Eskom pro­cras­ti­na­tion on re­new­able en­ergy a worry

The Star Early Edition - - OPINION & ANALYSIS - Richard Halsey

WE, AS CI­TI­ZENS of South Africa, are deal­ing with many is­sues that un­der­mine the premise that a state-owned en­tity (SOE) should act in our best in­ter­ests. In par­tic­u­lar, all of us should be con­cerned about the re­gres­sive moves made by Eskom to­wards re­new­able en­ergy, as fu­ture sources of elec­tric­ity af­fect all of us.

Eskom is owned by the state, and the state also runs the re­new­able en­ergy in­de­pen­dent power pro­duc­ers pro­gramme (REI4P). In July 2016, Eskom de­fied state pol­icy by re­fus­ing to sign out­stand­ing power pur­chase agree­ments (PPAs) with a num­ber of pre­ferred bid­ders in the REI4P. Es­sen­tially this is a sit­u­a­tion that should never have oc­curred, as Eskom should fol­low in­struc­tions from the state. It is now eleven months later and there is still no res­o­lu­tion to this sit­u­a­tion. This in­di­cates a se­ri­ous fail­ure in gov­er­nance, one which does not seem to have an end in sight.

On Tues­day, June 20, the Depart­ment of En­ergy (DoE) and Eskom were to give an “up­date” on the sign­ing of th­ese PPAs.

The pre­sen­ta­tion was de­liv­ered by a DoE rep­re­sen­ta­tive, and while Eskom of­fi­cials were present, they were no­tice­ably silent. The con­clu­sion was es­sen­tially a list of fur­ther steps to de­lay giv­ing any real clar­ity as to when th­ese agree­ments will ac­tu­ally be signed. To an out­sider this must seem con­fus­ing, but for those who watch the en­ergy space closely, it is in­cred­i­bly frus­trat­ing.

To get a bet­ter pic­ture of what is ac­tu­ally go­ing on, one must con­sider the back­ground con­text and read be­tween the lines of what in­for­ma­tion is given to the pub­lic, and how this in­for­ma­tion is pack­aged.

The REI4P has re­ceived more than R250.6 bil­lion in in­vest­ment since 2010 and has been recog­nised glob­ally as highly suc­cess­ful. Through a se­ries of com­pet­i­tive bid­ding rounds, wind and so­lar have now be­come the cheap­est form of new-build elec­tric­ity gen­er­a­tion in the coun­try. This trend is oc­cur­ring across the world, and is a huge step in mov­ing to­ward cleaner forms of en­ergy gen­er­a­tion.

The eco­nomics of re­new­ables have now be­come a driver in a tran­si­tion away from fos­sil fu­els. This is good for the en­vi­ron­ment and good for so­ci­ety. How­ever, it is not good for those with vested in­ter­ests in coal as an en­ergy gen­er­a­tion source. Eskom hap­pens to rely on burn­ing coal to pro­duce elec­tric­ity as its cur­rent core busi­ness. How­ever, even the die hards at Eskom seem to recog­nise that coal is an in­dus­try in de­cline, and their sights are now on nu­clear.

Un­der­hand

As we know from the High Court ver­dict in April this year, the en­tire nu­clear pro­cure­ment process to date has been un­der­hand and se­cre­tive, re­sult­ing in it be­ing deemed “un­law­ful and un­con­sti­tu­tional”. Nu­clear will also be in­cred­i­bly ex­pen­sive, as work by en­ergy re­search in­sti­tu­tions has shown, de­spite claims from the nu­clear lobby to the con­trary.

Eskom es­sen­tially has a mo­nop­oly on large scale elec­tric­ity sup­ply in South Africa, and con­se­quently the REI4P has no other op­tion at present but to have Eskom as the sole buyer of elec­tric­ity from in­de­pen­dent power pro­duc­ers (IPPs).

In this con­text, it ap­pears that Eskom is try­ing to pro­tect its cur­rent cash-cow in coal and fu­ture nu­clear am­bi­tions by re­fus­ing to sign the out­stand­ing re­new­able PPAs. Th­ese seem­ingly end­less stalling tac­tics ap­pear to be an ef­fort to test the pa­tience of in­vestors un­til they even­tu­ally give up on the re­new­able en­ergy projects. Es­sen­tially th­ese re­new­ables have be­come a real threat to the coal and nu­clear in­dus­try, and Eskom are ap­par­ently do­ing what they can to kill the com­pe­ti­tion.

How­ever, as a state-owned util­ity, that is man­dated to sup­ply a ba­sic ser­vice, Eskom should not be at­tempt­ing to sab­o­tage a ris­ing tech­nol­ogy. Con­versely, Eskom should be mak­ing the best en­ergy choices for the na­tion, but as we know from the State of Cap­ture re­port and the Den­ton Re­port, some high rank­ing Eskom of­fi­cials ap­pear to have been more in­ter­ested in feath­er­ing their own nests.

