South Africa’s state-owned power utility Eskom has formally launched its new subsidiary, the National Transmission Company of South Africa (NTCSA). The new entity aims to provide reliable, fair and affordable access to the electricity grid and market to enable domestic energy reform.

At an official launch on October 7, NTCSA board chairperson Priscillah Mabelane and interim CEO Segomoco Scheppers outlined the key focus areas that have been developed in the three months since July 1 when the company became an independent, wholly owned subsidiary of Eskom.

“The NTCSA board and executive team have already committed significant time and effort to building this company,” said Mabelane. “We are fully dedicated to realising the benefits of the Electricity Regulation Amendment Act (ERAA) and ensuring that the NTCSA has the structures and governance to contribute meaningfully to South Africa’s energy security and inclusive economic development.”

According to NTCSA’s press statement released on the day, the company has four strategic objectives: delivering reliable and sustainable access to affordable power; creating an inclusive and competitive electricity market; ensuring a financially sustainable business; and driving operational and digital transformation to boost overall efficiency and effectiveness.

These objectives are supported by strong partnerships with stakeholders, well-organised governance structures, and a focus on nurturing world-class talent, fostering capabilities, and promoting a high-performance organisational culture, the company said.

“Achieving independence will allow us to operate more efficiently, reduce conflicts of interest, and focus exclusively on our mandate; maintaining the stability of the transmission grid, managing electricity flows, and ensuring open access to the network for all players in the market,” Scheppers said.

The NTCSA board was appointed in January, and the company received trading and import/export licences in July, writes local media outlet Independent Online (IOL). Its transmission licences, however, were granted earlier by the National Energy Regulator of South Africa (NERSA), in July 2023. The concept of unbundling Eskom by dividing it into three distinct entities was initially proposed in a 1998 government energy policy white paper but was never put into action until now.

Speaking at the launch, Eskom CEO Dan Marokane stated that the utility would now focus on advancing the separation of its distribution and generation divisions. This process will benefit from the insights and experience gained through the establishment of NTCSA.

Key focus areas

After reviewing its corporate plan, NTCSA has outlined short-term goals for the next three to six months. The company aims to fast-track its strategy by focusing on the accelerated implementation of its Transmission Development Plan (TDP), meeting operational unbundling requirements in line with legislative mandates, and establishing a fair and competitive electricity market.

Looking ahead, NTCSA expects to have 30 GW of utility-scale renewable energy connected to the grid by 2029. According to Scheppers, ZAR112bn ($6.4bn) has been set aside for the TDP programme for the next five years as part of NTCSA’s corporate plan.

“This will allow nearly 30 GW of new utility-scale generation capacity to be online by the end of 2029, of which 11 GW and 1250km of transmission lines are targeted by financial year 2027,” Scheppers said at the launch, as reported by News24.

This would unlock significant capacity, including in the greater Cape area, where there was limited connection availability and an abundance of renewable energy resources, he added.

The notable increase in generation capacity will require a swift expansion of the transmission grid to handle the new energy supply and deliver it efficiently to areas of demand. To achieve this, NTCSA says it is prioritising the construction of new transmission infrastructure through robust project planning, development, and execution

Furthermore, the organisation is also actively exploring ways to implement the TDP at the necessary pace and scale. This involves refining its approach to capital project delivery and considering a mix of delivery models, such as in-house projects, Engineering, Procurement and Construction (EPC) contracts, Procurement and Construction (PC) and Independent Transmission Projects (ITPs).

“The NTCSA is committed to local economic development and will aim to develop local supply chains and upskill the local workforce to deliver the required infrastructure rollout, while still prioritising efficiency,” the company said.

According to IOL, the New Development Bank (NDB), established in 2015 by BRICS countries, said in September it was looking into potential funding for the new transmission infrastructure requirements estimated to cost about ZAR3.5 trillion ($200bn).

At the launch, Scheppers reaffirmed NTCSA’s commitment to developing innovative funding mechanisms with integral support from the private sector. “We will work with stakeholders including government, the private sector, and our other partners to develop a hybrid delivery model that increases NTCSA capacity to deliver by liberating private sector capacity while not encumbering our balance sheet or the fiscus,” Scheppers was quoted as saying.

Operational unbundling

The ERAA, signed into law in August 2024, mandates the creation of an independent Transmission System Operator (TSO) within five years of its implementation. The NTCSA, responsible for operating as an independent company, is tasked with preparing for this transition, which includes taking steps towards ownership unbundling. This will involve setting up a new operating model, along with appropriate internal processes, governance structures, and systems.

In collaboration with Eskom and the Department of Electricity and Energy (DoEE), the NTCSA will draft a high-level roadmap that outlines timelines and transitional arrangements to meet the ERAA's requirements. This roadmap will help ensure the company is fully prepared to enact the legislation as it progresses.

“The creation of the NTCSA will provide open, fair, and transparent access to the national grid for both public and private participants and will contribute towards improving the efficiency of the electricity sector. The system operator will use generators in a way that will be most beneficial to the consumer and will ensure a balanced, stable network,” the NTCSA said in the statement.

Fair and competitive electricity market

The Market Operator (MO) of the NTCSA is tasked with offering a fair and transparent trading platform for all market participants. To ensure this, the MO is responsible for creating a Market Code, which will lay down the rules that will regulate and guide the operation of the future competitive electricity market. The code will set the framework for market interactions, ensuring that all participants operate on an equal footing without discrimination.

“We are democratising energy generation, essentially allowing for multiple generators to come into play, we are de-risking the monopoly that is Eskom while introducing new players,” Minister of Electricity and Energy Kgosientsho Ramokgopa said at the event.

According to Ramokgopa, Eskom will continue to be a major player on the generation side, however, the liberalisation of the sector is expected to increase competition and attract investment. “As we increase competition, we think that the benefits are going to be passed on to the end consumer,” he added.