Month: April 2015

Rip Eskom Apart – 2014

By Glenn Ashton · 18 Mar 2014

While rolling blackouts are never a joke, many South Africans cracked an ironic smile when Minister of Public Enterprises Malusi Gigaba remarked that Eskom was better prepared to deal with their recent power supply crisis than in 2008. Thanks for that insight, Minister.

Problem is, we still have rolling blackouts six years on, with things looking pretty dire as we approach winter. As usual we all pay, in different ways, for these systematic failures at the highest levels. Surely it is time to rip the inefficient beast that is Eskom apart, for once and for all?

Our most recent energy crisis comes against the background of the total withdrawal from Parliamentary consideration of the Independent System and Market Operator Bill, which potentially could have opened up our power market by levelling the playing field away from Eskom domination, enabling broader access to energy suppliers. The government shelved this bill for reasons which remain unclear. This all seems to run counter to Energy Minister Ben Martins’ statement that Eskom could no longer be player, referee and linesman in the energy sector, when he spoke at a recent Energy Indaba.

The Independent Operator Bill has been in the pipeline for nearly four years, through several iterations. The fact that our Minister Gigaba feels sufficiently strongly to defend inefficient behemoths like Eskom, then we have a problem. While Ministers Martins and Gigaba may demonstrate public solidarity, their policy positions are incongruous.

In reality, the ongoing incompetence of Eskom to manage its affairs is inescapable. Not only has it failed to pull Medupi contractors in line, but it attempts to abrogate responsibility for wet coal. There are multiple levels of irony, piled one atop the other. First is the quaint way we refer to “load-shedding,” rather than black- or brownouts, in our uniquely South African attempt to render such unpalatable reality more politically correct and expedient.

Second is how the most recent crisis was triggered by record breaking late summer rainfall, symptomatic of climate change. As one of the world heaviest polluters, South Africa, with Eskom in the lead, has failed to deal with its disproportionate emission levels. To further rub salt into this wound in the fabric of the ecosphere, Eskom, along with one of its suppliers, Exxaro, openly boast that we have 200 years of coal reserves, emphasising how this commercial vision blinkers our national energy policy.

In fact Eskom recently went yet further, asking for exemption from the stipulations of our long delayed National Air Quality Act because it would be too expensive to comply. Despite knowing about these requirements since 2004, Eskom has failed to address them. Even the proposed scrubbers for Medupi are to be postponed, indicative of a dismissive attitude toward the Air Quality Act.

Then there is the paradox that the company responsible for supplying sodden coal to Eskom, rendering the huge Kendal power station inoperable, was Billiton Coal. This is a division of the same transnational corporation, BHP Billiton, which receives Eskom power at prices well below cost for its Richards Bay aluminium smelters, devouring nearly 10% of our national energy supply.

Billiton Coal enjoys similar commercial confidentiality to Billiton Aluminium, where years of legal probing eventually revealed the true facts of its outrageously beneficial contracts with Eskom. The Billiton Coal contracts are similarly inaccessible, limiting public oversight of this serial failure. Given the strategic impacts of these failures on our national economy, these agreements should be closely scrutinised, with the guilty party held to account. Surely it is not the business of the state to subsidise massive transnational corporations? The National Energy Regulator really ought to show its teeth, if it has any.

Whichever way you cut it there is little good to coal power generation. Not only does it generate greenhouse gases, it also dumps over 200 tonnes of mercury in our soil and seas every year, along with a broad range of other nasty pollutants. Emissions are directly responsible for tens of thousands of deaths and illness. It destroys natural resources where it is mined. Despite all of this it remains central to Eskom policy for the foreseeable future.

The luxury of monopoly has blinkered Eskom to the extent that it simply cannot see beyond coal and nuclear. While it has commissioned some wind energy, this was only because of a compulsory offset for its World Bank loan to build Medupi and Kusile Coal stations, in a sop, a greenwash, to alternative energy.

So how should we restructure our overweight energy monopoly? Almost all energy analysts agree that the grid, that is the power lines and network to connect our national energy system, should become a stand-alone entity. This would immediately reduce Eskom dominance. It would also encourage the development of a smart grid, with an increased shift in focus away from large power plants toward decentralised medium, small and micro energy suppliers.

