the completion of the first unit of the Medupi power station and the Sere wind farm.

Further projected capital investment by Eskom totals R155.3 billion over the medium term. This includes continuing work on the Medupi and Kusile power stations, and strengthening of transmission and distribution grids.

Additional units from the Ingula power station will be connected in 2017.