Last week I wrote an opinion piece in Daily Maverick following another round of load shedding, the central thrust of which was a call to trade unions – and indeed other civil society formations – to go beyond simply demanding salary increments and start envisioning a new power production and ownership model for South Africa.
I argued that as Eskom prepares to split into three entities (generation, transmission and distribution), unions, which played a pivotal role in bringing the apartheid regime to its knees and ushering in a new era of democracy, and which still wield a lot of power and influence today, have to advocate for more democratic ownership of electricity production as well as more green power, given today’s climate imperatives. They have to lead the clarion call for greater inclusion of as many willing and able South Africans as possible in future independent power producer (IPP) deals that materialise as unbundling becomes a reality.
I further made the point that we live in a country that needs to continue growing while reducing our carbon footprint. In 2016, South Africa emitted about 531 metric tonnes of CO2 equivalent (MtCO2e). That is a big problem for a region warming at twice the global average. Heating is causing water scarcity, crop failures, expansion of the malaria belt and food vulnerability in many parts of southern Africa, including South Africa. Clearly, we must transition to a low-carbon economy as quickly as possible.
My piece was motivated by the complete absence of any clear and forceful voice in the media space advocating for these changes as well as a noticeable trend towards what I consider demands for very immediate, short-term wins whenever power outages occur.
The day after my piece came out, Cape Town Mayor Dan Plato made the following statement concerning load shedding:
“In October 2020, amendments to the electricity regulations were finally gazetted which could pave the way for municipalities to source power independently from Independent Power Producers (IPPs),” he said.
“The city calls on national government to expedite the processes that will enable the procurement from independent producers to become a reality so that municipalities such as Cape Town can go forth and start breaking the sole reliance on Eskom for power provision… Time is of the essence. We cannot continue to go on like this.”
Dan Plato, like many South Africans, has seen a future without Eskom, and it does not scare him. Quite the opposite – he welcomes it! By the way, he was being nice and polite when he made those statements. I have heard many people say that the Western Cape or Gauteng should just get rid of Eskom and build their own power plants. That, however, could lead to a country where some provinces have uninterrupted electricity supply while some others only get it intermittently. It would take the country back to the apartheid days. We have to explore a different option, one that generates more electricity for everybody.
Less than 24 hours after Plato was quoted in the media, the National Union of Mineworkers’ Eskom Energy Sector Coordinator Khangela Baloyi said the following in a press statement:
“Under this leadership, load shedding is expected to be with us for the next two to three years. There is no proper plan in place to prevent load shedding. This is happening besides the fact that the country is on lockdown. It is happening besides the reality that the economy is not performing well…
“The NUM is calling on our government as the Eskom shareholder to address this issue of poor leadership... The current leadership of Eskom is pro-IPPs. As we have said before the IPPs are acting as parasites that are milking Eskom. With the current PPAs with IPPs Eskom will not survive. The NUM calls on the government to review the current IPPs setup. These IPPs are not even assisting the country in dealing with load shedding.”
All this means that there is no alternative. IPPs are here to stay and we are heading for a world with more IPPs, not fewer. In preparation for this eventuality, and while acknowledging that it is important to improve workers’ lives now, we should be calling for solar panel subsidies, wind farms, more green electricity, socially owned IPP licences, preferential share deals in the new utilities, etc.
The two visions could not be more different. While Plato is champing at the bit to sign more IPP deals and make load shedding a thing of the past, NUM is placing all its chips on Eskom with the belief that this is the best way to save jobs. In their view, #IPPsMustFall. This view, I’m afraid, could lead most South Africans to oppose something that has the potential to generate a lot of wealth, jobs and opportunity for the country.
Here’s the thing: Eskom is knee-deep in debt – it owes just under half a trillion rand. Its plants are running on old, inefficient equipment that should be replaced, but which cannot be replaced due to a lack of liquidity. Economic and demographic growth also outstrip Eskom’s capacity to satisfy the country’s needs going forward. The government made commitments within the framework of the Paris Climate Agreement to reduce CO2 emissions. Right now, it simply does not have the human and material resources to transform Eskom into a behemoth capable of providing uninterrupted power to every home and business in the country.
All this means that there is no alternative. IPPs are here to stay and we are heading for a world with more IPPs, not fewer. In preparation for this eventuality, and while acknowledging that it is important to improve workers’ lives now, we should be calling for solar panel subsidies, wind farms, more green electricity, socially owned IPP licences, preferential share deals in the new utilities, etc.
We should be pushing hard to get more details about present and future IPP markets. We should be calling on the government to publish details on how much electricity will be purchased in auctions/contract periods and at what price. This information can then be used to sign offtake agreements which in turn can be used to establish IPPs – IPPs that belong to individuals, unions, farms, stokvels, community trusts, provincial governments, women’s groups, etc.
If a large percentage of South Africans can be convinced to invest anything from R100 to R100,000 in power production, then democratising Eskom’s ownership can also play a major role in boosting the post Covid-19 economy. That would put more cash in pockets and unlock economic potential in all sectors of the economy – agriculture, auto manufacturing, education, housing, entertainment, tourism, etc.
If it is so much cheaper and faster to create more IPPs around the country, why cling obstinately to a model that has become a millstone around the country’s neck? In Europe, workers’ groups have scored big wins in the fight for socially owned IPPs, green power, electric cars, lower energy bills and green jobs. Drive around the countryside and you will notice that many individuals and companies have already made the call to start producing electricity, you know, the kind of production model that Plato wants to expand.
This should not be seen as state surrender. It is counterproductive to force the state to play a monopoly role that it is simply incapable of assuming at the moment.
To put it another way, who would you want to own the future generation capacity in the country – South African workers and families or just private venture capital? We need to answer wisely. DM