SUGAR COMPANIES PRODUCE MORE ENERGY THAN EEC

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The country’s two main sugar companies, Ubombo Sugar Limited and Royal Eswatini Sugar Corporation (RESCorp) have been generating more energy than the Eswatini Electricity Company (EEC). This is despite the fact that the core business for these two companies is sugar production - not energy generation. On the other hand, EEC is engaged in the business of generation, transmission and distribution of electricity in the Kingdom of Eswatini. It is 100 per cent-owned by government.Data from the Eswatini Energy Regulatory Authority (ESERA) has shown that, in the past five financial years, RESCorp and Ubombo Sugar Limited have outperformed the public enterprise in terms of energy generation.

In the 2019/20 financial year, EEC produced 221.30GWh (gigawatt hours) while the two sugar companies generated 307.50GWh. RESCorp produced 126.90GWh while Ubombo Sugar Limited generated 180.60GWh, both totalling to 307.50GWh. In one of its integrated annual reports, EEC said Eswatini requires 1 300 GWh of electricity annually. A gigawatt hour (GWh) is a unit for measuring energy. It is used to express the quantity of energy produced or consumed by a piece of equipment with power of one gigawatt, for one hour. It must be said that the base unit for measuring a quantity of energy is the watt-hour (Wh).

As a reference, one GWh equates to one billion watt-hours (Wh). This is also one million kilowatt-hours (kWh) or 1000 megawatt-hours (MWh). Zach Stein from Carbon Collective Investment says gigawatt hours are mostly used as a measurement of the output of ‘large electric power stations’. In the 2020/2021 financial year, EEC produced 264.30GWh of electricity while the two sugar producers generated 350.90GWh of energy. They outperformed EEC by 86GWh of electricity. It has also been established that RESCorp and Ubombo Sugar Limited produced more energy than EEC in the 2021/2022 financial year. Even though EEC showed some great improvements in energy generation by recording 302.90GWh while the two companies produced 321.50GWh.

In this reviewed year, RESCorp generated 138.70GWh of energy while Ubombo Sugar Limited produced 182.80GWh, totalling to a combined production of 321.50gWh of electricity. However, things changed in the 2022/2023 and 2023/2024 financial years as EEC outperformed the sugar producers.

Outperformed

In the financial year 2022/2023, the government company generated 373.90GWh of energy while the two companies produced 335.90GWh of electricity. EEC outperformed them by 38gwh of energy. Even though the parastatal’s energy generation decreased in the financial year 2023/2024, it was able to make 316.90GWh of energy while RESCorp and Ubombo Sugar Limited generated 315.50GWh of electricity. EEC produced more energy 1.4GWh. Consumers have been calling upon government, in particular ESERA, to ensure that the ground for producing electricity in the country is level. They raised this concern because the electricity sector is dominated by the EEC, which undertakes power generation, importation, transmission, distribution and supply.

The public enterprise supplies energy in terms of Swaziland (Eswatini) Electricity Company Act, 2007 (Act No. 1 of 2007). EEC operates under a set of licences issued by ESERA.
Notably, the sector has also seen an exponential uptake of small-scale embedded generation, predominantly from solar photovoltaic (PV,) mainly for own consumption. In this regard, it has been established that ESERA has issued licences and exemptions for a total above 21 megawatts (MW). The EEC owns and operates above 70MW (installed capacity) of power generation stations, among which is a 10MW solar PV plant.

It also owns and operates a 35kW off-grid solar PV-battery mini-grid that supplies 22 households for pilot purposes. Other key players include co-generators from the sugar industry namely Ubombo Sugar Limited (USL) and RESCorp with installed capacities of 41.5 MW and 65.5MW, respectively. The USL exports some of the generated electricity to the national grid.The sector has also seen an exponential uptake of small-scale embedded generation, predominantly from solar PV, mainly for own consumption. In this regard, the authority has issued licences and exemptions for a total above 21MW.

Khaya Mavuso, the Marketing and Corporate Communications Manager at EEC, said he would not be in a position to respond to the ESERA report on GWh of electricity supplied by the public enterprise in comparison to those generated by the sugar companies. He also focused his attention on the current reporting year in which EEC outperformed the sugar companies by 1.4 GWh. When he was referred back to the other three financial years, Mavuso said: “we will stick to what EEC does.”

