ESKOM CRISIS OP-ED
Dark, Dumb and Dangerous: Inside South Africa’s perfect (electrical) storm
The only thing that is certain about South Africa’s current situation is that we will have rolling blackouts for the next two years — at least. A top energy expert helps us understand the roots of the deepening crisis at a time when politicians are focused on political survival and not the big, bold courageous decisions that are needed to get us out of the hole we’re in.
South Africans are being forced to cope with a new normal: Stages 4 and 6 rolling blackouts for the foreseeable future. In some municipal areas, this can translate into up to 12 hours a day without electricity. What is very certain is that we will have power cuts for at least the next two years.
Like never before, the availability of electricity structures the minutiae of everyday life for everyone who depends on being connected to a reliable supply of electricity.
As households, businesses and municipalities scramble desperately to reduce their dependence on Eskom by installing diesel or (increasingly) solar-powered backup systems, Eskom has applied to the National Energy Regulator of South Africa (Nersa) for a 38% increase in the price of an electricity supply that South Africans no longer think is value for money.
Scapegoats
Unsurprisingly, everyone needs a scapegoat, and the culpable have to find someone to blame. The National Executive Council of the ANC debates whether André de Ruyter should be fired; Gwede Mantashe accuses Eskom of treason; business responds with a show of force in favour of De Ruyter; unions call on the Eskom managers to quit; all those who have invested in Eskom anxiously wring their hands and wonder whether Eskom has a plan to get itself out of the mess; National Treasury has yet to say how it is going to take over between one- and two-thirds of the Eskom debt; foreign donors start to wonder if the Just Energy Transition Partnership (JETP) announced at COP27 will hold together; the new Eskom board seems strangely quiet; and the renewables sector frets over whether Cyril Ramaphosa will survive because they know full well that the “other faction” has never been too fond of renewables. The only small gesture of accountability was the apology for the rolling blackouts by Public Enterprises Minister Pravin Gordhan.
When it comes to making sense of the crisis, most South Africans only get snapshots about this or that dimension of the crisis — Stage 6 because more machines have tripped, Eskom has run out of funds to pay for diesel, Bid Window 6 has delivered far less than expected, Eskom wants a 38% price hike.
The big picture remains elusive at a time when things are changing at sonic speed and the levels of uncertainty rise on a daily basis.
Long-running historical drivers
Over the past two weeks, some fundamentals have shifted. We all need to know how they relate to one another and what this means for the medium- and longer-term future.
The big picture isn’t pretty, but it can be explained without providing a justification. To make sense of what is going on, we need to be aware of the long-running historical drivers and the immediate current dynamics that reflect a deepening of the crisis at a time when politicians are focused on political survival and not the big, bold courageous decisions that are needed to get us out of the crisis.
Many make the very serious mistake of focusing purely on short-term causes of the crisis: Eskom management team is incompetent, State Capture resulted in the looting of Eskom, political interference prevents Eskom from finding solutions, by definition all state-owned enterprises are inefficient, the just transition is a White Monopoly Capital plot, and so on.
What needs to be recognised is that there were three distinct historical moments when decisions were made that could have been different that have resulted in the mess we are in today.
First, the government approved the White Paper on Energy in 1998 which made it very clear that unless new generation capacity was procured by 1999, there would be an energy shortage by 2008.
Needless to say, the decision to procure more energy in 1999 was not made. The first “load shedding” was in 2007.
Eskom kept on pressuring the government to be allowed to procure new generation capacity, but the government accepted the advice of influential advisers that it would be preferable for the private sector, in particular BBBEE companies, to invest in new generation capacity. The problem is that the prices were too low to attract investors.
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Trevor Manuel, then influential minister of finance, insisted that exports would suffer if prices went up. Without increased prices, margins were too low to justify profitable private investment in power plants. And so the decisions were delayed and delayed, until President Thabo Mbeki apologised to the nation in 2008.
Starting in 2006, Eskom was rushed into building Medupi, despite having lost a lot of technical capacity to do the job properly. Kusile came later. To fund this new aggressive build programme, additional funding was obtained from the World Bank — its last big loan for coal power.