A major advantage of opening up the system, particularly to smaller operators, is that they are primary drivers of employment and economic growth. Eskom’s historical focus has been an energy supplier to mining and heavy industry, such as the steel and petro-chemical industry. This sector is contracting and shedding jobs. If South Africa is to become globally competitive it needs to shift toward a far more diversified economy premised on beneficiation and value-add to these primary industries.

Beyond creating a stand-alone smart grid, it is imperative to shift toward gas as a transitional fuel as part of the shift away from coal. Converting some of the older Eskom power stations, which are running out of locally accessible coal, to gas power would be one way. Another is to replace our hugely inefficient diesel driven turbine generators with gas. By securing preferential rates from neighbours like Mozambique and Tanzania, each of which have massive gas reserves, we could rapidly start to transition toward a cleaner economy.

We should also increase research around ground-breaking new power sources. Modular concentrated solar power plants are one concept that South Africa ought to have researched rather than wasting billions on the Pebble Bed nuclear pipe dream. Another is to develop viable current generation modules to tap into the Mozambique Current running down our east coast at a constant 5 kilometres per hour.

By coupling these opportunities to other emerging decentralised energy sources of energy, such as cross-subsidised domestic and industrial solar installations, South Africa could come to the forefront of international energy and policy development, while creating employment. In the final analysis, anything would be an improvement on the antediluvian, monopolistic state run Eskom dystopia that has actively prevented the emergence of a vision of a better energy vision for all. We certainly have sufficient resources – they just need to be prised from Eskom’s greedy clutches.

SACSIS Attribution
This article was first published on SACSIS, the website of the South African Civil Society Information Service –
Should you wish to republish this SACSIS article, please attribute the author and cite The South African Civil Society Information Service as its source.
The article is licenced under a Creative Commons Attribution Licence:

Poor Energy Policy Undermines Energy Diversity in South Africa – 2011

By Glenn Ashton · 15 Jun 2011

In 2010 Anton Bredell, Western Cape Environment Minister, reported that his department had received applications for installation of over 11 000 Megawatts (MW) of wind energy generation capacity. This is more than double the capacity of the controversial Medupi coal fired power station. This could make the Western Cape a net exporter of clean energy.

However a number of bureaucratic stumbling blocks have delayed and may halt these mainly privately funded, market-driven initiatives. Instead of being a simple matter of getting planning permission and connecting the grid, government structures remain more of a hindrance than help.

Our national energy policy remains contested ground. Despite years of discussion about opening up and diversifying our energy market, the reality has been unnecessary delays simply through a failure to put concrete policies and supportive energy regimes in place. This vacillation was directly responsible for the scheduled rolling blackouts, euphemistically referred to as load shedding, in late 2007.

Despite these massive economic costs, the political jockeying and intransigence continues. Instead of opening up the market Eskom did some navel gazing, belatedly focused on energy efficiency and more than doubled its prices.

Instead of promoting generating diversity and a competitive environment Eskom retreated to the energy laager, fast-tracking one of the word’s biggest coal fired power plants. Eskom continues to ignore concerns around the impacts of human triggered climate change. Its massive CO2 footprint and political influence combine to directly undermine sustainable development in South Africa.

Persistent delays in finalising Integrated Resource Plans (IRPs) lie at the heart of our problems. If we had harnessed all of the hot air generated by debating various iterations of IRPs since 2002 we wouldn’t need new generating capacity! The most recent version, IRP 2010, was promulgated nearly a year behind schedule and has generated huge controversy around its focus on coal and nuclear generation.

Along with IRP delays, the finalisation and clarification of the Renewable Energy Feed-In Tariff programme (REFIT) continues to compromise investment in renewables. The first iteration, published in 2009, is under revision and is tangled in red tape. It is remarkable how government fast tracks political priorities like secrecy bills, media tribunals and disbanding the Scorpions yet cannot finalise economically critical matters like energy policy.

The continued delays and non-consultative nature of IRP 2010 are directly related to this political intransigence and interference. The now infamous exposé of the ANC’s Chancellor House investment arm and its deals with the Japanese Hitachi consortium, contracted to supply boilers to the Medupi and Kusile power stations, hints at the extent of the problem.

The revolving door between political players and empowerment schemes is well established. For instance the Public Protector, Lawrence Mushwana found ex-politician Valli Moosa to have acted improperly. As Chair of Eskom he should not have been involved in awarding the Medupi boiler tender to Hitachi because of his ties to the ANC and hence Chancellor House.

