July hit South Africa like a hurricane in succession with violence and looting in KwaZulu-Natal and Gauteng, a series of cold fronts that brought extreme cold and even snow in parts of the country and, as a predictable consequence – further load-shedding.
There has rarely been a more urgent moment to find effective short-term interventions for South Africa’s energy crisis. Not only do we need electricity to keep South Africans warm, we also need to power the economy as the country works to rebuild industries first pummelled by the pandemic and lockdowns, and now by the riots, looting and arson attacks.
Last month, President Cyril Ramaphosa announced that government would amend the Electricity Regulation Act to increase the National Energy Regulator of South Africa (Nersa) licensing threshold for embedded generation projects from one megawatt to 100MW. The decision was a significant step towards addressing the crippling impact of load-shedding on the economy, and could unlock up to 1 000MW of additional capacity on the grid. This would significantly reduce load-shedding.
But these benefits will only accrue over at least five years. We must therefore continue to seek interim energy solutions. One overlooked possibility is how South Africans can take advantage of an underutilised weapon in our arsenal: liquified petroleum gas (LPG).
LPG’s immediate benefits are that it is clean, efficient and a safe fuel made up of propane and butane. It does not degrade when stored for a long time and is easy to transport in road tanks without vapour losses. It has domestic, commercial, and industrial applications and is best known for its efficiency for heating spaces and cooking food.
By promoting greater use of LPG in households, even as business increases their embedded generation capacity, we can relieve the pressure on Eskom’s grid from both ends simultaneously. This would also give Eskom the space to take a methodical approached to maintenance, rather than the erratic approach that has worsened load shedding for households and business alike.
South Africa also already largely has the necessary LPG import infrastructure in place. But despite the benefits, South Africa’s current LPG consumption of around 7kg per capita annually remains very low when compared to international norms.
Globally, data shows that countries with a higher GDP per capita also consume greater amounts of LPG. Even countries like Brazil, which have similar GDPs per capita to South Africa have far higher levels of LPG consumption, at around 20kg per capita annually.
South Africa could easily increase its LPG consumption sixfold by implementing swift changes in policies related to the use of LPG in households for cooking and heating purposes. If South African households switched to gas for cooking, we would simultaneously decrease demand for electricity, and grow the LPG economy.
The country has excellent LPG terminals established at Saldanha Bay and Richards Bay which can already cater to significant increases in LPG demand throughout the country. Once expanded to their full design capacities, these terminals will have the capability of supplying the full domestic needs of households throughout South Africa.
By nature, LPG is mostly used for cooking and heating in peak electricity demand times in the morning and evening. This means that by households increasing their use of LPG to about 25kg per capita annually, particularly during peak periods, South Africa could save up to 550MW daily. This decreased use of Eskom power at peak could also save municipalities up to R6.5-billion every year by lowering the maximum demand charges paid to Eskom.
LPG is already included as an alternative fuel in the government’s free basic alternative energy (FBAE) policy introduced in 2007 – the same year that load-shedding started.
The FBAE policy allows for a subsidy to indigent households for alternative energy where electricity is not available. Unlike the free basic electricity policy, very few municipalities have made effective use of the FBAE. And yet it provides an existing vehicle through which municipalities can directly help indigent households to make the shift to LPG. This recommendation was made by the Competition Commission in its 2017 report on the market inquiry into the LPG sector.
Price is an important consideration across our Covid-battered economy. An exemption on value-added tax (VAT) for LPG used by households would, in the short term, encourage the shift of household functions such as cooking and space heating off the Eskom grid at peak hours and would reduce the demand for dangerous kerosene (which is currently VAT exempt).
And an even cheaper intervention would be to drive a consumer behaviour campaign to raise public awareness about the potential of LPG usage to reduce load-shedding, and to reassure consumers about the safety of LPG. Addressing this, together with the affordability of LPG, is perhaps the best way to increase South Africa’s LPG consumption in the short term.
The combined effect of increased LPG consumption across households, business and industry, together with expanded embedded power-generation capacity, means that South Africa can resolve its underlying supply problems while staying warm. For South Africans with inadequate shelter in this cold winter, and for the businesses that have been crippled by the protracted energy crisis and now battered by more recent catastrophes, LPG is a vital lifeline we cannot afford to ignore any longer.