Pravin Gordhan (as the then minister of finance) signed the funding agreement with the World Bank in 2010. However, costs soon ballooned: what was supposed to have cost R163.2-billion for both Medupi and Kusile with a completion date of 2015, has ballooned to an eye-watering R450-billion (Kusile is still not complete, and both Kusile and Medupi are not running as they should). Herein lies the origins of the Eskom debt crisis.
From 2015 to 2017, CEOs Brian Molefe and then Matshela Koko refused to sign the Power Purchase Agreements (PPAs) for the shovel-ready renewable energy projects that had been approved for implementation.
At the time, then-president Jacob Zuma was obsessed with the implementation of an agreement he signed with Vladimir Putin to build a Russian nuclear fleet to resolve South Africa’s energy problems.
Influential presentations by Bain & Co to Zuma affirmed (with deeply suspect calculations) the financial and technical viability of this idea. As Meridian Economics has now confirmed, if those renewable PPAs had been signed then, 95% of current rolling blackouts would not be happening.
Delusional obsessions
Many of those accusing De Ruyter of purposely sabotaging Eskom to prepare the way for privatisation supported the rise to power of Zuma and never opposed his delusional obsession with nuclear power, nor did they challenge Molefe and Koko to sign the PPAs. Some even call for the return of Matshela Koko as CEO of Eskom! Needless to say, the Zondo Commission recommended criminal action against both him and Molefe, and Koko has been arrested.
In 2019, shortly after Gwede Mantashe was appointed minister of mineral resources and energy in 2018, he was strongly advised to immediately clear the way for the procurement of large quantities of renewables if he wanted to be seen as the person who brings load shedding to an end.
Instead, Mantashe kept reiterating the need for — and viability of — coal-fired power and nuclear. Citing the red herring of “base load”, he refused to accept the need for renewables delivered either by independent power producers (IPPs) or Eskom.
Read more in Daily Maverick: “Gwede Mantashe has harsh words for Eskom as additional 1,759MW of renewables signed up”
If he had accepted the advice given then, which was to implement his own policy, namely the Integrated Resource Plan, renewable energy plants would have been connected to the grid by now. The result would have been a much-reduced level of power cuts.
Instead, after dragging his feet, Bid Windows 5 and 6 are now well advanced, and the cap on embedded generation has been scrapped (despite many years of defence of a 1MW ceiling by Mantashe). But these plants will only be connected to the grid in late 2024/early 2025. Until then, we have worsening power cuts.
Current dynamics
There are a tough set of realities that the minister of mineral resources and energy has consistently denied. There are 90 electricity generation machines located in Eskom’s 15 coal-fired power stations. Most are old and the new ones in Kusile and Medupi are not running as they should.
Years of corruption during the State Capture years, stupid decisions by CEOs Molefe and Koko to suspend much-needed maintenance, corrupt and inefficient project management of the new build programme, plus increasingly serious sabotage, has severely damaged these machines.
Six of the 15 power stations must close soon, and the performance of the remainder must be brought up to scratch. However, to do this properly it is not enough to take them offline for a few days or even weeks to patch them up. Effective overhaul of many of the machines means taking them offline for months at a time.
If Eskom did this now, permanent load shedding at Stages 4 and above would inevitably follow. Eskom can only execute a deep overhaul programme when there is new generation capacity on the grid that will take up the slack.
The only technologies that can deliver new generation capacity quickly (within two years), affordably and on budget are solar and wind power, backed up with batteries and gas.
Coal and nuclear will take too long, and in any case, securing funding for these more expensive options is not possible in a world transitioning to much cheaper low-carbon technologies.
In short, while renewables get built over the next two years, we are dependent on Eskom to ensure that the average energy availability factor (EAF) does not dip below 60%, which is what will keep rolling blackouts at around Stage 2.
It’s bad — and getting worse
But what happens if we build less renewables than planned? And what happens if Eskom cannot prevent the EAF dropping below 60%? The bad news is worse than many predicted even just six weeks ago — it looks as if both may well be unfolding.