According to a report by Shawn Hattingh of the International Labour Research and Information Group, Moosa also purchased shares in the services company Drake and Scull (which purchased Tsebo Outsourcing, previously Fedics) shortly before granting them a contract at Eskom. This sort of manoevering and influence peddling raises red flags about the structuring of IRP 2010 and related energy programmes.

During the late 1990s, the government’s market driven policies encouraged independent power producers (IPPs) to take up any slack in generation capacity. These Pubic Private Partnerships (PPPs) were stymied by Eskom’s excess capacity, lack of buy-in by Eskom and artificially low energy prices.

>â€A few small IPPs showed interest but their fingers have been seriously burned by the lack of clear policy. IPSA’s Cogen plant was contracted by Eskom to supply power over the World Cup period but remains marginalised. This uncertainty deters IPPs from entering the market. New policies are promised but not yet promulgated.

The IPPs dealing in renewable energy remain deeply affected by this uncertainty. They are further deterred by the proposed state tender system where the state will be the final arbiter of who delivers how much power to the grid. This is just one reason we have little chance of meeting promises for Carbon Emissions Targets set by the Department of Environment, by 2013.

The IPP regulatory system also introduces significant opportunities for economic and political interference. This is because well-connected individuals can align themselves with various energy start ups, either to improve BEE scoring or through providing access to tender committees, prime examples of rent-seeking and political patronage.

Given our power generation squeeze it is short sighted to impede the entry of new sustainable energy generation companies. If they are able to get planning permission, to install windmills, solar plants and provide power to the grid they should be encouraged, not kept waiting, dependent on arcane systems. Instead of facilitating entry, artificial barriers to entry are erected.

We also should ask why there has been such serious focus on large generation sources such as coal, nuclear and solar thermal, rather than decentralised, medium and micro supplies that encourage a diversified energy supply. Perhaps this is not only about stable energy supplies, but goes far deeper.

Given what happened with the Hitachi/Chancellor House deal, it is clear that mega-projects are far more prone to skimming and abuse by elites. Instead of fast-tracking an unambiguous energy policy, the vultures continue to circle.

Cosatu opposes any privatisation of our power generation capacity because of the profit motives involved. It has indicated preference for a centralised, state run energy utility. This would be sensible if Eskom was capable of pursuing its founding mandate to supply energy at lowest possible cost. The reality is that this mandate has been rapidly eroded and compromised poor planning and political interference.

Conversely, organisations like the Free Market Foundation insist that private capital would not enter the energy market if Eskom was competitive. The reality is that recent mismanagement has seen Eskom becoming an uncompetitive monolith.

Wind generation is already becoming directly competitive with Eskom’s escalating tariffs, without subsidisation. Wind energy companies will be able to generate power at less than half of the estimated R2.40 per kW rate Eskom is projected to be charging in 2014, underlining their eagerness to enter the market. Solar power and even innovative renewables like current generation must be enabled to enter the mix, through adoption of progressive energy policies.

It is notable that coal will be more costly than wind and even solar generation, especially if all the externalities are considered. Nuclear will be by far the most expensive option and it would never be considered by IPPs. Nuclear is not competitive; no unsubsidised, independent nuclear power generation facilities exist anywhere in the world. Fukushima will make nuclear even more expensive as further safeguards are installed. The latest third generation nuclear plants in Finland, France and USA are all going to be prohibitively expensive and our government is naïve in its wish to pursue nuclear options, on cost considerations alone.

It is also important to note the implications of the “Protection of Information Bill” for energy policy and transparency. Because energy is a key strategic resource, this “secrecy bill” would permit the state to declare any related information confidential. This would make it impossible to expose Chancellor House/Hitachi type deals. It would enhance the ability for graft, crony capitalism and politically connected cadres to rob us blind. Instead of being supported, whistle-blowers would be punished.

Diversifying our energy supplies means shifting away from coal and nuclear. They are each deeply problematic energy sources for complex reasons. Efficient diversification means shifting away from centralised energy generation. The recent publication of the draft Independent System and Market Operator (ISMO) bill should encourage open competition in the energy market.

