NTCSA Faces Increased Curtailment Claims, Backlog Payments to IPPs

Independent power producers (IPPs) celebrated when Eskom’s transmission subsidiary started processing the backlog in curtailment claims that has severely impacted their cash flow. The utility expected to finalise payments totalling R2 billion by the end of this month. The backlog arose following a sharp increase in curtailment instructions given to IPPs in April and May, according to the National Transmission Company South Africa (NTCSA). Read: NTCSA fast-tracks payments to ease cash crunch for IPPs Eskom urges caution over grid split as lender risks mount Moneyweb has established that not only has the number of curtailment events increased exponentially since at least April, but also the volume of energy curtailed – which may have an impact on its finances that may be passed on to either consumers or taxpayers. According to the NTCSA, the curtailment referred to in this context is a necessary measure to balance the grid. Generation curtailment is indeed an internationally accepted practice. It occurs when the system operator instructs generators like renewable IPPs to limit their generation because there is insufficient network capacity to transport all available generation, or because available generation temporarily exceeds what the system can accommodate while maintaining system security, says electricity pricing expert Deon Conradie. “This is very important, because the system operator must at all times keep the demand and supply in balance while maintaining system frequency close to 50Hz and keeping the network within its technical and security limits,” he says. There is little room for variance, or equipment might get damaged and the grid may collapse. In terms of its power purchase agreements with 117 renewable IPPs, the NTCSA must pay for the energy that was available but not used due to the instruction to curtail – so-called deemed energy. This applies to the IPPs that are part of government’s renewable energy procurement programme. The tariffs are the same as they would have been if there was no curtailment and the energy was in fact generated and supplied to the NTCSA. In other words, the NTCSA pays even though it doesn’t get anything in return – it pays for nothing. According to the NTCSA’s latest Weekly System Status Report, it currently has 7 908MW of renewable generation connected to the grid. It estimates that a further 9 219MW of rooftop solar is available. The availability of rooftop solar in particular has increased dramatically since the beginning of the year, when it was still estimated at 7 363MW. Rooftop solar reduces demand for electricity from the grid during daylight hours – which has caused a huge drop in demand during the day when the sun shines, resulting in increased curtailment to maintain the system balance. Eskom is trying to address this by increasing demand through special pricing agreements for large power users and reduced tariffs during the day to encourage demand, but this is not yet in operation. According to the NTCSA the need for curtailment is worse during winter, when it must keep more dispatchable generation like coal-fired power stations online to cope with the higher peak at night. A need to curtail curtailment? The number of renewable curtailment events increased from seven in April last year to 22 in April this year. That is about three times. The amount of energy curtailed, however increased almost nine times. This is not peculiar to South Africa and is seen in many international markets as well. While an increase from last year should be expected as the number of IPPs connected to the grid and people installing rooftop solar grows, it is clear that the NTCSA was also surprised by the sudden jump in curtailment. “We experienced a sharp rise in the volume and complexity of curtailment related claims during April and May 2026,” it said. Robert Futter, founder of the energy intelligence service Florion, says it may double or even triple in the next year or two. The NTCSA has shar