If a week is a long time in politics, it’s even longer in the dark.
Today “world-class” Eskom is talking about power rationing, calling into question even the golden calf: foreign direct investment lured by low-priced (subsidised) electricity. Alas, household and small business consumers are unlikely to be asked whether they prefer their rationing by way of “load-shedding” or voluntary efficiency and conservation. Cynics may wonder whether proposed penalties for non-compliance are intended to help Eskom pay penalties for failure to deliver to its energy-intensive customers who, to date, have been able to negotiate highly advantageous contracts.
Affluent South Africans were due for a wake-up call on profligate electricity use; the pity is that this involves a failure of essential services. We were also due a lesson on the real value of electricity, and the vulnerability of a highly centralised electricity supply industry dependent on very large generating units.
One can only hope that Alec Erwin has no back-up generator and drives his own car. Perhaps he’ll finally heed calls for independent management of transmission, along with decentralised generation and use of renewable resources.
Here it is necessary to debunk one myth: population growth is not a major driver of increased electricity demand. Residential electricity use constitutes only about 17% of total demand, while at my last count, the 25 members of the Energy Intensive Users Group — mostly mining, primary minerals processing and pulp and paper companies — account for more than 40% of consumption.
Apart from the widening cracks in the top-heavy system that has served well enough for so long, what are the root causes of today’s widespread electricity failures?
There is no one answer. First, South Africa is living with the legacy of the apartheid laager economy. Energy has remained subservient to the minerals sector, despite this sector’s declining role in the economy. Second, the school of economics at which key ANC members in exile studied is making its mark. And third, the operation and maintenance of Eskom’s generation fleet has been inadequate.
There is also the tendency for the “dismal science” to render everything a commodity (from people’s time and energy to water, the essence of life), all available on the basis of one’s ability to pay, but without restraint on the number of times they may be bought and sold before they reach you, in a shop, where you will pay VAT.
The vaunted policy of “liberalising” the energy sector to attract private players seems to have gone the way of the Washington Consensus, following the disastrous results of unfettered trading in places like California.
President Mbeki has apologised for the time the government took to realise that, however much it might desire private investment in the energy sector, if it was running its utility to offer low-priced electricity, there wasn’t a hope. Complete privatisation of Eskom was never a real prospect and the 30% private-sector participation is now expected to come through infrastructure investment, not operations.
Another factor is that key people in government want to believe nuclear industry lobbyists. About 10 years ago they were promising operation of a pilot pebble bed modular reactor (PBMR) within about five years, with half a dozen in operation by now. And they are still promising that a pilot plant will start running in about five years …
Meanwhile, PBMR costs have at least tripled.
When the government told Eskom not to build more generation capacity it embarked on a grand African adventure, founding the unregulated Eskom Enterprises to be the premier African energy company. Leading up to the 2002 World Summit on Sustainable Development in Johannesburg, it even tried to secure large-scale development finance to underwrite all of its investment risk in the name of serving the poor millions.
So when the government appointed Eskom as the generator of last resort, serious reorientation was required. The first choice — refurbishing moth-balled plants — has been far more time-consuming and costly than anticipated.
A key shortcoming intersecting these factors has been the failure to implement the 1998 White Paper on Energy Policy, particularly commitments to integrated energy planning, full-cost accounting, national targets for the reduction of energy-related emissions harmful to the environment and improved energy governance.
In the meantime, the pricing programme adopted by the department of trade and industry (in terms of which a 25-year power supply contract was awarded to the Coega aluminium smelter) has entrenched negotiation of contracts that prioritise profitability of energy-intensive customers over Eskom cost recovery. Last year, civil society demanded that this programme (never tabled in Parliament) be rescinded. Interestingly, Eskom’s finance director has come to a similar conclusion.
What now?
The country requires an emergency energy efficiency and conservation programme, along with diversified power generation. This should include sharing out some responsibilities vested with the overburdened Eskom demand-side management programme, including to the National Energy Efficiency Agency, which needs enhanced powers, capacity and finance; a national solar water heating programme to stimulate the most rapid expansion that local industry can sustain; implementation of a feed-in tariff for renewable energy; and political support and oversight at the highest levels.
Richard Worthington is sustainable energy and climate change project coordinator at Earthlife Africa