Energy overhaul needed

Only a couple of months ago, the ANC was boldly claiming there was no energy crisis in South Africa.

It seems the ANC has now decided this line cannot be sustained while the public is faced with continuous load-shedding for at least three years.

Instead it has decided to push a different narrative, namely that there is a crisis but that it is due to our apartheid legacy. I am the first to admit that many of the ills facing our society can be traced back in some way to our apartheid legacy, but unfortunately for the ANC the energy crisis is certainly not one of them.

It is important to make this point up-front, not only to ensure that the ANC does not escape political accountability for this crisis, but also because in responding to this crisis we need to understand fully how the overall system needs to be reformed to avoid a crisis like this from occurring again in the next 10 years.

It must be understood that there are no quick fixes to an energy crisis, as many generation technologies have long lead times and the roots of this present crisis stretches back over 15 years.

At the time the ANC, in a display of its ideologically divided nature, came up with a policy that embodied the worst of both worlds. It decided that Eskom should not build any future generating capacity and that this must be done by the private sector.

In making this policy pronouncement, however, it did nothing to implement the institutional reforms called for in the 1998 energy white paper that would have broken the monopoly power of Eskom and made it feasible for the private sector actually to respond to this call.

Astoundingly it took more than five years for the ANC to realise the folly of this approach and by that stage it was clear that blackouts were going to occur in 2007 as accurately predicted by the 1998 energy white paper. The present woes are in the main due to that five-year lacuna in not ensuring that new generation was actually built.

This latest crisis has since been compounded though by a raft of further mistakes on the part of the ANC government, such as the mismanagement of its new build programme and forcing Eskom to pursue a policy of keeping the lights on at all costs with no regard to the maintenance needs of its plants.

To my mind though, the most fundamental mistake has been to delay the long overdue institutional restructuring of the electricity industry so as finally to break the monopoly stranglehold that Eskom has over the sector. Coupled with breaking this monopoly stranglehold has to be the dilution of the energy minister’s powers solely to determine who gets to build what generating plant in South Africa.

As evidence of this last point it has been the most frustrating experience to sit in the energy committee over the last five years and hear the continuous pleas of potential cogeneration project developers. All they were looking for was simply to be given the go-ahead in the form of a procurement programme from the Department of Energy so they could bring much needed electrons onto the grid.

Many of those projects had lead times of 18 months to two years and could have already been delivering more than 1 500MW of power to the grid if such a programme had been initiated then. South Africa’s electricity system has therefore been in the absurd situation where there has both been a pent-up demand for more energy and a private sector with the capacity to supply it, but the two have been prevented from coming together by the monopoly power of Eskom and the ideological stubbornness of the ANC’s energy ministry finally to free up this market.

The failure to pass the Independent Market System Operator (ISMO) Bill, after years of wrangling, is yet another example of how the ANC simply does not have the political will to take the transmission grid away from Eskom and initiate the reforms this industry so badly needs.

In addition, there has been no guiding vision from national government on how to deal sustainably with the R40-billion maintenance backlog that has built up in our municipal electricity grids. The functioning municipalities need to be empowered and incentivised to play a greater role in building their own energy security, while the many non-viable ones need to have their functions usurped.

While the latest initiative by Business Unity SA (Busa) to get all partners working together to ameliorate the worst effects of this crisis must be welcomed, it simply cannot replace the need for deep structural and institutional changes to the electricity industry so as to avoid another energy crisis occurring in the next decade. This cannot be a case of calling on business and municipalities to help alleviate this crisis, only for them to be told to go back to their respective corners once the worst part of this crisis has been resolved.

The rapid changes in the global energy sector require us to move from our current stagnant state-controlled monopoly industry to one that is far more decentralised and incentivised to respond quickly to new opportunities.

-Lance Greyling

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