South Africa is amid an energy crisis. With loadshedding back in our lives at full force, a lot of questions were asked and some drastic decisions were made. Eskom was forced to implement Stage 4 load shedding at short notice on Wednesday the 9th of June despite having cut the level of planned maintenance at its power stations to just 1,273 megawatts (MW) – an unprecedented low. This has an immensely negative effect on the economic growth aspects of South Africa.
Is there a solution to get Eskom out of this calamity or will we have to stay stuck in the dark? John Endres, a senior analyst for the Centre of Risk Analysis (CRA), explains the origins of the current crisis and why only radical policy reform can turn this situation around.
“The state-owned utility enterprise, Eskom, is in terrible financial trouble as its debt far exceeds its revenue. To try and generate more revenue, they keep on increasing prices, but this leads to people turning to alternative energy forms and stop using Eskom services,” says Endres.
Eskom has made it public that more equipment is failing than is being maintained and this is of great concern. The energy availability factor has been steadily decreasing from 85% ten years ago to the current 60%. Conversely, the unplanned outage factor is shooting up. Endres says, “Eskom, as a state-owned enterprise, cannot fix this problem in the short and medium-term. It carries too much debt, it’s over-staffed, and the challenges it faces are effectively insurmountable. What would be needed is private energy generation, which is happening to some extent, but it is quite limited.”
Since loadshedding was introduced to our lives, the government has been very reluctant to allow large-scale private energy generation. This is due to ideological reasons. Allowing the private sector to intervene would be considered a threat to state-owned enterprises and the model of a capable, centralised state that performs well and delivers good services to citizens. But that is ultimately what would need to happen. The energy market would need to open up for private generation. This would be the best way to get out of this hole we find ourselves in.
Later the same day that Endres made the above-mentioned commentary, an article on News24 reported that Eskom’s CEO André de Ruyter said, “We can’t work miracles. Eskom alone won’t solve South Africa’s power crisis.” He goes on to say that Eskom has a role to play in the country’s energy mix, but solely relying on it for power is not sustainable in the long term. He believes that renewable energy could provide urgent solutions to the country’s generation capacity challenges. Eskom has to repair power stations to be able to meet demand. But as things stand, even if all the power stations are in working order, Eskom is still not capable to supply enough electricity for South Africans’ demand. They need additional capacity and they need it now. Eskom also has to consider environmental legislation while trying to meet the electricity demand.
“Renewable energy projects can be rolled out quickly and connected to the grid within 18 to 24 months, compared to coal projects that can take nearly a decade. Among the advantages of renewables is their cost-effectiveness. Particularly solar PV, coupled with storage, is cheaper than any other generation options,” De Ruyter said.
It seems that this information that has been common knowledge in the renewable power generation industry for years now finally made its way up to the powers that be, not only to Eskom but tentatively to government as well. The suggestion of including privately-owned energy generation capabilities into the mix has been delivered from both sides of the coin now. The private sector and the government
When asked if power from the controversial Karpowerships would still be warranted if we opt for renewables, De Ruyter said that they could serve as a “bridging mechanism” in the short term to access electricity. Essentially, renewable electricity can’t magically appear overnight, and so bridging options must be considered, he noted. This is a different stance from what the CEO of Karpowership SA, Sechaba Moletsane said on eNCA news on the 23rd of April 2021. He stated that people think Karpowership is an interim solution, but that it isn’t in this case. It seems that Eskom and Karpowership SA are not yet on the same page.
Moneyweb reported on 10 June that President Ramaphosa, in a surprise move, announced that the government will increase the generation threshold for companies to produce their own electricity without a licence to 100MW. The previous cap on the generation threshold for companies was 1 MW. Minerals resource minister Gwede Mantashe – in his departmental budget speech just a few weeks ago – announced that a rise to 10 MW would be more than sufficient for all our needs and that the president has twisted his arm to up it to 100MW. That is an enormous leap. That this number was increased so considerably is a clear indication of the scope of the problem.
The sudden move to increase the cap comes as the scale of loadshedding has increased over the past few days. The deepening of the crisis has spurred the government to not only increase the cap of how much can be provided but also who they can provide to. Ramaphosa says that companies looking to generate 100MW are free to sell to third parties, but in doing so they still have to abide by the regulations set out by the sector regulator, Nersa. Mantashe said that if all goes to plan, companies will be allowed to self generate within 60 days of the gazetting of the changes to the regulations.
The president said that this intervention by the government reflects the determination to do the necessary steps to ensure power stability and to reduce the effects loadshedding has on businesses and households nationwide. He also says that it points out the government’s commitment to listen to experts, deliberate and consider new ideas to overcome our challenges.
De Ruyter sent out an apology to the nation on the 3rd of June, saying “There is no doubt that a lot of damage is being caused by loadshedding and Eskom would like to apologise to the South African public for the inconvenience. The reality is that loadshedding is being implemented as a last resort to safeguard the integrity of the national grid.”
Sikonathi Mantshantsha, the spokesperson for Eskom, said that South Africans can expect power cuts to continue throughout the rest of winter. Eskom said it will use the higher intensity loadshedding to continue replenishing its depleted emergency generation reserves. It again emphasised that its capacity constraints will continue for the foreseeable future and urged South Africans to reduce their electricity usage.
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