Eskom must move grid allocation to NTCSA, says Saippa

Independent power producers (IPPs), through their industry body, have accused Eskom of bullying them in an increasingly tense environment relating to the utility’s allocation of grid connections.

This comes in the wake of a recent high court ruling that declared unlawful and set aside Eskom’s decision to withdraw the grid allocation award from renewables developer Mulilo Energy Holdings and reallocate it to its competitor, Scatec.

Eskom was also ordered to pay Mulilo’s legal costs.

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Speaking on behalf of the South African Independent Power Producers Association (Saippa), Tommy Garner, a member of its executive committee, argued that Eskom’s distribution division – responsible for the allocations – is resisting competition and using its control over grid connections to the detriment of private developers.

Growing bottleneck

At the heart of the dispute is a growing bottleneck: while investment interest in solar, wind and battery storage projects remains strong, available grid capacity – particularly in the Northern, Eastern and Western Cape, where the resources are the best – has become severely constrained.

This scarcity has intensified competition among developers and heightened scrutiny of how Eskom allocates grid access.

In this case, Mulilo’s 240MW Nepal solar PV project near Welkom in the Free State was intended to supply electricity to a private offtaker.

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Eskom later sought to reassign that grid connection to Scatec Solar Africa, whose project forms part of the seventh bid window (BW7) of government’s Renewable Energy Independent Power Producer Procurement Programme (Reipppp) – with Eskom as the offtaker.

The court’s ruling effectively restores Mulilo’s original position.

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Eskom has indicated that it will not appeal the judgment, saying it respects the court order and remains committed to managing grid capacity “fairly, transparently, and with technical rigour” to safeguard energy security.

Eskom’s dual role under scrutiny

However, the judgment is likely to reinforce long-standing concerns among IPPs about Eskom’s dual role as both a market participant and gatekeeper of grid access. Industry players have for years argued that this creates an inherent conflict of interest.

These concerns underpin calls for the full unbundling of the National Transmission Company South Africa (NTCSA), which owns and operates the transmission network, from Eskom.

The argument is that the grid operator should function independently and not be influenced by Eskom’s generation or distribution interests.

Although government policy has increasingly moved in this direction, tensions remain.

Eskom previously indicated that it intended to retain ownership of grid infrastructure post-unbundling, a position that drew strong opposition from market participants.

President Cyril Ramaphosa has since made it clear that ownership and control of the grid should be fully separated from Eskom.

In practice, however, the allocation of grid connections does not currently sit with the NTCSA, but with Eskom’s distribution division – an arrangement that continues to frustrate IPPs.

The rules governing grid allocation have shifted over time. Initially based on a first-come, first-served principle, Eskom later introduced criteria favouring projects that are ready to begin construction.

Developers who failed to progress fast enough risked losing their allocations.

Backlash, adjustments, new rules, flouting

This approach triggered backlash from the private sector, prompting Eskom to adjust how it applied its interim rules.

Meanwhile energy regulator Nersa undertook a formal process, including public participation, to establish permanent allocation rules, which were gazetted in December last year.

Despite this, Garner contends that Eskom continues to apply its own interim framework, and does so inconsistently.

He points to the Mulilo case as an example.

Eskom sought to cancel the project’s grid connection on the basis that it had not yet been registered with Nersa. However, registration requires developers to meet a range of conditions, some of which depend on Eskom itself.

An example is the issuance of a “budget quote” detailing connection costs among other things. At the same time, Eskom requires Nersa registration before issuing that quote.

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According to Saippa, this creates a circular and impractical process.

Eskom also requires developers to submit detailed information that Saippa argues is unnecessary, raising concerns about sharing commercially sensitive data with a direct competitor.

The financial burden is another sticking point, with developers required to commit significant capital long before projects are guaranteed grid access.

Eskom resisting competition …

Garner further alleges that Eskom’s distribution division has actively resisted competition, including by challenging Nersa’s decision to grant trading licences to five electricity traders.

Eskom argued in court that these traders could erode its customer base, leaving it with less profitable consumers.

Saippa is now calling for responsibility for allocating grid connections for new generation and storage projects to be transferred to the NTCSA.

The association argues that the transmission company should manage and maintain the grid independently, without participating in electricity trading or generation.

Moneyweb put Saippa’s allegations to Eskom, but the utility chose not to respond to them directly.

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