Juggling act needed to end power crisis
Energy reforms must be considered alongside Eskom’s debt, alternative energy sources and environmental and social requirements
In July, President Cyril Ramaphosa revealed the government’s energy crisis plan, which aims to increase energy security and end load-shedding — a euphemism describing rolling blackouts to alleviate pressure on the national transmission grid.
Demand currently outstrips generation supply by between 4000 megawatts and 6 000MW.
Broadly, the government energy plan reforms coincided with the Business Unity South Africa’s proposed interventions, which were announced a week prior to Ramaphosa’s. Foremost among these was to rationalise the cumbersome red tape constraining private sector investment in generation capacity and implement a programme to incentivise the efficient use of power to cut demand by 2 600MW.
As part of addressing the megawatt shortage, South Africa aims to import more power from neighbouring countries, such as Botswana and Zambia, through the Southern African Power Pool (SAPP) arrangement. In addition, the introduction of a National Energy Crisis Committee, comprising key decision-makers in the energy sector, is meant to enable better coordination and stronger stakeholder engagement.
The committee has prioritised interventions such as making changes to the Regulations on New Generation Capacity to allow municipalities to procure power independently and revive the renewable energy independent power procurement programme.
In this context, for reforms and the administrative environment to be efficient and effective, serious commitment and transparent governing systems, that will result in favourable outcomes and secure energy provision for all South Africans, are required.
However, the implications of the reforms need to be carefully considered, alongside the Eskom debt issue, and alternative energy sources.
Resolving the red tape that constrains private sector investment in generation capacity is a good start. However, taking on independent production without adequate vetting processes in place to support Eskom’s energy supply could come at a high price.
For instance, the Risk Mitigation Independent Power Producer Procurement Programme, which aimed to fill the current short-term energy supply, had approved more than 60% of an emergency power tender over a 20-year purchase agreement, valued at R218-million, to Karpowership. Karpowership, a Turkish company that supplies shipmounted, gas-fired power, was meant to supply 1 220MW to Eskom, starting last month.
However, the department of environmental affairs dismissed the initial application after environmental activists lodged complaints about its impact on fishing and local ecosystems and its potential greenhouse gas emissions.
This dismissal has halted the approval process, which has in turn delayed the project and further highlights the inadequate environmental vetting process that resulted in the complaints.
Moreover, corruption allegations were levelled against Karpowership and a government official by DNG Energy, a South African-based energy company. It claimed Karpowership’s local partners, Powergroup SA, had approached them seeking a bribe and, in exchange, would ensure DNG won a contract.
The Karpowership saga highlights some of the long-standing governance issues that persist in the department of mineral resources and energy, amid attempting to implement an energy plan with fewer red-tape procedures. Given this, it would appear imprudent to grant the department the power to start a second Eskom, as Mineral Resources and Energy Minister Gwede Mantashe has proposed.
The idea of importing power from Botswana and Zambia through the SAPP arrangement has much support, although policymakers will need to proceed with caution.
SAPP is the cooperation of the national electricity companies of 12 Southern African Development
Community member states. Regional electricity integration and power pooling is recognised as a cost-effective and suitable strategy to deal with evenly distributed power supply to meet demand.
However, the successful operation of power pools relies on well-developed and stable grid interconnections, adequate generating capacity, and a sound legal framework for cross-border electricity exchanges, as well as regional mechanisms for dispute resolution.
Pulling more power from SAPP has been established as one of the key immediate reforms in the energy plan. South Africa is the largest market in the pool, accounting for 31 470MW of the pool’s total quantity of 52 388MW demanded in 2020.
In November, media reports indicated that major power disturbances in Zambia had affected South Africa’s power supply and, in turn, the entire power pool which, ultimately, resulted in a 1000MW loss. To put it in context, that would effectively result in the loss of the electricity supply to about 1000 households a month (assuming a monthly household consumption of 900 kilowatt-hours) or more than 33 000 households a day (assuming a daily household consumption of 30kwh).
Preliminary investigations suggested that the disturbances were caused externally and were therefore not direct failures of the Zambian interconnected power system. Evidently, the power pool is experiencing its own operational issues and disturbances that need to be carefully monitored and investigated as Eskom gears up to extract more power from it.
To this end, the SAPP 2021 annual report indicated some of the measures implemented to mitigate these system disturbances. These included repair and maintenance work carried out on generation and transmission equipment; clearing of vegetation along the key line routes; the relocation of birds’ nests and the replacement of insulators.
Despite the emergency energy plan being in full motion, the question of Eskom’s debt remains only half answered.
The treasury is due to propose a sustainable solution to the debt burden next month in the medium-term budget policy statement. Reportedly, the finance ministry will provide a bailout to the energy utility and take on a portion of the R396-billion debt as part of a process to place the utility in better and more sustainable financial standing.
On the other hand, debt owed to Eskom by municipalities grew from R44.8-billion in March to R49.1-billion in July — a surge of nearly R5-billion in four months. While financial analysts agree that the debt-transfer plan is a step in the right direction, it will not be enough to solve Eskom’s governance issues. Operational reforms are necessary and required urgently.
A 2019 report by the Centre for Development and Enterprise proposed key interventions to address operational and capacity constraints that remain relevant today.
One of the key solutions related to generation capacity includes renewable energy sources for the national grid. While the ability of any grid to integrate variable renewable energy sources is dependent on several factors, a multiplicity of small, decentralised wind and solar generators is possible.
In addition, residential demand could easily be supplied by a set of wind and solar plants across the country. These could be supplemented by open-cycle gas turbines that can be powered off when not required. Evidently, the emergency energy plan has made a serious commitment to realise this.
The plan makes provision to revive the renewable energy procurement programme, given that 2 000MW of solar and wind power have been connected to the grid through the programme.
The official electricity plan that was approved three years ago is outdated and its implementation is two years behind schedule. The role of renewable energy sources is favourable in the South African context, especially considering the climatic advantage.
In closing, the energy crisis plan has articulated integral reforms that will assist in securing a sustainable energy supply for all of South Africa. However, for the plan to be effectively realised, the National Energy Crisis Committee must ensure independent power producers comply with all the environmental and social requirements in the context of rationalised red-tape procedures.
Therefore, a balancing act is necessary to mitigate further project delays but also foster an environment where increased local production is prioritised responsibly.
This will enable upstream industrialisation through the generation of a clean energy mix that is sustainable and productive for the economic development of South Africa.
Busisipho Siyobi is the lead researcher in the natural resource governance programme at Good Governance Africa. She has an Mphil in public policy and administration from the University of Cape Town. Mischka Moosa is a data journalist at Good Governance Africa. She holds a Bachelor of Social Science degree from the University of Cape Town. The views expressed are those of the author and do not necessarily reflect the official policy or position of the