The power situation in South Africa is now a fully-fledged socio-economic crisis. We need urgent, strong and clear leadership that shows Government has a plan to end load-shedding and achieve energy security.
In Cape Town, we have begun to procure additional capacity from Independent Power Producers (IPPs) to alleviate the burden on Eskom and end load-shedding here over time. This will, in turn, improve the situation nationally. But we need the National Government to help us bring more capacity online, quicker.
I urge President Ramaphosa to immediately announce a series of decisive steps to bring this emergency to an end as soon as possible:
- Abolish the 100MW licensing threshold for embedded generation and ensure a registration period for IPPs not exceeding 14 days. Not only is this threshold arbitrary, but it makes little financial sense. Due to economies of scale, the optimal size for new energy projects is far larger than this, and larger projects offer cheaper electricity per unit.
- Implement an income tax write-off for capital investment into small-scale generation and battery-storage projects. This could also be used to subsidise and incentivise home installations of solar PV and battery storage, making home generation affordable to more South Africans.
- Exempt financially-healthy municipalities from all unnecessary legislation and regulations (including those governing municipal procurement) that will delay bringing new generation capacity online. A minimum-compliance approach must be allowed in respect of tenders for IPP procurement and the construction of municipal own-generation projects.
- Declare in clear and unequivocal terms that municipalities do not require approval from Minister Mantashe for electricity procurement. Uncertainty in this regard is having a chilling effect on municipalities’ ability to procure new generation and introducing delays; there is no good reason for this to continue.
- Offer National Treasury guarantees in respect of any borrowing — by municipalities and private entities — necessary for IPP generation projects and municipal own-generation projects.
- Waive the Department of Trade and Industry’s local content requirements on solar PV modules until energy security is achieved.
- Exempt electricity traders from onerous National Energy Regulator of South Africa (Nersa) licensing requirements, substituting a registration process in which traders are required to demonstrate compliance with a basic list of requirements only designed to protect public distribution networks.
- Remove the substantial red tape on the establishment of natural gas imports and transport in the Western Cape, unlocking the use of natural gas-powered turbines. These are cleaner and cheaper than the diesel and jet fuel turbines currently in use.
- Convert Eskom’s Ankerlig plant in Atlantis, Cape Town to natural gas and run the plant on a mid-merit basis, with dynamic output adjusted according to fluctuations in demand.
- Immediately establish a Power Crisis Unit in National Treasury, with representation from municipalities and technical experts as well as the Finance Minister, with the mandate of expediting all interventions that could end the power crisis. The Unit must not just be another Government “task team”, and must in fact have power to make regulatory decisions. This includes decisions needed for interventions described above, as well as demand-side management, battery storage, new natural gas projects, and increasing Eskom’s operational efficiency.
Though we are only midway through July, the year 2022 is already the worst year of load-shedding on record. The last two weeks’ Stage 6 load-shedding — in which South Africans had to endure up to 12 hours a day without power — cost the national economy R4,2 billion per day.
Unless President Ramaphosa immediately implements bold steps to increase electricity generation capacity, we stand to lose even more than the 125 000 jobs that load-shedding destroyed in 2019 alone.
My message to President Ramaphosa is that this problem is solvable, if we all work together. But it requires clear and decisive leadership, and a willingness to do things differently.
I am hopeful that we can end load-shedding for the benefit of all in South Africa. Now is not the time to meekly accept our fate; it is the time to think big, to be decisive and to make a real difference.