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1) Background information regarding Eskom (the main electricity provider) in South Africa:

Eskom is a 100% state-owned electricity company in South Africa, providing energy to greater SA through 30 power plants with a nominal capacity of 44,172 megawatts. Unfortunately, it has faced significant challenges in recent years:

1. Widespread Corruption: Eskom has been plagued by corruption, affecting its efficiency and financial stability.
2. Rising Operational Costs: The cost of maintaining and operating power plants has escalated, impacting Eskom's financial health.
3. Staggering Debt: Eskom carries a massive debt load, threatening the country's utility framework.
4. Uncertain Future: Without successful reforms and a transition to a more efficient system, SA's industrial and economic growth remains uncertain.

The Eskom crisis has broader implications for the southern African region, prompting SA to seek power imports from neighbouring countries. Transitioning away from coal is central to SA's plans, supported by international climate finance through the Just Energy Transition Partnership. The utility's sales decline and tariff increases have exacerbated its challenges with the cost of electricity having increased, on average, around 15% per year for the last 10 years. This figure does not include the proposed 36% increase in prices that Eskom has requested NERSA (The National Energy Regulator of South Africa) to approve next year

In recent years, independent power suppliers were allowed to feed the Eskom grid with electricity generated in return for electricity credits with Eskom, to assist it in supplying the country with electricity, which it is struggling with seeing as it implemented “load shedding” (planned power outages/blackouts) on 335 of the 365 calendar days in 2023. This has had a devastating impact on the South Africa’s economy as it directly impacts productivity, profitability and jobs

2) Where we are today:

Naturally, commercial consumers of electricity have had to seek cheaper and more reliable sources of electricity over the last few years in order to keep their business operations alive

There has been a substantial increase in independent power producers that generate their own electricity for their operations and then feed any surplus energy they generate into the Eskom grid for electricity credits. As the price of electricity continues to increase substantially every year, these investments start to make even more sense over time as it can bring down electricity costs as well as be used as a source of electricity for operations during load shedding

3) What’s the problem with this scheme?

For one, the process to have your business registered with Eskom to become an independent power producer and to start feeding electricity into the grid for credits, is extremely cumbersome. This process takes months to complete and can only be started once the plant is finished, as the plant itself has to comply with all of Eskom’s requirements in order to apply to become a power producer. The application and infrastructure required to satisfy the requirements of the plant, costs money, quite a sum of money (second issue)
Another issue is, once you are registered with Eskom to feed electricity into the grid, is the credit amounts you receive per kwh of electricity you provide the grid with. I have outlined an example from one of my clients that had a solar plant built on one of their farms to supply the farm with electricity and, of course, feed surplus electricity into the Eskom grid for credits:

For the month of July 2024, the solar plant/client:
1.	Supplied the Eskom grid with 5 943.79 kwh of electricity
2.	Had received a gross credit amount of R10 807.96 (which is about $606 or 950k sats)
3.	Was charged, by Eskom, a daily fee of R113.84 for being connected to the grid, which amounted to R3 529.04 ($197.4 or 308k sats)  for the month
4.	Was charged, by Eskom, a monthly fee of R3 805.56 ($213.42 or 332k sats) for a “service charge”
5.	Netted a total of R3 473.36 ($194.80 or 303k sats) worth of electricity credits for the month for supplying Eskom with 5 943.79 kwh of electricity, which comes down to about R0.59 per kwh ($0.03 or 52 sats per kwh)
What is striking from the above details are the fact that about 68% of the credits are deducted from the gross credits for different fees charged by Eskom, for providing Eskom with electricity


4) Possible solution:

Rather direct the surplus electricity to the Bitcoin network. It will cost money to get the infrastructure up and running, but independent power producers will be able to start earning immediately (don’t have to apply and wait for approval, which takes months), they can save a lot of money by not having to comply with all the additional infrastructure requirements needed in order to apply with Eskom to provide them with electricity AND they receive non-KYC Bitcoin for their surplus electricity, which is the best money available and not just credits with Eskom that can only be offset with future electricity usage

Thanks for reading :)