In its “state of the system” report published in November 2022, Eskom painted a worst-case scenario that would arise if 16GW of generation capacity was unavailable for various reasons.
This, Eskom pointed out, would mean averaging at a minimum of Stage 3 load shedding. Eskom announced on Wednesday, 7 December, that 19GW of generation capacity was unavailable due to unforeseen breakdowns. Later that evening this rose to 20GW as additional units tripped. This, plus the 5GW on planned maintenance, took the total unavailable to 25GW — way above the 16 GW anticipated for the worst-case scenario.
Taking into account the 1GW as the reserve margin, this left 22GW available to meet demand of about 27GW. Add to this the loss of half Koeberg’s capacity for the next 12 months due to an overhaul that cannot be delayed and water shortages due to climate change in our pump storage dams, and the dynamics of our perfect energy storm become apparent.
When more than half of Eskom’s 90 generation units are down, the only way to keep the lights on is to keep the diesel generators going for longer than planned. But between April and October, Eskom exceeded its R11-billion diesel budget. By November it had run out of money to buy more diesel.
As the worsening of the worst-case scenario materialised, Eskom realised it would need a lot more diesel than anticipated under the worst-case scenario.
National Treasury, however, refused to consider providing the money, while someone arranged a stop-gap measure that resulted in PetroSA providing Eskom with 50 million litres of diesel.
So where will Eskom get the funds to buy enough diesel for the next few months? The only possible answer is South Africa’s public and private banks. But for any bank, putting money into Eskom is totally unjustifiable according to normal banking principles. So the only reason they would do it would be to save the South African economy from crashing by helping to keep Eskom afloat.
For this, an extraordinary level of confidence is needed in South Africa’s political future and in Eskom management’s ability to keep Eskom afloat. This is why Minister Mantashe’s statement that Eskom “is agitating for the overthrow of the state” could not have come at a worse moment.
If the banks get frightened away by this statement and Eskom does not find the funds to buy more diesel, then it will be clear who will be to blame for permanent rolling blackouts at Stages 4 and 6 by the end of January.
Fortunately, all the business associations saved the day by quickly issuing a statement expressing their faith in the Eskom leadership. Of course, no one really knows whether this also reflects the sentiments of South Africa’s bankers.
Renewable remedies
Ironically, Minister Mantashe made his fateful statement at the same event where he was announcing the outcome of Bid Window 6. This refers to the way the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP) works.
After a long and complicated process, a bid window is opened whereby the government stipulates how much renewable energy it wants to procure, and the IPPs respond with their bids. To qualify, they need authorisation from Eskom that their proposed utility-scale plants can connect to the grid and that Eskom will buy the energy. In return, the government provides sovereign guarantees to enable the release of loan finance.
The problem is that after many years of investment neglect and inadequate harmonisation of grid planning and location of renewables projects, the Eskom grid has very limited capacity to carry additional load.
Eskom has made it clear that it needs to spend R130-billion in the next five years to remedy this problem, and a lot more after that.
In July, the President announced that Bid Window 6 would increase the quantity to be procured from 2.6GW to 5.2GW (later curtailed to 4.2 GW).
Much to the shock of many in the energy sector, this week Mantashe only announced five successful bidders with a combined capacity of only 860MW. This could possibly rise to 1 GW if discussions with a sixth eligible project are successful.
The reason for this disappointing outcome? Lack of sufficient grid capacity for all the potentially successful projects that are effectively competing with private IPPs in the so-called non-REIPPPP Commercial and Industrial (C&I) space.
For many informed observers, this marks the death of the orderly transition that would have been possible within the parameters of the REIPPPP.
Instead, what is replacing the REIPPPP is the disorderly transition driven entirely by market forces. Ever since the cap on embedded generation was removed entirely by the President in his watershed July speech in the wake of Stage 6 load shedding, the disorderly transition has been unleashed.
This will see private and municipal buyers of energy procuring directly from renewable installations that they either own themselves or from IPPs who build and sell to third parties without having to rely on selling to Eskom or enjoying the security of sovereign guarantees.
Most, however, will need to wheel their loads over the grid, which highlights once again the grid constraint problem.
