POWER CRISIS OP-ED
After the flip-flops and zig-zags, is a policy coherence emerging to resolve SA’s energy crunch?
Yes, we are largely back on (a bumpy) course – we will be closing down our old coal-fired power stations after the elections (if no one wants to buy them), but later rather than sooner; and we will after all be aggressively pursuing the large-scale procurement and construction of renewables.
As South Africans head into a cold winter knowing that load shedding is going to get worse, there are signs that maybe, finally, the government is getting its act together to address the challenges.
Despite policy flip-flops like the State of Disaster and the Eskom reporting exemption; despite Minister Gwede Mantashe’s determination to consistently peddle falsehoods about our energy system (such as his claim that when Komati power station was closed its capacity was 1,000MW when it fact it was just over 100MW); and despite a lot of policy zig-zagging in desperate bids to be seen to be ending load shedding (including nonsensical claims that it could be ended by December), the harsh material and financial realities are forcing the government to grudgingly dispense with delusions in favour of a patchwork of strategies that kind of hold together in a reasonably coherent manner and are more or less consistent with a set of policy frameworks that have been carefully put in place over a number of years by a competent set of officials.
In short, Doomsday predictions about failed states and collapse tend to mask the true (albeit somewhat opaque) picture.
To start with, there was Electricity Minister Kgosientsho Ramokgopa’s long press conference on Thursday, 6 April, where he cockily announced his preference for extending the life of the coal fleet by suspending closures and fixing a few machines as the best way to end load shedding.
Unsurprisingly, the bull elephants in the Cabinet – who have been staring at this problem for much longer – politely put him in his place. And equally unsurprisingly, he was reminded behind closed doors and in public that the Budget Speech in February had made it clear that a high-level technical team was doing the hard work to determine what could be fixed, what could be shut down, and what could be sold off.
The furore his press conference ignited was justified, because it looked as if he was going up against a phalanx of Cabinet-approved policy frameworks that have taken years to put in place, including the Integrated Resource Plan (IRP), the Nationally Determined Contribution, Just Transition Framework, Just Energy Transition Investment Plan (JET-IP), Low Emissions Development Strategy, National Infrastructure Plan 2030 and the Energy Action Plan (EAP), adopted after the President’s breakthrough speech in July 2022.
Investors, in particular, hate policy uncertainty.
However, since then, the message has gradually become more muted and subtle, and much more emphasis has been given to renewables. No, said the Minister of Finance on the sidelines of the spring meetings of the World Bank and IMF, large-scale funds to realise Ramokgopa’s plan would not be forthcoming – a message totally consistent with his Budget Speech in February.
Yes, sure, said Eskom’s Jan Oberholzer without much enthusiasm, why not delay the closure of some power stations for a couple of years? Makes sense.
What he didn’t say is that it won’t make a huge difference to load shedding, of course, but it is really excellent PR in the lead-up to the election. He’s now got a contract to make it work. So why not? It isn’t such a bad idea if it is framed this way.
After all, according to the 2019 IRP, 11GW was supposed to be shut down by 2030, but only if 24GW of renewables was up and running by then. Well, the IRP 2019 targets have not been met, so it makes sense to delay the closure of some power stations and associated mines, particularly because it saves some jobs.
More importantly, Minister Ramokgopa built on the many (largely unrecognised) positive announcements made by Minister Mantashe during the course of 2022, which together could unlock 30GW of renewables according to the EAP that is being driven by the National Energy Crisis Committee.
At the opening of the Solar and Future Energy Show Africa on Tuesday, 25 April, Ramokgopa once again shook the energy community by announcing: “We are looking at unveiling a mega bid window of over 15,000 megawatts of additional renewables.”
For all those who had chirped that he was determined to go up against approved Cabinet policy frameworks (including me), we had to eat our hats.
To put this in context, we have built only 6.2GW of renewables since 2010. We need only 10GW to end loadshedding – 15GW on top of what is already in the pipeline would bring South Africa close to the 30GW that is referred to in the EAP.
This really is a big deal, if it is a real and genuine commitment.
In short, after much flip-flopping, zig-zagging, huffing and puffing (and, of course, the firing of an Eskom CEO), we are largely back on bumpy course: we will be closing down our old coal-fired power stations after the elections (if no one wants to buy them), but later rather than sooner; and we will after all be aggressively pursuing the large-scale procurement and construction of renewables.
When all the policy frameworks are put together, this is what they envisage and this is, in essence, what the President said in his breakthrough statement in July 2022.
The only difference between July 2022 and now is the atmosphere. The atmosphere has changed. One crucial ingredient in the mix has been lost along the way, and that is confidence. The lowest point was reached after Ramokgopa’s 6 April press conference. Since then, the Cabinet has kicked his proposal into the long grass – into the safe hands of the National Energy Crisis Committee.
And in a succession of measured statements by the President, the Minister of Finance and the Minister of Environment, Fisheries and Forestry, a semblance of policy coherence has been restored. Attempts by the press to conjure up a power struggle between our three ministers of energy were not all that convincing.
But still, there is a dramatic loss of confidence, in particular among public and private investors who were busily working to assemble the R1.5-trillion needed through to 2027 (as per the Cabinet-approved JET-IP) to accelerate the energy transition and end load shedding. Everyone will be watching very carefully now at the next set of moves.
