Category Archives: ISMO

Structure of the market needs to be revised to ensure least-cost energy

BusinessDay, Anton Eberhard, 9 May, 2017

The battle for SA’s nuclear and energy future is not over. While many South Africans welcomed the decision by the High Court in Cape Town setting aside international nuclear energy treaties and declaring the government’s nuclear procurement programme unlawful and unconstitutional, President Jacob Zuma and his allies have not given up. Ultimately, the structure of SA’s power market will need to change to ensure an optimal and least-cost energy mix.

Reforming the power sector will be the more important struggle.

Unfortunately, the court’s nuclear decisions were essentially around procedural issues and it declined to rule on substantive matters, such as the rationality of procuring nuclear power when the government’s own updated electricity plan says it is not needed.

Here is the full article


We need an electricity trading system to help SA out of the Jurassic age

Business Day, Robert Laing, 18 august, 2016.

ONE of the best examples of the power of markets is the power market in progressive countries (i.e. not SA).

Switching the electricity market from a state-owned monopoly to one where lots of competing buyers and sellers trade megawatt-hours in much the same way shares are traded via networked computers, has wrought wonders everywhere it has been introduced…

…While SA’s electricity market remains backward, this country is lauded as a world leader in other areas of the power business.

For instance, by the end of March, SA had attracted R53.4bn in private-sector investment to increase this country’s power generation capacity by more than 2GW, To global applause, not only is this additional power no burden on the tax payer, nearly all of it is green.

Competition between the independent power producers has driven the cost of renewable energy down from R2.37 per kilowatt-hour to 77c, according to data available on the government website

Another area in which SA excels is cross-border electricity trade, with the World Bank citing the Southern African Power Pool as a role model for the rest of the planet.

Sadly, all this innovation is saddled with a dinosaur called Eskom…

…SA’s electricity problems are easy to fix. For starters, policy makers need to officially kill the reds so that municipalities start investing in their electricity grids again. Secondly, the government needs to follow Margaret Thatcher’s example and make Eskom power stations separate, privately-owned companies that not only have to compete against the independent power producers, but also against one another.

It is vital that Eskom’s power stations be separate businesses from its pylons so that the grid is run by an independent operator.

Finally, we need to invite an exchange such as Intercontinental Exchange to operate a modern electricity trading system, to link all these competing power stations with customers such as municipalities and mines.

Here is the full article







South Africa has an energy plan – it just needs to implement it

ESI Africa, 30 June, 2014.

By the Free Market Foundation Energy Policy Unit

President Zuma’s call for a radical transformation in South Africa’s energy sector in his state of the nation address hit at the core of the country’s energy catastrophe. Without energy the National Development Plan (NDP) and all plans for growth are dead in the water along with prospects for jobs. South Africa has an immediate and future energy crisis. We need a radical policy to secure affordable and reliable energy to solve the short-term emergency and the long-term supply to power essential GDP growth. The good news is that this radical policy already exists embodied within the 1998 Energy White Paper and the NDP for energy…

(EGI-SA Ed note: If only we would implement it…)

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SA urged to create a competitive electricity market

Engineering News 5 June 2013.

Solving South Africa’s power crisis will assist the country in achieving sustainable economic growth and help government deliver on its National Development Plan, Free Market Foundation director Eustace Davie said on Wednesday.

He stated that the Department of Energy had to open doors and tweak energy policy regulations to allow for the easy integration of independent power producers (IPPs) into the electricity market…


Independent System Market Operator (ISMO) Bill and public comments: overview

Published on Parliamentary Monitoring Group website,
Energy Portfolio Committee summary of Meeting.
Date of Meeting: 27 Mar(sic) 2013
Chairperson: Mr S Njikelana (ANC)

The Department of Energy provided an overview of purpose, mandate, and logic of the Independent System and Market Operator Bill. ISMO would be an autonomous state owned company, mandated to assist in the development of Generation Resource Planning, buying of power from generators, as the Department was currently not well established to be procurers of energy so ISMO would be the dedicated procurer. Currently, the Department was the procurer of energy but trading took place within an Eskom function, and this was not an ideal structure. it would also deal with electricity trading at a wholesale level and system operations. Bias could not be eliminated unless an autonomous entity was set up to deal with these issues and the playing field was levelled. However, key policy and finance considerations still needed to be made by DoE as well as by government.

Independent Power Producers (IPPs) had not been forthcoming in significant volumes due to:
∙ Perceptions of conflict of interests in vertically integrated Eskom
∙ Perceptions that government was not serious about reforming the industry
∙ Perceptions about long-term viability of present electricity supply industry (ESI) structure
∙ Lack of clear policy specifically aimed at IPPs
∙ Lack of enabling legal/ regulatory framework to facilitate IPPs.

The Committee commented that what came up strongly in the public hearings was that there needed to be a long term vision for the electricity industry and its end state. More concrete work was needed in formulating relevant policy by the DoE to reach agreement on what the ultimate objectives in the energy industry were. DoE needed to revisit some of the issues which had failed in the past and re-cast a new framework. The Minister should therefore address the restructuring of the electricity sector as a matter of urgency, which included policy renewal, legislation, programmes and road map. It was suggested that DoE should hold another energy summit to address some of these issues.

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