One prob­lem is that de­spite be­ing an SOE, Eskom also aims to func­tion as a com­pany in the sense of try­ing to make a profit (de­spite hav­ing a net debt of about R320bn at present). This re­in­forces the ar­gu­ments that many play­ers in the en­ergy sec­tor have been mak­ing for years: that Eskom must be fun­da­men­tally re­struc­tured to avoid th­ese con­flicts of in­ter­est be­tween ser­vice pro­vi­sion and at­tempts at profit gen­er­a­tion.

It is un­ac­cept­able that Eskom should be al­lowed to con­tinue to un­der­mine the re­new­able en­ergy in­dus­try, but based on the 20th June ses­sion, it ap­pears that the DoE may be fol­low­ing their lead.

The pre­sen­ta­tion was de­liv­ered in such a man­ner as to sow doubt about any im­por­tant facts and fig­ures while not an­swer­ing any direct or crit­i­cal ques­tions.

Even the chair­per­son of the meet­ing, twice, had to make a plea for a “sim­ple” an­swer to the fun­da­men­tal ques­tion of “When will th­ese agree­ments be signed?” Of course, this is­sue was tip­toed around un­til the meet­ing drew to a close.

Many of the sup­posed jus­ti­fi­ca­tions re­volve around Eskom’s “hard­ship” and pre­car­i­ous fi­nan­cial po­si­tion. De­spite what might be trot­ted out, this sit­u­a­tion is as a re­sult of years of mis­man­age­ment and cor­rup­tion at Eskom, and is not due to re­cent in­tro­duc­tion of the IPPs.

En­ergy plan­ning is com­pli­cated. It in­volves sys­tems think­ing with at­ten­tion to the sub­tlety and nu­ance. It in­volves lots of math­e­mat­ics, vari­ables, mea­sure­ment units and tech­ni­cal jar­gon. Th­ese are not the pre­serve of the gen­eral pub­lic, so it is easy for a good or­a­tor to spin a story to sup­port a par­tic­u­lar agenda by se­lec­tive use of sta­tis­tics.

En­ergy plan­ning has also, un­for­tu­nately, be­come highly po­lit­i­cal, and is sub­ject to pa­tron­age prac­tices and the seek­ing of rents by var­i­ous in­di­vid­u­als through the SOEs.

Ev­i­dently this has been go­ing on for years, but it has be­come more vis­i­ble in re­cent times since the in­flu­ence of the Gupta fam­ily and oth­ers has been brought to light in the main­stream me­dia.

So what we end up with, as wit­nessed in Par­lia­ment on the June 20 is the de­lib­er­ate ob­fus­ca­tion of an al­ready com­pli­cated topic, which seems to serve the pur­pose of let­ting those be­hind the scenes buy more time to plan their next move.

If, af­ter eleven months, the best of­fer­ing that we get from the DoE is a list of items that should have been cleared up ages ago, then there is real rea­son for con­cern. Or anger. As one of the MPs said in the meet­ing, this is “ab­so­lute rub­bish”.

Choices

If you live in South Africa, this af­fects you. En­ergy choices af­fect all of us. While th­ese de­lays in sign­ing the PPAs may seem mi­nor in com­par­i­son to other is­sues we are fac­ing as a coun­try, they are an in­di­ca­tion of a com­mon theme: gov­er­nance struc­tures that pro­tect the vested in­ter­ests and am­bi­tions of a mi­nor­ity at the ex­pen­sive of the ma­jor­ity.

If this both­ers you, then you can make your voice heard. You can con­tact rep­re­sen­ta­tives at Eskom and DoE: the rel­e­vant de­tails are on the re­spec­tive web­sites. Al­ter­na­tively, talk with lo­cal gov­ern­ment of­fi­cials and ward coun­cil­lors about the broader is­sue of pro­gres­sive gov­er­nance.

If you have ideas for how to bring about pos­i­tive change in how the state con­ducts plan­ning, then con­tact or­gan­i­sa­tions or aca­demics in the ap­pro­pri­ate field. Share th­ese con­cerns on so­cial me­dia so that there can be in­put and de­bate from a wider au­di­ence.

We, as the pub­lic, must work to­gether on how we can col­lec­tively force a change in this short-sighted, self-serv­ing form of en­ergy gov­er­nance, to one that is pro­gres­sive, and best serves our peo­ple and the en­vi­ron­ment. For if we do not do this, ev­i­dence shows that the in­cum­bency will put it off for as long as pos­si­ble, if not in­def­i­nitely. Richard Halsey is a mem­ber of the Pol­icy Team, at Project 90 by 2030. Visit their web­site at www.90by2030.org.za

PHOTO: BLOOMBERG

En­ergy plan­ning is com­pli­cated. It in­volves sys­tems think­ing with at­ten­tion to sub­tlety and nu­ance, says the au­thor.

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