Under these conditions (both regulatory failure and grid constraints), it is very unclear whether the target of 10GW within two years to end the rolling blackouts proposed by the National Planning Commission in July can ever be achieved.
If this is true, then the wriggle room Eskom needs to close old plants and properly overhaul existing machines will not materialise. This means the prolongation of rolling blackouts beyond the envisaged two years.
Shocking increases
Eskom has stepped smack bang into this perfect storm with its shocking announcement that it is looking for a 38% increase in the price of the electricity it sells.
What the public does not understand is that Eskom has for many years suffered the consequences of year-on-year increases approved by Nersa that were below the actual costs of keeping the lights on.
If Nersa had approved gradual increases in the price of electricity over a long period of time, South African households and businesses would have slowly adapted in multiple ways. Instead, as Eskom was forced to accept very low increases, its debt levels rose as did the quantity of funds allocated from the National Budget to keep Eskom solvent (thus taking away from other important social expenditures). Debt levels are now so high (around R400-billion) Eskom cannot service the debt without injections from the state.
But the state has diminishing funds to do this. The only option open to Eskom in this context is to apply for “cost-reflective tariffs” to get to where it should have been if Nersa had properly understood Eskom’s business. But now everyone will experience the shock, and at a time when our economy is on its knees and poorer households and businesses are taking serious strain.
Moving forward
To move forward, the following will need to happen:
- National Treasury must make good the promise of the minister of finance to take over between a third and two-thirds of Eskom’s debt, thus freeing up Eskom to allocate more funds to maintenance;
- The Board of the National Transmission Company of South Africa must be announced before the end of year so that this entity can get up and running fast to attend immediately to the need to rehabilitate and extend the national grid, a task that could get compromised if it is saddled with too much debt;
- A clear strategic plan is required that builds on Eskom’s Transmission Development Plan and describes in detail how the minimum of 10GW of renewables will be delivered by the start of 2025, which should be the target date for ending rolling blackouts;
- A clear multistakeholder high-level development plan for Mpumalanga is required that clearly demonstrates how the just transition will unfold in ways that will not threaten the livelihoods of workers and communities dependent on coal;
- The Just Energy Transition Partnership needs to be fast-tracked so that the $8.5-billion is accessed on terms that suit South Africa, with the bulk of the loan funds used to upgrade and extend the grid, and the grant funds to support the just transition in Mpumalanga;
- Government, and the President in particular, needs to reiterate support for the Eskom leadership that was expressed back in July;
- Eskom Board and management need to set a realistic average EAF of 60% over the next two years (not the unrealistic 75%), and provide South Africans with an understandable plan in non-technical language for how this will be achieved;
- A regulatory regime is needed that ensures that we do not run two separate renewable energy delivery programmes with contradictory outcomes that could compromise the goal of 10GW in two years, ie one through the REIPPPP and the other through the market;
- A consortium of public and private financial institutions is required that will come up with creative ways to resolve the financial crisis that underlies the energy crisis. Such a strategic plan could demonstrate what a five-year pathway looks like, and what exactly is expected of the government to make it work. DM
Professor Mark Swilling is co-director of the Centre for Sustainability Transitions at Stellenbosch University.
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One obvious action is we must place all areas and councils that do not pay on permanent stage 8 until their accounts are not in arrears. Or disconnect them. It will bring in cash and it will reduce how much the paying consumers need to be shed. Any rational utility would do this, the ANC will not permit Eskom to do this.
We must forget any noble ideas about spending money on retrofitting old coal stations with scrubbers while we need that money for staving off an economic and employment crisis.
We must box smarter with loadshredding. Our midday need for emergency power and loadshredding is much less than peak periods. Also the gas and diesel peakers cannot run fulltime. Until further notice we need to run loadshredding at stage 6 from 6pm to 6am and stage 2 the rest of the day.
There is a lot “we” in above. What I am doing, because I do not think “we” will do anything except talk talk talk talk, is taking my business 90% energy-independent. Huge solar, huge battery bank, huge diesel that are my primary energy source and I use the grid when it works and could help use less diesel.
