Keep minds open on energy

The argument by trade unions at Eskom that there is a price to be paid for the transition from coal-fired energy to renewable energy is valid. There is also, though, a price to be paid for not making that energy transition.

The country needs to know what these costs are if it is to evaluate the trade-off between clean and dirty energy. While workers at power stations and mines are important stakeholders in negotiating the trade-offs, they are not the only ones. The costs are borne by all South Africans, who must pay for electricity; by businesses, which need efficient and well-priced energy; and by all present and future generations, who live with the human health and environmental consequences of energy choices.

This is a debate in which everyone must rightly participate, which is exactly what SA’s energy policy encourages. An Integrated Resource Plan, which models energy demand and the relative advantages of technology options over a 20-year period, is published and updated every two years. The last plan was adopted by the Cabinet in 2010. Unfortunately, due to the politicisation of energy policy over the past 10 years, an update to the plan has not appeared since the 2010 iteration.

Energy Minister Jeff Radebe has promised one by August. He has also promised public participation. It will be important that out of it the country can emerge with a broadly shared understanding of the facts.

The National Union of Metalworkers of SA and the National Union of Mineworkers — which have made their opposition to Eskom’s contracts with independent power producers of renewable energy part of the wage battle in which they are engaged — have done great disservice to the facts. Their arguments are two-fold: the first is that due to what they claim is expensive renewable energy, Eskom’s financial sustainability is under threat; and second that as more renewable energy comes into the grid and coal recedes in the energy mix masses of jobs will be lost. But the numbers the unions have put out to support these arguments are pure fantasy.

While the first two bid rounds of the renewable energy programme came at R2.50/kWh, the price for the last round was R0.62/kWh. As these are 20-year contracts, the burden of the early contracts will remain, but the price of new contracts is a fraction of those. By contrast, the overspending and delays on the construction of Medupi and Kusile means they will produce the most expensive coal-fired energy in the world at R1.70/kWh and R1.90/kWh, respectively. As it happens, renewable energy doesn’t strain Eskom’s finances as the full cost is passed through to the consumer, although the early contracts — just like the coal-fired energy that will come from Medupi and Kusile — are certainly expensive and put pressure on tariffs.

The scale of the job losses Numsa predicts is also absurd. In one of its documents it says 40,000 jobs will be lost from early decommissioning of coal stations; in another it says 6,000 direct jobs will be lost and 92,000 jobs in Mpumalanga will be affected. A study by Meridian Economics presented to the National Energy Regulator of SA earlier in 2018 shows total employment at the three oldest power stations to be 1,402 people.

The same study shows that it would relieve Eskom’s finances by R17bn a year if it was to retire these stations early. Of course there are many indirect jobs that are associated with Eskom’s power stations, as well as the mines that feed them. But the point is the variation is just too large to take Numsa’s figures seriously.

The transition to renewable energy is a part of a large global trend that no-one, not even two trade unions down at the bottom of Africa, can reverse. Renewable energy is cleaner and due to technological advances is constantly becoming cheaper.

SA needs to make an energy transition. This must be fair and inclusive. Trade unions are an important part of the conversation but they are not the only voices in it.

UNIONS ARE AN IMPORTANT PART OF THE ENERGY CONVERSATION BUT THEY ARE NOT THE ONLY VOICES