Imports

In its research report titled ‘the Developer Guide’ and published on October 2024 by Business Eswatini, it is said that Eswatini imports approximately 70 per cent to 80 per cent of its electricity from ESKOM in South Africa, Electricidade de Moçambique (EDM) and the Southern African Power Pool (SAPP) trading platforms. The research was compiled by the Eswatini Economic Policy and Research Centre (ESEPARC). The local generation mix is dominated by biomass (bagasse at sugar mills) witha total of 106.5mw installed capacity, followed by hydro power withan installed capacity of 63.4MW, solar PV with an installed capacity of 30.9MW, and coal with 2.2MW.

The research indicates that the key players in the electricity supplyindustry are the vertically integrated Eswatini Electricity Company (EEC)and Independent Power Producers (IPPs) (i.e. RESCorp, Ubombo Sugar Limited and USA Distillers). The Times SUNDAY can mention that the National Development Plan (NDP) 2023/24 – 2027/28 highlights government’s commitment to upscale investments in renewable energy technologies for enhanced energy supply, access, security and creating an enabling environment for private sector investment in the energysector.

The Independent Power Produce Policy of 2016, promotes the use of local renewable energy resources such as biomass and solar energy. According to the research outcome published by Business Eswatini, a key emerging trend in the country is the growing adoption of embedded power generation, particularly PV systems, by domestic, commercial, industrial and agricultural consumers. Eswatini’s overall national electrification rate stands at 82 per cent. Government is aiming to achieve 100 per cent electrification by 2030. It must be said, ESERA made some contributions to the research.

It is said that, for the past three years, electricity purchases from EEC by major or large customers (industrial and agriculture) have been on a downward trend due to a shift to own generation (primarily with solar) as a means of reducing electricity costs. As a result, large electricity consumers have been looking for ways to reduce their electricity bills, including alternative power technologies. Researchers say this could potentially result in major customers leaving the electricity grid. This is also caused by the fact that Eswatini relies heavily on South Africa (SA) for electricity, regardless of the fact that, in recent years,SA has been experiencing one of the worst periods of load shedding.

Requirements

To open up the energy space, EEC has developed the embedded generation requirements that specify the conditions and application processes for becoming a grid-connected embedded generator, but in the EEC electrical network. Prior to developing the requirements, ESERA formulated what is to be known as Small-Scale Embedded Generation (SSEG) Framework of 2021. ESERA and the EEC are currently piloting the SSEG Framework by applying and assessing proposed compliance guidelines on existing SSEG sites to ensure installations are safe, compliant and in line with the country’s objectives.

It has been established that the SSEG framework capped the penetration of SSEG into the EEC network at 37MW, which is 15 per cent of the national maximum demand. The 37MW was based on the grid network status in 2021 and is expected to be reviewed on a regular basis, as grid studies are conducted to establish the cap, and the network is also reinforced.
The current SSEG penetration is at 21.28MW, it has been learnt. In preparation for the national roll-out of the SSEG Framework, the EEC launched a campaign to encourage solar PV-embedded generators to register their systems with themfor approval on or before December 31, 2024.

Analysis

Moreover, ESERA and EEC are conducting a sensitivity analysis on the impact of embedded generation on the public entity’s business model. In accordance with the SSEG Framework, all distributors will adopt a net-billing approach, as opposed to net-metering, to compensate for the excess energy that is fed into the grid from the embedded generators. In November 2022, the ESERA completed the development of the Wheeling Framework that allows privately-generated power to be transmitted across the national grid.It is projected that Eswatini’s maximum local electricity demand wasrecorded to be 245.17MW in 2020 and is expected to grow to 334MW by 2035.

With the increasing demand for electricity, Business Eswatini and other establishments believe that there is a significant opportunity for the further expansion of solar power in Eswatini, especially in the industrial and agricultural sectors. The total approved capacity from SSEGs increased from 17.27MW in 2021/22to 21.28 MW in 2022/23, representing a growth rate of 23.2 per cent in one year. This is viewed as a significant growth rate that indicates strong market demand for SSEG solutions. ESERA is currently conducting a public hearing exercise as a legal obligation to process the application for tariff hikes filed by EEC. EEC wants to raise E8.7 billion to meet its energy demands.  

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