Energy News — 27 February 2017

To many people the idea of an electricity plan seems removed and technical but the truth of the matter is that it is not as daunting as one would think. The electricity we receive has many benefits and advantages, to not have electricity is a sure way to lessen a person’s or a nation’s quality of life. The importance of the Integrated Resource Plan (IRP), South Africa’s electricity, cannot be understated. Shortly after the IRP update is subjected to public comment, policy adjusted, promulgated and based on its recommendations of expected demand and supply of electricity, put into effect, South Africa will then be exposed to the next round of tariff determinations for a period after 2018.

 It is important that South Africa builds the appropriate infrastructure at the appropriate time because it ultimately translates into something every South African can relate to; the price paid for electricity and this is called an electricity tariff. The price of electricity is dependent on many things, for one it is dependent on determinations on IRP and the other more subtle factor, is the manner in which costs of generating, transmitting and distributing electricity are considered.
 The latter factor is more so dependent on the structure of the electricity sector than the types of technology that are required to produce electricity.

The current IRP process requires South Africa to have a debate on the future of Eskom in the electricity sector. It is of course, tempting to see Eskom as too big to fail or to important to reform but what we need to understand is that Eskom is not the electricity sector. Eskom is a player (be it a big one and for most of our recent history the only player) in the sector and consequently Eskom plays a disproportionate role. The monopoly utility has to secure the generation of electricity by building new power stations. It is also the primary buyer of power from Independent Power Producers (IPPs). It transmits electricity from the point of generation to the point of distribution and or demand – homes and businesses etc. This one entity has to do it all and continues to do it alone and refuses to acknowledge that it does not have to do it alone in this day and age.

 One of the consequences of Eskom’s antiquated design has played out in it refusing to sign contracts with renewable energy Independent Power Producers (IPPs), it is our luck that this has changed, thank goodness to political leadership of the executive on this. Such an act by Eskom makes sense when one considers that Eskom really does not have a say on the price it pays IPPs and to add insult to injury, Eskom would rather (and desperately) sell the electricity it produces. The state utility has been unable to uphold its own coal supply conditions and associated procurement processes.
 With development of new technologies as well as the emergence of a growing participation by non-traditional state and non-state actors the monopoly status quo can no longer be maintained without undue sacrifice and or unwarranted compromise by the public.

Consider that in the early days of what was to become Eskom, things were different, South Africa was unlike today and the world was drastically different. In the 21st century flexibility is key and rigidity breeds intransigence which does not bode well in an ever changing world. Increasingly, there are fewer things we know with certainty. One of those things that have become apparent is that the future and continued existence of the electricity sector should not be left to a single entity marred by a damning corporate practice report.

It is safe to say that our beloved Eskom has a lot on the line and has to focus on what is on the line. Most of Eskom’s problems come from its generation function. It would stand to reason that the utility should seek to systematically discharge itself from the cash burning duty of generating electricity and stick to maintaining the extensive and crucial transmission network. The utility needs to expand the grid to enable South Africa to reach its target of universal access and achieve South Africa’s long standing objective of being a “decarbonised powerhouse” in the Southern African Power Pool.

It should be noted that South Africa has the Renewable Energy Independent Power Producers Procurement Programme not just to secure electricity supply as envisioned in the 2010 IRP but also to achieve its mitigation targets contained in the Department of Environmental Affairs’ Climate Change Response White Paper. The country is a party to the Paris Agreement and has a Nationally Determined Contribution that is primarily premised on the acceleration and expansion of the renewable energy programme. Recent developments place unnecessary stress on South Africa’s standing in multilateral negotiations.

Eskom needs to relinquish control over distribution and revive the regional electricity distributors, giving back to municipalities the power they deserve and maybe the current situation of municipal non-payments will improve. In any case, the current situation is as a result of dated policy perpetuating uncertainty and more so a lack of direction. Maybe it is time for an update of energy policy.

Source: Huffington Post

 

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