The politics that choke SA’s renewable energy programme
On paper, SA’s renewable energy programme is one of the most progressive in the world. The problem is the chilling effect of the love affair between the entrenched coal lobby and State Capture agents. By
On 17 February 2017, the Organisation Undoing Tax Abuse (Outa) delivered a heavily referenced complaint to the Competition Commission alleging that Eskom was wilfully abusing its market dominance. At the core of the allegation was that the state-owned power utility was “unlawfully” favouring its legacy coal-fired fleet at the taxpayer’s expense.
In the summary of the complaint, Outa pointed out that electricity prices had risen dramatically over the previous decade, partly a result of new-build coal plants that had run “severely over budget” – by which was meant Medupi and Kusile, the largest and dirtiest of their kind on Earth – and partly as a result of maladministration.
“At present,” noted Outa, “power from independent power producers and especially renewable energy is considerably cheaper than new Eskom power and, in many cases, cheaper than Eskom’s average selling price of electricity. Indeed, the cheapest renewable energy may soon be cheaper than Eskom’s average cost of production.
“This situation is likely to be exacerbated in the next few years as Eskom is allowed by [energy regulator] Nersa to again raise its price considerably in order to recoup sunk costs.”
Outa’s submission to the Competition Commission was nothing short of prophetic. This is mainly because in late September this year, by which date the catastrophe had fully materialised, Outa would once more complain about Nersa’s price hikes. This time, the regulator would unashamedly call for a 38% increase.
Also, there was that little bit in the original submission about “unlawfulness”.
“The complaint,” Outa noted, “is that Eskom is refusing to sign power purchase agreements with independent power producers (IPPs) which have been appointed by the Department of Energy as preferred bidders in [the department’s] Renewable Energy IPP Procurement Programme (REIPPPP) ... in defiance of government policy and international conventions signed by the Republic of South Africa, and in an attempt to retain its historical electricity generation monopoly for the long term and to squeeze out new market entrants…”
In a nutshell, although the government had decreed that Eskom was obliged to procure power from independent providers of renewable energy – a programme that had been recognised at its launch in 2011 as one of the most progressive in the world – the “coal lobby” was having none of it, particularly because mining and transportation contracts had become the sinecures by which ANC party loyalists were rewarded.
Of course, while Outa couldn’t say this outright (the #Gupta Leaks were still a few months in the future), it could refer to the employment of “selective facts” by senior Eskom executives.
For example, when erstwhile Eskom CEO Brian Molefe had addressed Parliament in
May 2016, he said renewable energy had “disappointed”. The technology would only be reliable “in about 10 years”, he said. Further, ignoring that some renewable technologies had already achieved a net zero cost for Eskom, Molefe lamented that the utility would just have to “battle through”.
In July 2016, as Outa reminded the Competition Commission, a letter from Molefe to the energy department was leaked to the media. In it, he stated that he would not support projects beyond the fourth bidding window of the REIPPPP – which, Outa alleged, happened to be the same bidding window that he wasn’t supporting anyway. In return, the finance minister at the time, Pravin Gordhan, made it clear in the press that it wasn’t Molefe’s
job to decide on energy policy, while the energy department assured the market that the REIPPPP would continue. But Molefe, backed by Matshela Koko, Eskom’s then head of power generation, simply doubled down.
Koko, who would be promoted to acting CEO of Eskom in December 2016, would, by the winter of 2022, be recommended for criminal prosecution by the Zondo Commission. According to Chief Justice Raymond Zondo, he had been instrumental in paving the way for the Gupta family’s purchase of the Optimum Coal Mine on Eskom’s dime.
And yet, in September 2022, there would be those – including former statistician-general Pali Lehohla – calling for Koko to be reinstated as Eskom CEO.
In a report released in June 2022, titled Resolving the Power Crisis Part B: An Achievable Game Plan to End Load Shedding, consultants Meridian Economics laid it all out in unemotional terms.
“Due to a range of political, institutional, rent-seeking and corruption-related factors, South Africa has now seen a delay of seven years since a concluded IPP Office procurement round has resulted in new capacity being connected to the grid. This despite ongoing load shedding over this period that, according to our 2021 analysis, would have been almost entirely avoided had the REIPPPP process not stalled in 2016.”
In other words, it was thanks to the campaign against renewables, orchestrated in the main by Molefe and Koko, that we were where we were.
“As the reliability of the existing fleet of generators continues to decline and delays with procuring and connecting new capacity to the grid continue to mount,” Meridian Economics said in the report, “South Africa now faces the very real prospect of a return to Level 6 or even Level 8 load shedding in the foreseeable future.”
This assessment was easily as prophetic as Outa’s submission to the Competition Commission in 2017. Meridian Economics knew what was coming, and it told us. But perhaps more importantly, as published in Part A of its series, it had laid down an empirical foundation for the resolution of load shedding in its entirety.
“In that [first] report,” Meridian noted, “we quantified the impact that additional generation capacity would have had on load shedding if it were already operational in 2021. To perform this ‘what if’ test we focused on the shortest lead time and cheapest sources of generation – wind and solar. Confirmed by two separate modelling methods, the results are startling – an additional 5,000MW of wind and solar capacity (the approximate capacity of two IPP Office REIPPPP bidding rounds) would have allowed Eskom to eliminate 96.5% of load shedding in 2021.”
Koko would publicly respond to Meridian less than a week after Stage 6 hit. Published on IOL on 21 September 2022, his piece would take the form of an “open letter” to Minister of Mineral Resources and Energy Gwede Mantashe.
For Koko, Meridian had failed to take into account something called the “total inertia” of the power system, which – according to certain quoted scholars – would yield higher kinetic energy the bigger it got.
More inertia, Koko claimed, was a good thing; for him, it was the only thing – along with nuclear – that would save the grid before 2035. The unfortunate “fact” about going with “variable renewable generators” to replace the ageing coal plants, he added, was that it would result in an unstable, low-inertia system.
This was contrary to the view of the country’s leading sustainability academic, Mark Swilling. For him and many others, most notably Meridian Economics, there was already a plan in place, not only to end rolling blackouts by 2024, but also to wean South Africa off its reliance on coal by mid-century – a plan that included the REIPPPP.
The stability of the grid, in the eyes of the local and international experts who supported this plan, was not an unsolvable issue – increased battery storage and the transitional use of gas as a backup power source were a core part of their thinking. The actual issue, it seemed, remained the politics.
“I am persuaded by the literature that there are significant technical challenges to be addressed in low-inertia systems before South Africa can go with the proposal by Meridian Economics,” Koko informed Mantashe. “I hope that you are persuaded too.”
Mantashe wouldn’t take much persuading, mainly because he had been openly supporting coal since June 2019, when the mining and energy portfolios were inexplicably collapsed into a single department.
Neither, for that matter, would it take much to persuade Deputy President David Mabuza, the head of Eskom’s political task team (as opposed to its sustainability task team), who hadn’t really featured in the debate since taking over the role. When it came to the power utility, it appeared, all Mabuza had achieved was the safety of his own skin – little had resulted from the parliamentary call for him to step aside, following revelations that his foundation had received a R30-million kickback off an Eskom contract with General Electric in 2016.
To South Africa’s taxpayers, then, it was the same old story: corruption, subterfuge and electricity tariffs that were spiking through the roof.