The publication of the Electricity Regulation Amendment Bill is a strong step in the right direction from the investor community’s perspective. The opponents of freer markets will be worried. The remarkable success of the civil society legal action to use the courts to force the President and the Minister of Mineral Resources and Energy to publish an Integrated Energy Plan (IEP) is also a significant breakthrough.
Fortunately, the President and Minister chose eventually not to oppose the action and had to cover the legal costs. The Government Gazette announced that an IEP would be compiled next year.
In short, it was civil society action, not the government nor business (which was, apparently, distracted by conspiracy theories of former apartheid spies), that has ensured that in the midst of the worst energy crisis ever, South Africa will finally benefit from coherent energy planning rather than desperate policy decision making on the hoof to calm a depressed nation in the lead-up to elections.
Section 6 of the National Energy Act specifies that an IEP must “(a) serve as a guide for energy infrastructure investments; (b) take into account all viable energy supply options; and (c) guide the selection of the appropriate technology to meet energy demand”.
Unfortunately, lowest cost is not specified, but it is specified in some other policy frameworks, and in an ANC policy resolution sponsored by the current finance minister. So, hopefully, expensive, technicist, state-driven delusions will be minimised. But don’t hold your breath for too long.
Policy flip-flopping and strategic zig-zagging may be the cause of a loss of confidence outside of the government and the party despite the re-emergence of a semblance of policy coherence over the past two weeks aligned with the President’s July 2022 statement, but this ignores the new dynamic within the government since the appointment of Ramokgopa as Minister of Electricity.
When it comes to resolving the energy crisis and managing Eskom, up until now no one in the ANC leadership really trusted the Eskom leadership. Within nine months of the full Cabinet’s approval of his appointment, André de Ruyter was making suggestions about the future that are no different from what the President announced in July 2022 and what Ramokgopa is saying now.
In essence, De Ruyter was saying “face the reality that the IRP 2019 says we must close down nearly 25% of the coal fleet by 2030, which means building 5GW of renewables per annum to avoid permanent load shedding”.
The difference between him and Ramokgopa is that closures will be slowed down a bit, and renewables will now be built even faster. So, why is one guilty of treason and the other a new energy hero?
The answer is simple: the ANC leadership really did not trust De Ruyter. Many key politicians really did agree with Mantashe that De Ruyter headed up a team that was actively sabotaging Eskom. Mantashe’s statement that Eskom was guilty of treason really did reflect what many thought was the only reasonable explanation for why solutions to load shedding were proving so elusive.
Getting rid of De Ruyter was, they assumed, the only way to ensure that Eskom’s power stations could get fixed. At the end of his tether, De Ruyter’s famous eNCA interview was about making it clear who he thought was really guilty of treason.
In a radio interview after Ramokgopa was appointed, Fikile Mbalula was asked what he thought of the newly appointed Minister of Electricity. In a tone more ebullient than ever, Mbalula said he was the perfect candidate for the job – “he is technically qualified and has political experience; De Ruyter had neither”.
In short, in Mbalula’s mind, they had replaced De Ruyter with “one of our own” – that is, someone who could be trusted.
Put aside the niggly, inconvenient detail that the Minister of Electricity is not the Eskom CEO, it is a revealing comment, because it essentially makes clear that for the first time the ANC leadership has someone with authority in place who they can trust to tell them what is really going on.
This is significant, because it is very clear that Ramokgopa is not hiding the fact that Eskom’s power stations are really in trouble, and it will take billions to fix them. Mantashe has never said this in so many words.
De Ruyter said the same, but no one in the ANC leadership really trusted him enough to accept the bad news he delivered repeatedly. Ramokgopa is also aggressively pushing renewables now (in line with the National Infrastructure Plan 2030 that he took to Cabinet as head of Infrastructure SA in the Presidency) – once again, a position no different from the one promoted by De Ruyter, but this time the ANC leadership cannot dismiss the messenger as a “renewable energy lobbyist” – the ultimate insult in ANC circles.
In any case, he is simply making happen what Mantashe has already announced.
In short, what we are witnessing is an extraordinary twist in a set of very complex dynamics: previously, business had confidence in De Ruyter, the President’s July 2022 statement (which, by the way, expressed full confidence in Eskom’s management) and the Cabinet-approved policy frameworks, but the ANC leadership did not trust De Ruyter; now we have an ANC leadership that has confidence in the man charged with ending load shedding using strategies not that different from De Ruyter’s, but there are low levels of confidence in the business and international community that the much-needed policy certainty will be robust and long-lasting enough to justify gigantic investments in South Africa’s energy infrastructures.
We could have had it all: a good strategy, an effective team and confidence.
This is not how it has panned out. It is what it is, and we all have no choice but to work with these realities.
Every South African feels the pain, and is implicated in the solution as consumers and taxpayers.
What really matters now is whether the emerging policy coherence can be reinforced through strong political leadership from the top, the IEP compiled much sooner than 2024, the revised IRP published and confidence restored so that the R1.5-trillion worth of investments can be mobilised to kickstart the projects that will ensure long-term, affordable energy security for all. DM
Mark Swilling is Co-Director of the Centre for Sustainability Transitions at Stellenbosch University.