Twenty-four years into South African democracy, the electricity sector, and the energy sector, more broadly stands in a transition space between old and new. We have a long history of coal-led development, built on extensive mining operations, embedded in the country’s painful, racist labour laws, and unequal resource allocation. As things stand, Eskom, our vertically integrated public utility that still enjoys near monopolistic power, has a history that is inextricable from apartheid’s lack of transparency that has long shielded it from public accountability.
During the Portfolio Committee on Public Enterprises’ oversight inquiry into allegations of state capture at Eskom, the extent to which the utility had become disconnected from its public mandate and lines of accountability shocked us all. The endemic corruption, routine expansions of procurement practices, and most importantly, the shaping of South Africa’s energy policy by narrow and corrupt interests, exposed by the precedent-setting Committee created an opening for a set of interventions, led by the Ministers of Energy and Public Enterprises, by the President and by the Eskom board.
Eskom is in crisis. It has enough installed generating capacity to meet South Africa’s energy demand (about 47,000 megawatts (MW)), but between 9,000 and 11,000 MW of this capacity is broken at any one time. Our public utility’s budgeted loss was R11-billion in this financial year. It is also not generating enough cash to cover its operating costs, undertake required infrastructure maintenance, and service its debt of more than R400-billion. There are many diverging views on what is to be done to ensure that South Africa’s electricity sector works for everyone, but what clear is that the problem is coming into sharper focus.
Eskom cannot fail, and Eskom is failing. South Africa cannot afford it. As we have moved into yet another period of rolling blackouts, we are all aware of the effects of the lights going out, on households, schools, neighbourhood safety, clinics, businesses, economic productivity and more. Electricity is critical for our sustainable and inclusive development goals, as reflected in the National Development Plan. The whole country may grind into a halt.
A decade ago, South Africa was offered a plan for transforming the energy sector, in the form of the 1998 White Paper on Energy Policy that spelled out many steps including distribution sector reform, the introduction of independent power producers (IPPS), the introduction of renewable energy generation, and an independent grid (breaking Eskom up into smaller entities). These sweeping reforms did not get implemented in full but did lead to some change. The Renewable Energy Independent Power Producers Procurement Programme (REIPPPP) has been internationally lauded for its good governance and decreasing energy prices. At the same time, however, the distribution sector – mostly municipalities – is still in crisis. We do not have a workable solution to coal job losses. We also do not have public consensus over the role of the private sector in the electricity sector. Proposed electricity tariff increases of 15% each year for the next three years are untenable for households, or businesses.
Looking at our collective future, the possibility for change, to create an energy transition that works for all South Africans remains possible, and still yet unknown. Technological development and deployment, changes in political and administrative institutional arrangements, together with changes in global energy and resource markets, new geopolitical configurations, and environmental pressures – most conspicuously, unprecedented climate change – characterise the current “global energy transformation”. South Africa’s electricity crisis is unfolding at a time of unprecedented change that holds risks and opportunities for our local context.
While there are many potential solutions, there is no single silver bullet. Our electricity crisis has technical solutions, but it is not a technical problem. It is a complex, multi-faceted problem that will test our commitment to democratic processes, and our care and respect for those most affected by the change. It is a problem that requires strong and compassionate political leadership, and an ability to get real and get creative, to draw on the collective intelligence of stakeholders from diverse positions.
How, then, do we all participate in this sector that underpins everything from healthcare to clean water supply? We need to start with the problem. South Africa’s electricity sector does not work for South Africa. From health crises to power outages, to the risk of a national debt crisis, we cannot afford to fail to grasp the severity of this moment. We must get real on the facts, constraints and limitations of this juncture in history, and we cannot afford to compound this wicked challenge with a crisis of imagination, a failure to see the possibilities for change.
We must ask together, where might South Africa’s energy transformation lead? What are the most important issues? Who are the winners and who are the losers? Who needs protection in this time of change? Can the energy sector contribute to a sustainable and just future? Who should lead this transition and who should participate? How can the energy transition address our pervasive structural inequality and not deepen social divides that are currently entrenched?
Furthermore, there are more practical questions. What technological options are available to us? At what financial cost? At what economic cost? At what human cost? How do we establish a clear, shared evidence base on which political discourse and policy decisions can be grounded? How will distributed energy resources – energy that households, small businesses, large businesses and communities can generate – transform the energy sector, from the bottom, up? DM
The writers in this first Power Futures op-ed series have been selected based on their involvement in recent energy debates. They are by no means an exhaustive representation of the people or concerns in the sector. It is a starting point, an opening for an energy dialogue that can hold a range of interests, sometimes conflicting, while maintaining an openness to innovation to support our shared national developmental goals.
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