SA's energy transition: Expect Eskom to be dominant player for next 10 years, says Nersa chair

Thembani Bukala is familiar with being in the hot seat - the energy analyst and engineer was appointed chairperson of the National Energy Regulator of South Africa (Nersa) in 2022 amid (ongoing) disputes with Eskom over its tariff applications.

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Bukala has over 25 years of experience in the field, and a long history with Eskom where he also served as member responsible for electricity regulation from 2005 to 2016. Prior to this Bukala served as managing director at various entities, including Testing and Conformity Services at the South African Bureau of Standards (SABS), and Bytes Managed Services.

In conversation with Stephen Grootes, Bukala shares how growing up in Cofimvaba in the Eastern Cape likely sparked his interest in electricity, as there was so little of it available during his childhood.

After completing a BSc in electrical engineeringat the University of Natal (now KwaZulu-Natal), the Nersa chair did post-graduate studies at Warwick University in the UK and with the University of South Africa (Unisa).

'I think I wanted to know about this commodity that makes life easy and yet is not so easily available', he says.

"When the area got electricity, it changed a lot of lives. People no longer had to consume the meat they bought that day because now they could store it, so it reduced their costs... Kids could study under proper lighting, not candle light or paraffin lamps, so it was a big contributor to a change in people's quality of life."

Talking about the actual business of regulating electricity prices now, Bukala says it involves many aspects of consideration, which the public might not be aware of.

While there is the part that is about the science, the accounting and the economics; it also involves what he says with a chuckle, is more of an art.

"You are predicting things that are going to happen in the future that you don't have 100% certainty around. It's an art of 'how do I make sure that even if the future picturing is not exactly what IS going to be, it doesn't fall far off from that?'."

During the turbulence of loadshedding this became a particularly complex exercise, Bukala says, because while many of the things predicted did happen, they happened at a pace that was much faster than anticipated. On top of that, they were working with a power utility that was not operating at optimal level, he adds.

Bukala describes Nersa's role in South Africa's changing energy landscape where more players are hopefully entering the market, as one of levelling the playing field. "Now that we are moving towards a real market - what is hoped would happen is that when we have other players that want to sell their product, the tendency when a market is created is that producers try and find the least (costly) possible way of producing their product, which then results in the least possible cost of the product."

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While at this point there isn't any one private entity that has the advantage over another, he notes that 'unfortunately', South Africa will still see Eskom being the dominant player for at least the next ten years.

"So, our function is still going to be one of mitigating that dominant power of Eskom and ensuring that the other players are given the same rules to play under, the same field and the same parameters to operate within."

Opening up the market should eventually lead to a drop in the price of electricity, Bukala says: "When we get to a point where there are efficiencies in the way that you run your operations, then there is no reason why the prices would not go down."

He also cites the change in the technologies being used which should further contribute to a reduction in cost.

Scroll up to the audio player to hear more insights from the Nersa chair