Far from rescuing our economy, as Robin Friedland suggests, “Old King Coal” (Mail & Guardian) is an obstacle to a rational energy policy and public-interest electricity pricing.
Friedland’s justification of more coal-fired power stations ignores energy efficiency, including conservation, and fails to distinguish between energy costs and market prices.
South Africa has an electricity capacity excess of more than 11% above peak demand. The country is burning enough coal to supply all of our electricity needs well into the next decade, even with high growth, if development moves towards sustainability.
The upside of having, arguably, the world’s most energy-intensive economy is that we have enormous scope for “virtual capacity” gains through efficiency.
Many options would pay for themselves quickly enough to be economically justified at current prices — but because of low prices and policy shortcomings, few are implemented. In 2001 Brazil achieved a 20% reduction in domestic electricity demand in three months.
The Energy Efficiency Strategy, still up for debate in Parliament, should introduce standards. The simplest way of saving electricity is to rule that all homes and buildings above a certain value must have solar water heating within a few years. Penalties and incentives would facilitate long-term investment.
But the main incentive for energy efficiency is cost saving. More than half of the real costs of generation are not included in the price of dispatched electricity — including water pollution, land degradation, depletion of resources and accelerating climate change. The benefit accrues primarily to industry, particularly bulk users who negotiate long-term low prices.
Fully cost-reflective electricity prices could affect the economy. But deferring South Africa’s expected “supply shortfall” — really a demand overrun because of artificially low prices — to allow for proper development planning would be relatively painless in the short term and gain over the longer term.
Industry and Eskom say the poor will be hardest hit by energy price rises. This simply denies the government’s power to regulate prices in the national interest.
The best way to cushion the impact of higher prices on the poor and small business is through “stepped block” tariff, whereby the cost per unit of consumption is initially low and increases with rate of consumption.
Friedland’s blithe claim that recommissioning coal power stations “will meet the crunch in peak period demand expected in 2007” endorses the use of dirty old technology and echoes Eskom’s approach of treating this as a fait accompli, hoping to avoid having to investigate alternatives.
Friedland reports Eskom is doing feasibility studies on “the whole range of power plant and feedstock [fuel] options … to build a coal- or gas-fired plant”. Such feasibility is rightly the subject of the government’s integrated energy planning, whose focus should be jobs and poverty reduction. These are best served by decentralised, renewable technologies.
Richard Worthington is project coordinator of Earthlife Africa’s sustainable energy and climate change partnership