Abstract:
South Africa’s electricity supply industry (ESI) remains a vertically-integrated monopoly
despite global trends towards restructuring. The monopolistic nature of the ESI could
hinder the development of distributed power systems as penetration of renewable
electricity increases. The research aims to rationalise South Africa’s ESI evolution;
propose practical power sector restructuring in the short-to-medium term; and to
determine their potential impact. The research methodology included a single case study
instrument, with embedded sub-units of analysis. Primary research data was gathered
using semi-structured interviews with industry experts in addition to which secondary data
from government documents and archival records were used for triangulation. Research
results conclude that South Africa’s ESI grew due to techno-economic industrialisation
factors, while Apartheid-era policies influenced the ESI in only some specific respects.
The vertically-integrated status quo was sustained in the post-transformation period due to
government’s focus on social imperatives; lack of regulatory & policy certainty; and
conflicts in political ideology. South Africa didn’t experience the pre-conditions that
triggered global power sector reforms in the late 20th century but these pre-conditions are
now becoming evident. Privatisation of Eskom Generation and introduction of wholesale
and retail competition are not practical in the short-to-medium term, proving the
infeasibility of the standard model of reform locally. The introduction of an Independent
System and Market Operator (ISMO) using a single-buyer model is seen as the most
favourable and practical option, with the ISMO owning transmission infrastructure. The
research suggests that ESI changes will increase system efficiencies, economic
performance and private sector involvement, but will not reduce electricity tariffs. The
scenarios, challenges and proposals identified in this research are also applicable to other
countries in Africa and other developing regions of the world, that have similar social and
political backgrounds, ensuring sustainable supply of electricity.