Would you still feel this way if you were up to date on your electric bills but lived in one of those municipalities that are not paying their bills, and were penalised as you describe?
Christopher, I get that problem, but when things carry on like this there is no end in sight. Maybe citizens will change their council when they are on stage 8. There are places where the ratepayer association took control of their council via a court process. You cannot expect that the rest of the paying consumers continue subsidizing what must be 30 billion per year or 15c/kWh for your area’s circus act.
A brief timeline of the ANC’s very own disaster in the making:
1999 experts were ignored by the ANC in favor of spending billions on the rotten arms deal
2006 Medupi and Kusile – both inefficient and overly expensive, BEE a major driver of loss of skills and experience; heavy reliance on contractors paves the way for criminal syndicates to entrench themselves in Eskom
2007 electricity market should have been opened up by now and strategic grid management a key requirement, but ill-conceived BBBEE ideals kept the gates closed.
2015 to 2017 it’s the ANC’s love affair with Russia and unaffordable nuclear that continues to keep the gates closed for the free market. Still no meaningful strategic planning and investment to make the grid accessible to multiple power producers.
2019 the ANC favour’s coal and look to foreign, expensive sources of carbon-heavy generation capacity, Medupi and Kusile still shining lights of the failure to expand coal capacity locally. More dragging of feed on IPPs; grid constraints are apparent
2022 we’re in deep sjite and it’s De Ruyter’s fault
Mark Swilling has been peddling a lot of drivel in public oblivious to the suffering of millions caused by incompetence and negligence at Eskom because he has the money to run a generator and solar at his home. He is oblivious to the damage these blackouts cause to small business, health and education. He paints a very bleak picture that the public must tolerate from an incompetent government, Eskom board and management when people with experience at Eskom he does not clearly have besides the academic drivel he punts that the situation can be turned around with proper management. Mantashe is not incorrect that the black outs are going to cause unrest and uprisings at one point or the other. The poppycock that comes out of the Eskom management as reasons for breakdowns are legal reasons to remove its management. The issue of sabotage has become a convenient scapegoat including skills when a skills audit ought to have been done when the new CEO took over as part of a process to have develop a turn around plan at Eskom. To raise these issues now says these fellows never knew what to do at Eskom from the beginning. As for the non – leadership of Ramaphosa on the issue and absence of clear plans from government to deal with Eskom beyond a non plan of just transition from a non -existent energy availability. The mobilisation of society is required to address the issue of Eskom so that the penny can drop.
Have you read this article with the open mind it deserves? I don’t think so. Mantashe should be arrested and jailed for treason.
Along with Molefe and Koko given the evidence presented here that they are apparently responsible for 95% of the current crisis. Not just incompetence but disgusting self-enrichment by selling out the future of the country. This is beyond treason (that sort of traitor tends to have an ideology at least) and should be punishable by a fate worse than a fate worse than a fate worse than death.
16 years of load shedding steadily getting worse and now that everything is falling apart you want to fire the only good management Eskom has had under ANC rule. Things can only drastically improve if Mantashe is fired and the Eskom management is allowed to MANAGE
Why mention Ramaphosa? Your argument is that Eskom management does not know what they are doing. Your political bias does your argument no good.
Read Steven Grootes’ article also in this issue.
And you are right that loadshedding will cause people to reconsider who to vote for, unfortunately just too late for the rest of us…
To Prof Swilling, thanks for the many reminders on what has passed in getting us to where we are, ‘lest we forget!’
In the apartheid days the Nat government said exactly the same nonsense about Desmond Tutu when he was simply reporting the truth. You are shooting the messenger here, dude. Looks like you didn’t read the article, just skimmed it. Also your argments are all over the place and don’t actually lead anywhere.
