South African electricity sector : possible policy reforms

Abstract

The study investigated the potential reform of the South African electricity sector. The country has a shortage of electricity capacity and sufficient coal reserves to meet the demand. However it is, at the same time is Africa s highest carbon emitter. Climate change and the reduction of carbon emissions have prompted the country to reconsider its reliance on coal. The South Africa electricity sector is a monopoly held by the state utility Eskom, in all aspects of generation, transmission and distribution. The research suggested that the current dominance of coal will reduce over the next 50 years and there will be an increase in renewable and nuclear technology. It was also suggested that electricity sector should transform into from an electricity sector to electricity market. Various factors such as property rights, institutions, risk, uncertainty and pricing were reviewed to understand requirements for a potential reform. It was also found that electricity generation was not an impediment but rather the major problem was access to the grid. A policy is proposed to allow Independent Power Producers (IPPs) ownership to the transmission network and the ability to build their own infrastructure to provide power directly to private customers.