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The National Transmission Company of South Africa (NTCSA) needs to close a funding gap of about R134bn over the next five years to accelerate transmission projects needed to connect new electricity generation capacity.CEO Monde Bala said the funding requirement forms part of NTCSA’s broader R440bn transmission development plan (TDP), which aims to build about 14,500km of new transmission lines over the next decade.Speaking at the South Africa-China Electricity and Energy Conference in Beijing on Tuesday, Bala said the company is looking for financing partners, including development finance institutions and commercial banks, as well as companies that could support equipment supply and project execution.“We need to close the estimated R134bn funding gap,” Bala said.The transmission expansion programme is aimed at connecting new wind, solar, battery storage and gas generation projects to the national grid, while strengthening the network to support changing electricity flows.Bala said NTCSA cannot deliver the entire programme on its own and needs support from international partners. “We do have the capacity to execute, but not to the full extent required.” He said private sector participation through the Independent Transmission Programme (ITP) will form part of the delivery model for the wider grid expansion.Bala said the intention is for about 70% of the transmission expansion programme to be delivered by NTCSA, with about 30% delivered through the ITP and private sector participation. This will translate into about 4,000km of transmission infrastructure being delivered through private sector involvement.The first phase of the ITP covers 1,164km of transmission infrastructure, but Bala said future phases will be required to support the broader transmission build.NTCSA’s transmission development plan comes as South Africa’s electricity system undergoes a major shift, with new power projects increasingly being developed away from the country’s traditional coal-producing regions. This requires new transmission infrastructure to move electricity from areas with new generation capacity to big centres of demand.Bala said limited investment in transmission infrastructure over the past decade and a half has affected the industry’s ability to deliver projects at the pace required.Chinese companies could play a role across the transmission value chain, including equipment supply, financing and execution, he said. NTCSA has already ordered a number of transformers from China.Bala said South Africa also has to ensure the transmission build creates local industrial opportunities.“If we execute this programme but fail to localise a significant portion of it, then it will be an opportunity lost,” he said.He said the scale of the programme will require a much faster pace of delivery, with NTCSA planning to add 14,500km of transmission lines over the next decade compared with the about 33,000km of lines it has built over a century.President Cyril Ramaphosa has sought to allay fears that stripping Eskom of its transmission assets as part of the unbundling process, first mooted six years ago, will leave the utility in a far worse financial position, with municipal debt the next litmus test for a successful unbundling.On Friday the president all but sealed the fate of the transmission assets after months of intense lobbying by Eskom’s top brass to retain ownership, a move that pitted the state power utility against big business formations and led to a public spat last month.Ramaphosa said he had received and studied the report by the National Treasury-led Eskom Restructuring Task Team (ERTT), which he appointed in February to draft a blueprint for the power producer’s unbundling. The task team, chaired by Treasury director-general Duncan Pieterse, was appointed after a failed bid by Eskom, with the support of electricity & energy minister Kgosientsho Ramokgopa, to retain the transmission assets within Eskom.There are concerns among some in Eskom’s corridors that the establishment of an independent transmission system operator (TSO) to own NTCSA assets will undermine Eskom’s financial viability.Business Day
