South Africa: Vodacom South Africa to pilot sourcing energy from independent suppliers

As recently reported by Baxtel, South Africa has been facing significant energy challenges resulting in regular outages, with Eskom implementing Stage 6 power cuts. This has meant that South Africans have been faced with power cuts for at least six hours a day. These power outages have had a hugely detrimental impact on the country's economy, and are a major factor contributing to the 0.7 percent contraction in the second quarter. Experts have even warned that a stage 8 shed (8,000MW) might be required soon, which, if it goes ahead, would impact data center operations in the country, and local telco networks. 

Now, Vodacom South Africa, is proposing to start a pilot with Eskom to source all its electricity from independent suppliers due to the grid struggles under pressure as demand exceeds supply.

The pilot, if successful, would mean that Vodacom would be supplied with renewable independent power producers and act as a blueprint for other operators to follow, adding more capacity to the grid. Moreover, the state-owned power utility would still provide transmission infrastructure and services if all goes to plan. 

Speaking about the pilot, Vodacom Group CEO Shameel Joosub said: "This was a monumental task to assist Eskom and South Africa to solve the energy crisis, which proved our greatest threat to economic recovery. Access to low-cost and reliable energy was a fundamental requirement for any modern economy to flourish. Through this partnership with Eskom, we could meet our commitments to source 100% of our electricity from renewable sources in all our operations."

According to Joosub, the energy crisis in South Africa can be solved with "the assistance of private sector participation and enablement," he said that this solution "does just that," and "can be fast-tracked and scaled to address the shortfall of generation capacity within two years."

Meanwhile, Eskom's chief executive Andre De Ruyter commented: "What we have done with Eskom was to enable quite an innovative accounting structure independent of regulatory requirements that would enable us to wheel across the grid."

Adding: "So if you have distributed an offtake point as Vodacom does, they've about 15 000 cell towers across the country, they can aggregate their demand use their balance sheet to sign a power purchase agreement and add more electrons to the grid with no treasury guarantee and with no need for Eskom to sign a power purchase agreement putting no burden at all on the taxpayer or government."