How Eskom plans to get customers back

 ·21 Feb 2024

State-owned power utility Eskom plans to counter the decline in its customer base and revenue by strengthening its grid and introducing new products and services.

Electricity minister Kgosientsho Ramokgopa said that these plans are designed to enhance customer service, and include:

  • Increasing accessibility and engagement;
  • Restructuring tariffs;
  • Using renewable energy credits;
  • Implementing smart meters;
  • Strengthening the grid.

Ramokgopa presented these plans in a response to a parliamentary question by ANC’s Jabulile Mkhwanazi seeking to find out how the “diminishing volumes of sales for Eskom be reversed amid the increasing number of efficient independent power producers (IPPs).”

IPPs and self-generation have skyrocketed in the country. Between 2018 and 2023, 1,310 energy projects have been registered with the National Energy Regulator of South Africa (Nersa) – signaling a possible shift in Eskom’s energy market hegemony.

Source: Nersa via The Outlier

In 2023, Eskom saw a 5.9% decline in sales volumes from the previous year with revenue increasing to R259.5 billion due to 9.61% tariff increase, with a net loss after tax of R23.9 billion.

Ramokgopa said that the decline in sales is associated with market demand patterns (which have contracted for Eskom) as a result of an “increase in awareness of energy efficiency and the accelerated adoption of embedded self-generation,” which are all propelled by the state of Eskom’s generation plant performance.

“When adjusting actual sales to accommodate estimated load-shedding impacts since 2018, there seems to be an average annual loss of approximately 3 TWh,” said the minister.

Fiscal compensation

To fiscally compensate for the declining sales as a result of the declining customer base, Ramokgopa said that the utility aims to “properly structure electricity tariffs to ensure that fixed costs associated with immovable lines, transformers, and power stations are fairly recovered through the fixed charges that are not dependent on kWh sales volumes.”

Increasing grid capacity

Additionally, Ramokgopa said that Eskom plans to “increase the availability of electricity supply through alternative energy sources such as renewable energies, microgrids, and battery energy storage system (BESS) technology.”

One of which is the recent announcement of expediting the expansion of transmission lines to the Cape provinces to potentially unlock at least 2,335MW of energy in the short term.

Eskom also plans to “enable generators to wheel energy to different offtakers connected to the
grid, thus securing the cost recovery for networks, including fixed generation standby costs,” he added.

Woo customers

To further entice lost customers, Ramokgopa said that Eskom wants to:

  • Fast-track customer connections of new applications and strengthen the grid to ensure that customers who apply are connected;
  • Increasing the products and services offering to include eMobility services, the Distribution System Operator, the Distribution Energy Trader, and providing consultancy services.

Read: The Electricity Minister’s plan to add 2,335MW to the grid in South Africa

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