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Eskom’s risk to the economy can be mitigated with a focus on renewables


Beverley Schäfer is MEC for Economic Opportunities in the Western Cape.

If we are serious about growing the economy and tackling the high rate of unemployment in this country, we have to start making tough decisions about Eskom.

About a year ago Eskom reported on significant excess capacity as a buffer to protect the country from more load-shedding. Independent and decentralised power producer programmes, like the national government’s Renewable Energy Independent Power Producers Procurement Programme (REI4P) were criticised for being unnecessary and expensive as we had too much power.

Yet, without any increase in electricity demand, we found ourselves plunged into darkness this December due to load-shedding – this time, caused by a lack of maintenance, leading to very low plant availability.

The Western Cape Government does not have a mandate for energy, but we are doing everything we can to reduce the province’s demand on Eskom and to increase localised supply into the grid. The economic cost of load-shedding and energy insecurity on the economy has seen the World Bank call Eskom the South African economy’s biggest risk.

A technical task team is providing insights to President Cyril Ramaphosa on possible solutions for Eskom to prevent further economic disaster. If Eskom is our biggest risk, it is incumbent on cities and regions to act, where they can, to mitigate this risk.

In the Western Cape, the Provincial Energy Security Game Changer started in 2015, with the goal of increasing energy security in the region and, in so doing, increase energy security in the whole country. Three years later almost every municipality in the Western Cape allows the connection of small-scale embedded generation (SSEG). SSEG allows residents and businesses to play an active part in their individual energy future and collective energy security. Programs to coordinate load curtailment have lessened the impact of load-shedding on homes and businesses and the City of Cape Town has aggressively pursued the ability to contract with Independent Power Producers.

Our push towards the use of solar photovoltaic (PV) has seen the installation of more than 70MW of solar power installed so far in the province.

If we are serious about growing the economy and tackling the high rate of unemployment in this country, we have to start making tough decisions about Eskom.

Eskom is faced with crippling debt, rising costs, ageing assets, lower demand and a formidable maintenance backlog. The risks to the South African economy are real if the utility fails to take a series of painful steps.

Bailouts mean there is less money for other economic activity, and investors don’t want to invest in a country where the power supply cannot be guaranteed.

Many experts have outlined the broad strokes of Eskom interventions; dramatic governance improvements, coal contract renegotiation, head-count rationalisation, unbundling of transmission, generation and distribution and finally, selling assets.

These interventions are often presented as choices when the reality is significantly more stark – all of these steps are required to bring stability and competitively priced electricity back to South Africa.

There is a silver lining. With the costs of renewable energy and batteries dropping rapidly, the rise of electric vehicles and thoughtful enabling legislation for SSEG – we are rapidly reaching a ceiling price for energy in South Africa.

The Western Cape Government will continue to work on creating the enabling environment for companies, homes and communities to access clean affordable energy and making a contribution to national energy security.

On Monday, together with Wesgro, I’ll be hosting a dinner for the CEOs of some of the largest renewable energy companies operating in the country. I want to use the opportunity to understand how to position the region to benefit from cheap and clean energy from renewable resources.

By reducing our reliance on Eskom, we are building our resilience, and at the same time, contributing to the development of the green economy in the Western Cape. DM


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