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Eskom Holdings SOC Ltd plans to allocate a portion of its US$12,5 billion multilateral loans to deliver power to areas where grid congestion is hindering the transition to renewable sources, as revealed by the newly-appointed Electricity Minister.

South African Electricity Minister Kgosientsho Ramokgopa stressed that expanding the nation’s transmission grid is vital in halting power cuts and is crucial in bringing online renewable projects.

“We know now that the capacity transmission capacity has been exhausted in those areas,” he said in a media briefing. “And that undermines our ability to connect the renewable energy projects. This pool of money will help us to access that.”

According to the minister, South Africa requires an estimated 390 billion rand (US$21,3 billion) to enhance its transmission capacity and link renewable energy projects in specific northern, eastern, and western Cape regions to the national grid, Bloomberg reported.

Eskom’s deteriorating performance in recent years prompted President Ramaphosa to declare an energy crisis. In response, the government increased power purchases from private producers and appointed an electricity minister in March, marking a significant step in addressing the challenges facing Eskom.

Renewable energy firms are incorporating funding options for grid expansion into their business models due to transmission constraints, according to Ramokgopa.

This strategic approach reflects the recognition of the vital role grid expansion plays in addressing the challenges posed by transmission constraints and facilitating the growth of renewable energy projects.

“There is an insatiable appetite,” he said. — Business Insider Africa