If private power generators are able to reliably produce renewable energy at competitive rates, surely this benefits us all? Eskom has only itself to blame for its lack of competitiveness. By transparently opening the market, diversity of supply will naturally follow. Anyone, even trades unions, could invest.

Arguments that micro and medium power producers are unreliable are archaic. Modern communications, coupled to meteorological reports can inform a centralised electricity control system by sharing predictive inputs (weather reports, service downtime) and real-time generation patterns.

Our chaotic energy policy and planning, exacerbated by political short-termism, crony capitalism and secrecy, underlies most of our energy problems. It is not an option to throw energy generation to the wolves. However we would collectively benefit by creating an enabling climate where all players, from micro-generators, to medium sized renewable providers are able to contribute to a sustainable and energy secure future.

SACSIS Attribution
This article was first published on SACSIS, the website of the South African Civil Society Information Service –
Should you wish to republish this SACSIS article, please attribute the author and cite The South African Civil Society Information Service as its source.
The article is licenced under a Creative Commons Attribution Licence:

Eskom is the Problem, Not the Solution – 2010/2.0

By Glenn Ashton · 26 Jan 2010

The ongoing public debate about electricity price hikes raise questions about how our national energy policies are decided. Public interaction with the National Electricity Regulator of South Africa (NERSA) cannot yield expected results, as NERSA is little more than a messenger and not the framer of policy. The real problems revolve around the relationship between Eskom, the state and the ruling party and the degree of influence that our electrical generation behemoth wields.

The relationship between Eskom and the state runs deep. It was initiated when the Smuts Government created the Electricity Supply Commission (Escom) in 1923. Escom was directed to provide cheap, abundant and reliable power to government departments, railways, harbours, local authorities and industry. Escom operated efficiently for decades, but its policies and practice are now stultified and outdated.

Renamed Eskom in 1987, it remains a parastatal public utility. As such, it is indivisible from the state. As we shall see, this is a fundamental weakness. As a monopolistic industry it dictates the rules regarding competition, while also holding the whip hand in controlling and shaping national energy policy, such as the dismally failed PBMR that has cost it – and us all – dearly. Through its management and maintenance of the transmission infrastructure it is able to actively prevent open participation in the power market.

Given our recent history with power supply shortages, Eskom appears to be the natural place to seek solutions. Instead Eskom has perpetuated our problems. It has shown itself unable to devise creative solutions or to clearly analyse shortcomings in state energy generation policies. It has become a poorly run utility, lacking vision.

In crisis it has instead turned to solutions such as reducing demand through ‘demand side management’, long touted by civil society and public commentators as providing cost effective alternatives to building more expensive capacity. Eskom’s panicked subsidisation of compact fluorescent light bulbs, gas stoves, solar water heaters, blankets and timers for geysers is palpably too little, too late.

The primary reason that Eskom never embarked on demand side management is because it is a utility whose primary objective is selling as much of its product as possible and which had, until recently, excess capacity it wished to utilise. It had no interest in reducing demand and consequently lacked strategic vision.

The cut-price contracts given to overseas aluminium corporations soaked up our excess capacity that clearly exposes Eskoms short-term planning and lack of vision. The reality that aluminium refineries now consume nearly 10% of Eskom’s total generating capacity, while providing only a few thousand jobs and limited revenue to the national fiscus, illustrates how this one-sided deal primarily benefits aluminium producers at our expense.

Hocking our power generation capacity to corporate entities at utterly unrealistic prices, estimated (Eskom obdurately refuses to disclose contract prices) at a quarter of the price that domestic consumers now pay for electricity, underlines the extent to which this decision runs counter to the national interest. It is akin to enticement.

Eskom’s pervasive influence on national energy policy, its monopoly over transmission and nearly all generation, emphasises how the quasi-corporatisation of Eskom has changed it from its initial role of a utility to that of a profit-driven monster operating against the national interest.

This is perfectly illustrated by Eskom’s interference in the solar water heating industry. Through its demand side management policies it has, with state blessing, instituted a putative subsidy system to supposedly encourage the uptake of domestic solar water heating. While this appears good on the surface, examination of the real effects illustrate a more sinister reality.

The first year of this subsidy programme resulted in the installation of just over 1000 solar water heating systems, by all accounts a dismal failure. This number would probably have been exceeded had the ‘subsidy’ not been in place.

