South Africa is embarking on a formidable task to address years of persistent electricity shortages that have hampered economic growth. A critical aspect of this effort involves a R390 billion expansion of the national grid to accommodate more power plants.

Faced with restrictions on new generation imposed by decades of ANC neglect of transformers and distribution centres, grid capacity in the Cape region is now 98% saturated, according to government spokesperson Alwie Lester. In Bid Round 7, only a tiny sliver of new generation capacity was available to be added to the Cape grid, which covers the Northern and Eastern Cape provinces.

Eskom, the state-owned entity responsible for the transmission system supplying over 80% of the country's electricity, has struggled to maintain its existing infrastructure or expedite the construction of new facilities to avert energy deficits. The utility plans to install 14,218 kilometers of power lines over the next decade, a stark increase compared to its installations over the past decade. Additionally, it aims to increase transformer capacity six-fold and enhance other critical infrastructure.

Load shedding has constrained productivity, exacerbated unemployment, and kept the annual economic growth rate below 1% on average over the past decade—a key concern leading up to the May 29 elections. The ANC has pledged in its election manifesto to prioritize investment in expanding the transmission grid to facilitate the supply of more energy, including from renewable sources, a commitment echoed by its main rivals.

However, funding this expansion is a significant challenge. Eskom's financial reserves were depleted during former President Jacob Zuma's tenure, accumulating over R400 billion in debt. The National Treasury's bailout, though conditional, severely limits Eskom's ability to secure additional loans.

The inadequate investment in the grid has created what Brian Day, chairperson of the South African Independent Power Producers Association, calls "a real emergency." The slow progress in constructing new lines and substations must be accelerated to meet the growing demand for electricity.

The current grid limitations have already hindered efforts to expand the electricity supply. Despite calls for bids to double wind power purchases from private contractors, the government failed to award any contracts due to connectivity issues.

Furthermore, the grid's constraints pose a risk to approximately 66 gigawatts of wind and solar projects at various stages of development in South Africa, according to analyst Raine Adams of fund manager Allan Gray.

While South Africa has made progress in developing its electricity system over the past century, with several solar and wind plants connected to the grid, further expansion is crucial. The country must address challenges such as securing land rights for cable laying and combating organized crime in the construction sector.

Despite the hurdles, there is optimism about private sector involvement in financing transmission projects. The government has endorsed the creation of an Independent Transmission Projects Office to facilitate private investment, a model successfully implemented in countries like Brazil and India.

However, there are concerns about privatizing the transmission network, with the ANC firmly opposed to the idea. Finding a balance between private investment and state control will be crucial in ensuring the success of South Africa's grid expansion efforts.

However, if past public-private partnership models with the ANC are any guide, the strategy will be to give main operations to a private contractor, while an ANC-linked BEE company or public entity holds the majority shares, keeping control and tender access open for the ruling party and its allies.