- Eskom warns that transferring transmission assets without full compensation could trigger debt defaults.
- A failed investor engagement has unsettled creditors and raised questions about governance and transparency.
- Industry stakeholders caution that the current unbundling model may undermine market reform and private investment.
Eskom has placed a valuation of about R100 billion on its transmission assets as part of its ongoing unbundling process, a position that has intensified debate over the future structure of South Africa’s electricity sector. The utility argues that any separation of the transmission business without adequate shareholder support would pose significant risks to its balance sheet and could trigger cross defaults on its roughly R400 billion debt burden.
The issue has come into sharper focus following a poorly executed investor engagement held on 2nd February. Last minute changes to dial in details meant that several major lenders and asset managers were unable to join the call, prompting concern among creditors about the quality of communication around Eskom’s restructuring plans. Although the utility has since rescheduled the engagement, the incident has already dented confidence among investors seeking clarity on how Eskom intends to manage unbundling while preserving debt covenants.
At the centre of the dispute is Eskom’s insistence that the transmission business, currently housed within the National Transmission Company of South Africa, must be fully compensated if assets are transferred. Eskom maintains that retaining balance sheet stability is critical to reassuring creditors and sustaining access to capital markets during a period of profound sector reform.
The valuation debate is closely linked to a policy decision endorsed by the Minister of Electricity and Energy, Dr Kgosientsho Ramokgopa, to retain ownership of transmission assets within Eskom Holdings. Under the revised unbundling plan announced in December, NTCSA remains a wholly owned subsidiary of Eskom, while a separate Transmission System Operator will be established outside the group to manage system and market operations without owning the grid infrastructure.
Business organisations, domestic lenders and energy analysts have warned that this model could create conflicts of interest. Critics argue that Eskom’s continued control of the grid may advantage its own generation activities and constrain fair access for private power producers, potentially weakening efforts to build a competitive and transparent electricity market.
At the same time, NTCSA has published a new Generation Customer Connection Data Dashboard, offering an unprecedented view of the future electricity supply pipeline. The online platform provides a high-level overview of generation and storage projects seeking grid connection across Eskom supply areas, based on data submitted by distributors and end use customers.
According to the dashboard, 332 generation and storage projects with a combined nameplate capacity of 31.7 GW have either received budget quotes for grid connection or have applications pending for connection before 2030. Nearly 24 GW of this capacity relates to 204 advanced projects expected to seek grid access within the next five years, the majority of which are variable renewable energy developments. View the number of projects plus capacity by region HERE
If realised, the pipeline could support the retirement of around 5 GW of coal fired generation. Importantly, the projects reflected in the dashboard are not speculative. They are either operational, under construction, have grid allocation, or are in the formal budget quote process.
Solar PV dominates the pipeline, accounting for 15.2 GW of capacity, excluding an estimated 7 GW of rooftop or behind the metre solar already installed nationally. Other technologies include wind, concentrated solar power, hydro, gas, biomass, landfill gas, hybrid projects, battery storage and nuclear capacity linked to the Koeberg life extension programme. The Free State leads geographically, with 4.2 GW spread across 31 projects, underscoring rising demand for transmission capacity across multiple provinces.
While the dashboard is published for general information purposes only and may change over time, it is expected to become an important tool for developers, investors and power system analysts. By highlighting capacity that is formally committed through the grid connection process, it offers insights into emerging congestion risks and transmission investment needs.
These developments are unfolding alongside preparations for the South African Wholesale Electricity Market. SAWEM will introduce a multi-buyer, multi-seller wholesale market for the first time, allowing generators, traders and large consumers to transact on a transparent, market-based platform. Initially focused on bilateral trading, the market is expected to evolve towards real time trading over time.
For renewable energy developers, particularly in solar PV, SAWEM promises improved price discovery and new opportunities for portfolio optimisation. However, key elements such as market rules, settlement systems and the independence of the market operator remain under development.
Eskom’s evolving role remains one of the most complex challenges. As owner of most transmission and distribution infrastructure, a participant in generation and trading, and the gatekeeper to grid access, the utility occupies multiple and potentially conflicting positions. Industry stakeholders caution that without clear institutional separation, strong governance and transparent processes, investor confidence in both SAWEM and South Africa’s broader energy transition could be undermined.
Author: Bryan Groenendaal