An examination of the numbers shows how the subsidy system has had a sharply inflationary effect on solar water heating systems in South Africa. Under the Eskom agreement, each complete system must be SABS tested, costing approximately R35,000. Given that at least 135 different systems have been tested, the direct cost of this testing alone has added at least R4.7 million to the cost borne by the solar water heating industry.

To this amount, add substantial administration costs, both by installers and Eskom, an insistence on expensive compliance with ISO checklist practices and many other additional costs. This programme therefore increased the price of each system installed in the first year by an average of at least R5,000 each. This conservative estimate could be easily double, and ongoing costs continue. It excludes Eskom’s doubtless substantial administration costs, auditing programme, and advertising, not to mention the loss of electrical revenue.

Clearly this supposed solar subsidy system has cost all parties dearly. We have failed to examine how Australia, New Zealand, China, the US and the EU have all succeeded in solar heating rollout, while we have spectacularly failed. But this is not the end of it.

Many of the SABS tested solar systems use identical hot water cylinders made by local manufacturers, several of which have now been tested tens of times. The profit oriented focused SABS is smiling but the solar industry is not. The same applies to many of the solar heating collectors. Instead of establishing the efficiency of each cylinder and each solar collector individually, giving a rating to each and then providing a flat rate subsidy on that basis, as is best practice elsewhere, Eskom and the SABS have undermined the solar water heating industry at every step. ‘Unsubsidised’ (read ‘not artificially inflated’) solar water heating remains significantly cheaper than subsidised systems.

The government is about to release its national solar water heating strategy and implementation plan, which will build on the Eskom solar water heating rollout. This strategy has been rushed through without adequate consultation. Its draft contains appalling misconceptions about our local solar water industry.

For instance, it repeats the baseless assertion that we have inadequate capacity to roll out solar water heating in South Africa. The fact is that we have plenty of capacity to supply local cylinders and collectors, if the government supported instead of undermined renewable power supplies through accepting Eskom’s negative assertions about renewable energy.

Eskom habitually rejects ‘renewables’ through the deceptive practice of externalising the true costs of conventional energy and failing to account for its inflationary fuel costs. The real costs of waste management, air and land pollution and health impacts from fossil and nuclear energy sources are always excluded when calculating power generation costs. The impacts of mercury on people, land and fish from coal power are externalised. The pollution of water sources by coal mining is ignored. Were all these costs included, renewable energy would be seen to be more than competitive yet the reality is hidden behind falsified statistics and incomplete accounting practices.

At the heart of the problem with our energy supply lies the relationship between Eskom and the state. The latter is indivisible from the government of the day, run by the ANC. It is, sadly, all profoundly reminiscent of the corrupt National Party, which also benefited from its incestuous affair with Eskom.

Party cadres are instrumental in deciding the energy procurement process, which has undermined transparent tendering. The relationship between the ANC, Chancellor House and Hitachi, the supplier of generation systems for the new coal fuelled stations, is unacceptably murky. And just why are these new power stations costed at three times the amount of similar plants elsewhere in the world? Who pays? Us, the people.

Behind this mess, lies the King Kong of party political funding and crony capitalism. Until such time as spotlights are focussed on this beast, and proper public scrutiny applied, we the public, rich and poor alike, will be endlessly shafted by the evil axis of power producers allied to those who hold the reins of political power.

The nightmare of our frayed energy policy must end. Eskom must be held to account, not through the lame duck of NERSA, but directly through the legal system and active application of the Public Access to Information and the Public Access to Justice Acts. Urgent public oversight is required through these legal mechanisms.

The ruling party must be interrogated as to exactly what is going on in Chancellor House, and how political cronyism threatens national energy policy and practice. The pathetic sideshow and internal squabbling around immature reactions to personal critique diverts attention from matters of governance.

The funding of all political parties must be opened to scrutiny. The cancer of party political funding, both within the ruling party and the official opposition must be excised. The arms scandal is small change compared to the potential costs of the looming energy scandal.

We have seen our electrical power go from the cheapest to in the world to where it will soon be the most expensive in less than a decade. Is this leadership? Is this visionary? Is this being interrogated by the opposition? No to all of the above.

At the heart of this lies Eskom. It is the problem and not the solution.

