Renewables may do Eskom in
But the power utility says not so, and that it has for years been calling for additional generation capacity
Eskom’s inability to provide a reliable supply of electricity will see many customers moving to independent power producers (IPPS), which could see the demise of the power utility.
This is according to energy expert Professor Sampson Mamphweli, the director of the Centre for Renewable and Sustainable Energy Studies at Stellenbosch University.
“The president’s plan has basically opened the energy or electricity supply market ... and they’re now working on the Revised Integrated Plan.
“Eskom has got a straightforward procedure so it is now becoming easier for people to buy electricity from IPPS and to produce their own electricity.”
Mamphweli added that although “that’s a good thing, it could lead to a death spiral for Eskom because all the people and industries doing this are those who could afford to pay for the electricity, so it’ll be left with customers who can’t afford high electricity prices and those who are basically not paying”.
As part of President Cyril Ramaphosa’s interventions to address the energy crisis, excess energy created by households, businesses and independent power producers will be sold to Eskom.
The head of energy at the South African Local Government Association, Nhlanhla Ngidi, said the move to renewable energy threatens the income of municipalities and Eskom because people who opt for renewable energy will pay less in municipal taxes.
As of 31 July, 96 of the 278 municipalities were indebted to Eskom, with the Free State — at R16.7-billion — carrying the biggest burden, according to Eskom.
Ngidi said municipalities would have to find alternative ways to cover their debt to Eskom, which has accumulated to more than R50-million because of a culture of non-payment of electricity bills, he said. “The problem is that municipalities owe Eskom a lot of money, because residents do not pay for their electricity, many are connecting illegally and the municipality has to pay for that bill.”
He said that many citizens are considering moving to solar power to move away from municipality outages and load-shedding imposed by Eskom.
“Now when the residents move to solar, both Eskom and municipalities will not receive their money. Municipalities will not be able to pay back the money it owes to Eskom and Eskom will not be able to fully pay its debt, which means it will need bailing out,” he said.
Last week, Fin24 reported that the treasury’s acting director general, Ismail Momoniat, had said that getting more households and businesses to rely on solar photovoltaic (PV) installations for power presented a problem for the tax and budget system.
He agreed that it could also hit Eskom and municipalities’ finances.
Johannesburg’s mayor, Mpho Phalatse, said during a virtual tax indaba that electricity sales account for about 30% of the metro’s revenue.
She added that the city was concerned about revenue losses when customers shift to renewable energy.
But Phalatse said that based on discussions with independent power producers “there is a way for the city to continue earning revenues, and that is through wheeling tariffs. That is, charging IPPS for using the city’s distribution network to transport electrons to customers.”
Eskom does not regard alternative energy sources as a threat.
“Eskom has for years been calling for the addition of generation capacity to alleviate the constraints,” said Sikonathi Mantshantsha, Eskom’s spokesperson.
“Solar panels, and Eskom being able to buy the excess power from self-generators such as [households], are part of that generation capacity solution Eskom has been calling for.”
The City of Cape Town has urged commercial and industrial suppliers to produce as much power as they can to feed to the grid and it plans to start paying consumers who do so. Previously, compensation had been restricted to credit on municipal accounts, but now the city will start paying cash once a customer’s municipal account has been cleared.
“This initiative will be aimed at commercial and industrial customers, as these customers tend to have more surface area available for installing solar power panels. The policy will be expanded to all electricity-generating customers over time, even residents with small-scale rooftop solar PV installations,” the city said.
The city said the objective was to free its consumers from Eskom’s rolling blackouts.
On Monday, Eskom chief operations officer Jan Oberholzer announced that the utility has spent R7.7-billion over the past six months burning diesel to limit load-shedding, and that this was “way over what we estimated what the expenditure will be” for the year.
About R350-million of the budget remains but Eskom is only halfway through its financial year, he said.
Eskom also announced that the risk of load-shedding between September 2022 and September 2023 is remarkably high.
The utility’s risk scenario, which covers the 52 weeks ending midseptember 2023, shows that Eskom is more than 2001MW short to meet demand and reserves during 49 of those 52 weeks.
It added that the shortage will subject the country to stage two loadshedding for 49 weeks in 2023.
The utility’s projections show that it will probably be short of 1001MW and 2 000MW for three weeks — one in December 2022, one in January 2023 and one in September 2023.
After the release of the risk scenario, Anton Eberhard, who directs the Management Programme in Infrastructure Reform and Regulation at the Graduate School of Business at the University of Cape Town, said that without the use of independent power producers, South Africa stands to face stages seven or eight in the next year.
“Electricity demand this past winter exceeded 31 000 megawatts. Now we know the Eskom supply/demand gap could result in stage seven or eight load-shedding [without IPPS],” he said.
“Code red. If you’ve not yet bought your home or business [a] solar PV and battery system [to avoid the rotational power cuts], now’s the time,” he said.
‘Code red. If you’ve not yet bought your home or business a solar PV and battery system, now’s the time’