Eskom faces R4bn curtailment bill as solar power surges

Eskom is set to incur a R4 billion curtailment bill in the current financial year, due to instructions for solar and wind farms to reduce energy generation when there is an excess on the grid, according to Keith Bowen, senior manager at the National Transmission Company of South Africa (NTCSA). This issue is expected to worsen as more consumers install solar systems, leading to less reliance on Eskom's power and increasing the volume of curtailment orders.

Deon Conradie, an electricity pricing expert, warns that consumers will ultimately absorb the cost through higher electricity tariffs. The issue echoes a previous diesel subsidy program, where Eskom spent from R320 million to R24 billion on diesel in a single year to avoid load shedding. The rapidly growing solar power sector and pending construction of numerous solar farms further exacerbate the problem, as Eskom now generates more electricity during the day than it can sell, prompting curtailment orders.

The risk of spiraling curtailment costs is significant, similar to earlier diesel spending, warns Conradie. The complexity is heightened by the time of day when curtailment occurs, affecting tariffs, and the lack of uniformity in private-sector contracts, which complicates the risk allocation between parties. Some argue that solving the issue could involve building more gas-fired or battery storage power stations, but these solutions come with their own challenges and time frames.

Reducing electricity tariffs during the day to incentivize off-peak usage is another suggestion, though implementing such changes with Nersa could take up to 10 years.