SACSIS Attribution
This article was first published on SACSIS, the website of the South African Civil Society Information Service –
Should you wish to republish this SACSIS article, please attribute the author and cite The South African Civil Society Information Service as its source.
The article is licenced under a Creative Commons Attribution Licence:

Eskom: Plunging Us into Darkness – 2010

Eskom: Plunging Us into Darkness

By Glenn Ashton · 18 Mar 2010

Those responsible for formulating the policies required to solve our national energy crisis are clearly floundering, all at sea, while the great white sharks of international capital circle for the kill.

Our national energy policies are a mess. We have signally failed to formulate a comprehensive long-term energy policy since democracy in 1994, instead relying on ad hoc responses by both Eskom and politicians.

The incestuous Tweedledum and Tweedledee relationship between Eskom and the state undermines public participation in formulating energy policy. The excessive provision of energy capacity by the technocratic central planners of the Apartheid state enabled the new South Africa to ride on the shirttails of its predecessors. However this capacity was rapidly absorbed, primarily through controversial deals with major energy consuming industries.

The sweetheart deal between Eskom and Billiton to exploit our cheap and dirty power to transform Australian bauxite into aluminium and then export the profits is both an outrageous abuse of a national resource and a cautionary tale. It is a relationship that costs us all dearly. We lose electricity capacity to corporate predators. The public effectively subsidises this cut-rate power effectively sold to Billiton below cost. This is effectively redistribution from the poor to the rich.

Aluminium, with its massive power requirements, has been called solidified electricity. Eskom is instrumental in maintaining Billiton as one of the worlds six biggest aluminium companies. Billiton is also one of 138 Eskom customers, which receive electricity at between nine and 35 cents a Kilowatt hour (kWh) — at a rate that averages 17 cents per kWh, for almost 40% of Eskom’s total output.

This is more than three times less than the 59 cents per kWh paid by most South African consumers, which is set to rise to around R1 per kWh when the full National Electricity Regulator (Nersa) approved increase has been implemented over the next three years. The poor and middle classes, together with smaller businesses are effectively subsidising Billiton and 137 other favoured and already wealthy entities.

Earthlife Africa recently showed how poor consumers who rely on prepaid meters already pay around 72 cents per kW/h; four times more than the average discounted Eskom rate.

Billiton is apparently one of two companies with a special long-term discount power contract with Eskom and gains its profit at our collective expense. Do we, as a nation, owe privately held corporations a profit, especially if this is at cross-purposes to both our individual and national interests? Surely Billiton and other wealthy, privileged entities should simply pay the same as everyone else?

The preferential tariff rate granted by Eskom to these companies is by its very nature anti-competitive, across the board. This unfair discount, which arose through the government wishing to project an atmosphere of business friendliness, severely disadvantages smaller companies.

Any energy reliant start up enterprise is automatically compromised by the massive advantages these Eskom subsidies provide. There is clearly a role for the competition tribunal to play in this sordid saga.

The names and the exact rate that each of these privileged companies pays must be legally interrogated and revealed. Eskom is a public entity. South Africans have a vested interest in the fairness and transparency of how this public utility is run and its discriminatory behaviour is patently unfair.

Public utilities should not be permitted to hide behind the cloak of corporate confidentiality. The fact is that the state, as Eskom’s sole shareholder, has failed to adhere to the corporate governance principles that the private sector is required to. Eskom does not fulfil its requirements of stakeholder participation and transparency as set out in the King 3 report (Chapter 8), which states that the critical role of stakeholders – which in this case includes all South Africans – cannot be ignored.

The Eskom board has proven itself incapable of projecting or formulating a meaningful energy policy and has failed in its charter role of serving the people of South Africa. The manner in which Eskom, through its inordinate influence on Nersa, has forced through inflationary energy policies while capping alternative energy supply, can only lead to the conclusion that those at the helm of Eskom have lost the plot and are operating beyond their mandate.

We should recall however that Eskom did approach the government in the late ’90s to highlight that it was rapidly approaching operational capacity, and was rebuffed. Instead pseudo-solutions like the Pebble Bed Modular Reactor were promised. The state has utterly failed to pursue, let alone achieve, proclaimed energy targets, particularly in renewable energy.

In 2003 we set a 10,000 gWh renewable energy target, to be achieved by 2013; to date we have installed less than one percent of that goal. Yet Public Enterprises Minister Barbara Hogan blindly insists we will meet this target! What hope have we against such bombastic hubris?

