Eskom looks to EPC sector to build new transmission lines

Eskom looks to EPC sector to build new transmission lines

Eskom looks to EPC sector to build new transmission lines

South African electricity utility Eskom is embarking on a huge transmission infrastructure expansion drive, changing its business model to lean on EPC contracts to build new power lines, transformers and substations.

The existing Integrated Resources Plan 2019 (IRP) calls for 30GW of new generation capacity to be connected to the grid by 2030. Then the Eskom 2035 Corporate Strategy, plus applications via DMRE procurement programme and information supplied by non-DMRE applications and engagements with renewable energy associations, suggests that 53GW of new generation capacity will be needed in-country by 2032.

Whichever way you read the figures, the reality is current network reliability constraints, coupled with anticipated demand growth, requires new transmission infrastructure. At the same time existing infrastructure needs to be strengthened to support new renewable energy sources being added to the grid.

Transmission Development Plan

Addressing an EPC Supplier Forum meeting, Segomoco Scheppers, Eskom MD: Transmission, broadly outlined what it would take to make the 10-year Transmission Development Plan, released October 2022, a reality.

The TDP identifies the need to a) add significant amounts of capacity to the national grid by 2032, and b) the need to rapidly expand the transmission grid by constructing 14,000km of new transmission lines, said Scheppers.

As he explained, this would necessitate a build rate of at least 1,500km of power lines a year, which is significantly higher than the 300km Eskom has been averaging.

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“One thousand five hundred is an understatement, because the decade already started last year. So, over seven years, not ten. It’s a significant build rate that we have to achieve,” the Transmission head explained.

“You are a key partner in our ability to deliver,” he addressed the EPC companies directly.

“We need to deliver requisite infrastructure at a scale and speed we have not done before. It is important that we appreciate the size of the challenge we have, and we commit and resolve to actually making this a success,” said Scheppers.

Creating grid access for new renewables

Scheppers pointed out that the Minister of Mineral Resources and Energy in his Budget Vote Speech on 16 May highlighted that in line with the reformation of the electricity sector called for by the South African President, the DMRE has amended the Electricity Regulation Act to enable the creation of the transmission system operator. “Legislation on this is before Parliament. That is a big shift that is happening.

“The second point [made by the Minister at his Budget Vote] was that the single most important challenge we face when addressing the energy crisis, is grid availability.

“The Minister quoted 3,200MW of wind capacity of the 4,200MW procured under Bid Window 6 not being allocated because of grid unavailability. This is a scandal. Things like this should not happen,” said Scheppers.

He reminded that the Integrated Resources Plan is under review and the DMRE intends to submit the new plan for review by Cabinet before September 2023. If government continues to procure generation according to the existing IRP2019, then Scheppers sees the follow procurement still going out to tender this year:

  • Bid Window 7 and 8 – 500MW of renewable energy each, with RFP releases to the market in the second quarter and fourth quarter of the year;
  • DMRE will ask for 1,230MW of battery energy storage systems in the second and fourth quarter of 2023
  • An RFP for gas-to-power of 3,000MW before the middle of the year; and
  • AN RFP for 2,500MW of nuclear energy before the end of the year.

“So, that’s a lot of power that the country needs… This all needs to be integrated into the grid,” explained Scheppers.

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T&D to be prioritised by Eskom

Eskom will be prioritising capital expenditure into Transmission and Distribution the near future. “This is not a debate anymore. Transmission is now the central focus of how we will address energy security in the country,” said Scheppers.

Naresh Singh, General Manager of Transmission Project Delivery, said the move to an EPC- heavy business model for new transmission build is a big mindshift for Eskom, but the utility would also still continue developing and building transmission projects.

“This change is game-changing and has far reaching implication for Eskom and the supply chain as well,” said Singh.

Over the past two decades Eskom has lost its technological edge as well as the price advantage of building own projects thanks to complex procurement requirements. This, coupled with the scale and speed at which future transmission lines are required to bring renewables onto the grid, have  contributed to the mindshift.

“There are times when we do EPC, times when we just procure and construct and other times where we stick to the historical approach of multiple packages with free issue,” Singh explained Eskom’s future transmission build strategy.

Of reference?
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Eskom to expand grid with the help of EPC companies

Leslie Naidoo, Senior Manager: Grid Planning said that when it comes to transmission infrastructure build, Eskom’s initial focus will be on the next five years. But, over the next ten years it needs to build 14,218 km of transmission lines, compared to the 4,374 it built over the last ten years.

The utility has also commissioned 45 transformers for 19,060MVA over the last ten years, but needs to create 145 new transformers over the next ten years.

“That’s a significant opportunity in terms of executing that plan,” Naidoo explained to the EPC companies present.

“The numbers might seem high. Just to put into context, what we’re trying to build in ten years, the Chinese have done in less than a year. Elsewhere in the world, these transformations, what we’re planning over this period of time, can be done.”