So, Mr Ngcukana, what particular parts of Prof Swilling’s (excellent, accurate, perceptive, fact-filled, superbly-analysed) article did you find “drivel”? Do you believe that the current Eskom leadership IS the cause of our current predicament, and not years of procrastinating, incompetent, corrupt ANC leadership? Do you believe that the Eskom leadership are conspiring to overthrow the State – as stated by that buffoon Mantashe in his launching of a crude and libelous attempt to deflect blame from him and the ANC? The real treasonous traitors are the Molefes and Kokos who crippled a key state organisation in collaboration with the Guptas – and, of course, Chief Thief JZ himself. There is drivel being spoken, but I’m not sure it’s by Prof Swilling.
Hear, hear !! There is not one topic on which Cunningham is not an expert (ex-spurt : defined as a drip under pressure!). There is a lot of cunning in this ham – and I suggest he take over from Ramaposa whom he has crucified quite mercilessly at every turn – not that some criticism is not warranted ! In addition I suggest he be nominated for a Nobel prize (Trump would be up for the ‘noble’ one) for having the biggest bek in the land, probably the world.
Thank you very much, Professor Swilling, for highlighting the key aspects that need to be addressed, and the steps that need to be taken to stabilize the situation and resolve the crisis as soon as reasonably possible. It will also be necessary to urgently source ffornthe diesel that is critic to get the system stabilised to some degree. Unfortunately, the Governemt does not seem likely to take the urgent measures necessary to implement the plan, and that is why even what transition there is, is happening in a not well coordinated manner. It is understandable that businesses and municipalities are taking steps to try to develop capacity when government has been such an impediment to the transition.
Well that makes depressing reading. What is clear is that various ministers, primarily Mantashe should probably be tried for treason.
Absolutely
Great article ! It would be interesting to understand the consumption levels of the massive aluminium smelters that continue to operate, despite load shedding ? Surely there should be scope to negotiate an arrangement with South 32 and other owners, whereby they are placed on care & maintenance and cease operating entirely for as long as it takes for Eskom to recover ? The penalties pale into insignificance when compared to the cost to the SA economy ?
Tony: to add injury to insult, those smelters and a few other large users receive discounted electricity tariffs. We all pay more so that Eskom can try cover its costs. DeRuyter says our electricity is too cheap. It is too cheap for SOME people. I benchmarked my energy profile and I pay at almost 300c/kWh total cost, 30% more than my same factory would pay in Dallas, US. That is before the 32% increase being asked for which would take it to 70% more.
Eskom’s under estimate of the worst case scenario is a clear example of optimism bias. This bias is enhanced with people in large corporations who find it difficult to tell the bad news. When I first visited Nigeria, with its corruption and long power cuts, I phoned home and said that what worried me was that I thought I was looking at South Africa 20 years into the future. Unfortunately it looks as if I also suffered from optimism bias – that was only 15 years ago!
Sure it’s the ANC [and] government that “. . . underestimated the worst case scenario . . ” and not Eskom; since as early as the 1990’s it warned of a shortage of generation capacity within seven years or so? Just a thought!
Well written, apparently balanced, thoughtful article. I have to take issue with the assessment of the last decade’s NERSA-approved tarriff increases as “very low” though. I don’t have the numbers offhand and don’t have time to go looking for them, but I do recall figures like 17% (after being reduced from whatever Eskom was asking for) and I also know my electric bills are way more than double what they were when this cr@p all started. That indicates increases w-a-a-a-a-y over CPI, and in fact closer to (or over?) old apartheid government inflation numbers.
You’re not wrong about those increases being over inflation, and I agree that they were high. However, the issue is that they were not adequate to cover actual costs, and delays of years in getting them meant that the gap became wider. Don’t forget that Eskom needed to turn a profit in order to invest in new power – by being held hostage to inadequate pricing, it was consistently turning a loss, which meant that even regular maintenance couldn’t be covered. And yes, it’s likely that those costs were inflated by mismanagement and corrupt practices, so we can’t exactly blame NERSA entirely for the shortfall. But the reality is that to fix the mess we’re all going to have to pay a LOT more for electricity, it appears.
It is obvious that the “free market” implementation of renewable energy is proceeding much quicker and better than the REIPPPP. The latter remains under political and bureaucratic control and hence inefficiencies. Freeing it up more and focusing on the National Grid is the quickest way. Furthermore , given the grid constraints, decentralised / local micro renewable projects is the other obvious solution. Imagine all municipalities allowing feed-in plus the R13 billion spent on diesel so far this year (plus the other years) being used to subsidise the capital costs of the equipment for such projects.