While a renewable energy feed-in tariff was recently cemented after years of dithering by Nersa, it is too little too late. Had we met proclaimed renewable targets we would need to build neither Kusile nor Medupi power stations. Nersa’s dithering has been compounded by Eskom’s consistent anti-competitive bias.

Now the government has insisted that renewable energy supply must be capped at unrealistic levels and put out to tender. Surely any agency that can competitively supply power should be permitted to enter the market? This starkly illustrates the contradiction of the state being Eskom’s sole shareholder, and then in turn using the authority of the state to stifle competition.

Our energy policy lacks considered planning. Career politicians like Alec Erwin utterly failed to develop meaningful policies, instead engaging in counter-productive pro-nuclear daydreaming. Yesterday’s sweetheart, Barbara Hogan’s shift from Health to the Department of Public Enterprises has repeatedly demonstrated that she too has succumbed to a nuclear-induced dwaal.

Hogan’s recent proclamations that we must embrace the nuclear option are both premature and untested. She ignores that nuclear power will cost nearly twice the amount Eskom wishes to charge us in three years time. The nuclear power plant being built in Finland by Areva, identical to the units it wishes to build here, is twice over budget and schedule and will be lucky to produce power at less than R2 per kWh. The alternative, US sourced systems, are equally problematic.

Last year we rejected the nuclear option as being too expensive. Now Hogan expounds on its viability. What has changed in six months? This indicates staggering incompetence and a lack of consistent policy. Lance Greyling of the Independent Democrats, who is one of the few politicians with a decent grasp of energy policy, has pointed out that it is not Hogan’s place to make such proclamations before any consultative process has occurred.

Furthermore, Hogan insists Eskom no longer is a power monopoly. She makes this absurd claim because companies like Sasol (which also benefit from Eskom’s special rating dispensation) are now permitted to sell minuscule amounts of excess energy onto the grid! Barbara is clearly in wonderland.

Hogan is also panicking about the acute pressure being brought to bear by a broadly representative civil society coalition against a World Bank loan, sought to fund Eskom’s Medupi coal fuelled power station. This loan is in direct contravention to proposed World Bank lending criteria. This loan will also subsidise “tenderpreneurs” associated with the ANC linked Chancellor House, which in turn has accrued interests in the Hitachi Corporation that is contracted to provide generation equipment for the coal power plants.

Hogan’s counter that this World Bank loan provides 7% (R1.95 bn.) for renewables simply illustrates the green-wash behind this entire policy fiasco. Her claim blithely ignores the fact that this is 8% less than the established government policy of the 15% renewable mix required in any new energy generation capacity.

This all glosses over the fact that the government has thrown away at least R15 billion on the hare-brained Pebble Bed Modular Reactor, which actually cost far more in lost opportunities as it diverted power policy attention from alternative supply options. The kickbacks from the coal and nuclear expansion will eclipse the arms scandal by degrees of magnitude, while simultaneously exacerbating our power woes.

We require an urgent national debate about what is required to extricate ourselves from our policy chaos. Our solar water heating policy is unworkable. Our waste to energy policy is rubbish. Our renewable energy policy is ignored. Our proposed spending on supercritical coal fired power stations is excessive. Our proposals to engage in ‘carbon capture and storage’ are not grounded in reality. Eskom and national governments’ interference in allowing the open market to establish renewable energy generation plants is unacceptable. The lack of transparency underlying Eskom’s price structures is disgraceful.

There no single area of our national energy policy that is not problematic. The cabinet and relevant ministries have shown themselves incapable of solving this problem.

Unless there is an urgent review of this whole sorry saga we are positioning South Africa to financially compromise its good standing, simply because we cannot adequately or competitively power our economy. We are being set up for a failure that opens our doors to the sharks and vultures of the developed world – the World Bank, the International Monetary Fund and the rest of the Washington consensus – which will put us collectively in hock for generations to come, to be paid off with our abundant resources and by the sweat of our brows.

The heat being generated by the hands gleefully rubbing together in Washington is almost palpable, as they look south…

SACSIS Attribution
This article was first published on SACSIS, the website of the South African Civil Society Information Service –
Should you wish to republish this SACSIS article, please attribute the author and cite The South African Civil Society Information Service as its source.
The article is licenced under a Creative Commons Attribution Licence: