Sunday Times

Raise the cap on self-generated energy, says the Energy Intensive Users Group’s Fanele Mondi

EIUG says 10MW limit is totally inadequate for SA’s energy crisis


● Fanele Mondi, CEO of the Energy Intensive Users Group (EIUG), says lifting the cap for self-generation of electricit­y to 10MW is a wholly inadequate response to the energy crisis the country is facing.

The EIUG, which represents the biggest industrial, mining and manufactur­ing companies in the country, including Anglo American, Sasol and Transnet, has been calling for 50MW.

“The quickest way to bring additional megawatts onto the grid is to unlock selfgenera­tion,” says Mondi.

He says energy minister Gwede Mantashe seems to be “leaning very heavily on power ships, which tends to largely exclude alternativ­es such as embedded generation projects”.

The big winners in the risk-mitigation independen­t power producer procuremen­t programme announced by Mantashe two weeks ago are power ship projects owned by Turkish company Karpowersh­ip.

Of the 1,845MW in the programme, 1,200MW will come from four power ships which will be moored off the South African coast for the next 20 years in terms of their power purchase agreement.

Mondi says signals from President Cyril Ramaphosa provide hope that Mantashe’s 10MW cap will be shortlived, although in his announceme­nt Mantashe said that 10MW represente­d the view of the president in his February state of the nation address.

Mondi disputes this.

“Looking at the president’s Sona there is nowhere that he spoke about 10MW. He only spoke about an increase of the threshold and he was quite clear that there should be a consultati­on process,” he says.

This is required in terms of schedule 2 of the electricit­y regulation act, he says.

“We are looking forward to that consultati­on process, where we will be calling for 50MW. Our view is that Mantashe’s announceme­nt is not the final position they’re putting on the table.”

In spite of its “worrying” track record, he hopes the energy department won’t drag out the consultati­on process.

“Our view is that the president has indicated he expects all of this to be wrapped up in three months. We expect all of us to work towards achieving that,” he says.

Stakeholde­rs can’t afford to wait much longer, he says.

He says Eskom CEO André de Ruyter has made it clear that more and bigger self generation projects are needed to assist Eskom “because they're not coping. The government also agrees that the utility is not coping.”

This makes it hard to understand Mantashe’s reluctance to move beyond 10MW, he says.

“We’re hoping that we will have thorough consultati­on, and certainly this is a question we will need to ask. If Eskom, which manages the grid, and industry are comfortabl­e with 50MW, what is the risk the department is trying to mitigate?”

Mondi, who became CEO of the energy lobby group in August 2020, is a mechanical engineer who worked at Eskom for more than 23 years and held senior management positions in its generation and distributi­on divisions.

“There is no technical reason why you can’t register projects of 50MW. So it’s certainly a question we’d like to put to the minister. To ask him, what are his big concerns.

“Perhaps they think from a technical point of view there might be problems, but if Eskom is comfortabl­e with 50MW then clearly as far as they’re concerned there are no technical problems with this level.

“They’ve said we can go to 50MW, so what are the risks the department and the minister are worried about?”

What about speculatio­n there may be vested interests involved?

“This is why we need to ask exactly what is the risk the minister is mitigating. We’d rather pose that question to the department instead of speculatin­g about why they are taking this position.”

He agrees with a 2020 estimate by the Council for Scientific and Industrial Research that by lifting the cap to 50MW the government could unlock 3,400MW of small to medium-scale grid-connected electricit­y by 2022, creating more than 30,000 constructi­on jobs and reducing load-shedding.

De Ruyter says self-generation in Vietnam has unlocked 7,200MW of generation capacity from the private sector in just over 12 months.

“We certainly believe that is possible. Hence we are calling for the limit to be lifted without further delay so we can attract as much new investment as possible,” says Mondi.

There have been calls for Mantashe to be removed from the energy portfolio and replaced by someone more seized with a sense of urgency, but Mondi says the EIUG has “not taken a view” on that.

“The speed at which things are happening is a big concern. This is a national emergency and there certainly needs to be more speed.

“But we have not moved to the level of saying it is time for him to go.”

On March 15 De Ruyter warned there would be a shortfall of 4,000MW over the next five years and that Eskom, which was recently granted a 15.6% tariff increase, would pursue further multi-year, doubledigi­t tariff increases.

The impact of this on industry and any hope of economic recovery will be “quite devastatin­g”, says Mondi.

Combined with frequent load-shedding, it will play havoc with their members’ production planning and investment plans.

“You have to say, ‘can I invest in this economy if I cannot rely on the power supply?’

“Obviously, if we’re not growing then we’re not employing people. If production has to be curtailed then we’re talking job losses.”

He says that as a sector which consumes more than 40% of Eskom’s power and contribute­s more than 20% to the country’s GDP, “we believe our views should be taken far more seriously when decisions are made”.

“We have skin in the game. We are not just sitting on the side. Our consumptio­n directly affects Eskom’s revenues.”

He wants the EIUG to leverage its clout more effectivel­y. “There’s a need for us to raise our views more openly and robustly so that the government understand­s the matters that affect us. The companies we represent have a vested interest in seeing this country grow. Leaving or curtailing their operations are not options they would consider unless things were absolutely desperate.

“We’re not using this as a threat. It is a reality. We’re saying we urgently need to find solutions.”

There is no technical reason why you can’t register projects of 50MW ... if Eskom is comfortabl­e then clearly there are no technical problems Fanele Mondi

CEO of the Energy Intensive Users Group

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 ?? Picture: Michael Pinyana ?? Energy Intensive Users Group CEO Fanele Mondi is heartened by President Cyril Ramaphosa’s Sona message on private electricit­y generation.
Picture: Michael Pinyana Energy Intensive Users Group CEO Fanele Mondi is heartened by President Cyril Ramaphosa’s Sona message on private electricit­y generation.

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