“This will see private and municipal buyers of energy procuring directly from renewable installations that they either own themselves or from IPPs who build and sell to third parties without having to rely on selling to Eskom or enjoying the security of sovereign guarantees.” This is not a bad thing – it will (in time) remove the single point of failure problem, possibly increase innovation, and diversify generation reducing the possibility that a government can mess things up.
There seems little doubt that this constant load shedding will be a final nail in the coffin of the ANC. The people in the townships are suffering even more than those in the suburbs. However, Eskom and government always ignore the saving of energy, with preference for the generation of new base load and peak and for renewables to be part of the solution. A faster and lower cost is the removal of energy (particularly towards peak) is solar water heaters, which can remove over 40% of domestic electricity and also remove significant peak loads during evening spikes. Saving energy must be an important part of the energy equation. Sadly though it is of little interest to government as there is less opportunity for corruption.
Won’t happen while the ANC are in charge. We need to buckle up and do what we can to protect ourselves.
Thank you, Professor Swilling. I understand that ideologically this may not sit well with the ANC, but wouldn’t it make sense to study the Spanish/ Portuguese Iberian electricity market model, Mibel? Even the grid is owned by a listed company. Can be viewed at mibel. com I fully understand that many of our problems are as a result of politicians structuring things to produce lucrative contracts either for the party or connected cadres. Step into utopia and imagine for a moment that our political leaders suddenly learned about the principle of “fiduciary responsibility” and acted in the interest of the country or the region and formed a SADC power exchange running much like an independent stock exchange, with private sector generation and distribution companies competing. There would be no direct personal gain for the politicians doing this, but the region and all its people would benefit. Obviously, the politicians would benefit in the long term, but that type of thinking is probably hoping for too much.
this makes depressing reading indeed, it is clear that without massive changes we are heading for disaster, social unrest and businesses going down the drain. Clearly politicians are unable to lead, manage or provide the necessary platforms for Eskom to turn around.
Phew…no point in moaning. It is what it is…and at least we’re not living in Ukraine!
I think their grid is doing better than ours, despite Putin’s attempts to destroy it.
And all the while, businesses and homes with rooftop solar, all sit idle, because there is no provision for businesses and private individuals to sell solar to the grid. I know its only a drop in the ocean, but one that was promised to be addressed in Rhamaposa’s speech in July, we are now in December, and nothing has been done .
Thanks for the great article.
Would Rooftop Solar overcome the transmission limitations? What about using FIT like many other countries do?
This looks coherent and complete but there are many fatal flaws. For instance:
“The only technologies that can deliver new generation capacity quickly (within two years), affordably and on budget are solar and wind power, backed up with batteries and gas.”
Huh? Wind and solar need grid connections – most of the latest Round 6 proposals were rejected because there was no grid capacity. But grids take time to build – ESKOM estimates ten years – and must start BEFORE asking for renewable bids and opening the gates to private ‘wheelers’.
What’s why we need quick investment in gas generation FIRST – the proposed 3000MW to be located at ports with grid capacity – Richards Bay, Coega, Saldanha? But gas is green heresy!
The article is also ill-informed about energy storage. How much ‘battery storage’, for how long, for what purpose? And that bizarre statement statement that “water shortages due to climate change in our pump storage dams” are part of the “dynamics of our perfect energy storm”! There is no shortage of water for pumped storage in SA – the same water goes up and down and just needs to be topped up to make up small evaporation losses. But tho it is the cheapest ‘battery’, it takes time to build. Again, start building it before the generation that needs it!
This kind of under-informed over-belief, is typical of the environmental campaigners that dominate these discussions. They’re dangerous – and have aggravated our current crises!
Adding to Mark’s daunting and demanding list, please add – and what, Mr President, are you going to do to bring the five or six criminal syndicates, protected by, and working with senior members of the ANC, operating within Eskom, and draining R1 billion each and every month?