South Africa’s energy sector – a quagmire if ever there was one. Massive power cuts, utilities challenged by sabotage and theft and unable to provide power. High levels of load-disposal mean long hours without power throughout the day. In some cases between nine and 12 hours without power.
The latest disaster has seen CEO Andre de Ruyter removed from his job with immediate effect, following a shocking interview. In it, he accused the ministers of simply stealing the energy transition fund and downgrading the tool. Let’s be real, this doesn’t take a small fortune. He said there was a lot of money stolen, much needed money.
And then we have a leader, our president Cyril Ramaphosa, saying that load shedding is not his fault. My colleague Emsie Ferreira reported him as saying, “It is now accepted that municipalities have laws to provide water and electricity to the public as a public duty.”
“This task does not belong to the president or the national department…” Here he lied, passed the money. Okay, but we know Eskom’s problems are everywhere, we know the utility and the country are in a very dark place, literally and figuratively.
So how can we fix it? Now, the natural question you should ask is what journalists with no experience in power generation, electrical engineering or related fields know about repairing the country’s electricity?
The answer is nothing, I don’t know how to fix the problem. But what I can do is tell stories, I can tell about other countries and what they do in the face of power outages and shortages. Maybe, just maybe, in these stories there is a solution for South Africa.
Vietnam
Let’s start with Vietnam. The country, since 2000, has experienced a huge demand for energy. So how do we deal with it? The Harvard paper explains how “Vietnam has increased the supply of electricity to the economy eightfold since 2000 and increased the supply to almost all villages. EVN, the state monopoly utility, has reduced blackouts and improved the quality of electricity since 2010.
The country is making changes in its legal and regulatory framework. This basically opens up the electricity market to competition but without affecting utility supply.
There is an increase in solar projects and renewable energy projects reaching about 5 500MW at the end of 2019. There are generous feed-in tariffs that play a significant role in incentivizing power producers. There are also income taxes and rent payments that play a role. The use of off-grid systems, such as small hydropower, makes a big difference in electrifying rural communities.
Importantly, Reuters reports, the private sector plays a large role in the country’s electricity stability. “The role of the private sector, especially foreign investment, is increasing in Vietnam’s electricity market. Most foreign investment is in the form of build-operate-transfer projects, where foreign investors build a power plant project, operate it for a certain period of time to make a profit, and then transfer it to the Vietnamese government .
One of the most important steps taken by the country is to ensure that there is a power distribution and transmission infrastructure that can accommodate small-scale energy from hydropower.
China
Around 2003, China faced an energy crisis where there were regular blackouts and it struggled to maintain power. They are not alone, countries such as Greece and Colombia are also experiencing blackouts and energy shortages.
China, like many other countries, is working on ways to eliminate electricity supply chains. What it does is separate the generation and transmission networks. The generation was not thrown out and thrown out of the monopoly.
One immediate step is for the government to allow local governments to make quick decisions about generation, without the lengthy process of obtaining government approval. At the same time, the central government started the process of unbundling, including the restructuring of the market base.
Roy Havemann explained that “generation is not separated from the rest of the state monopoly in China. Between 2003 and 2006, new generation companies added more than 237 500MW to the Chinese grid. That is equivalent to delivering almost 10 Eskom in three years.
Not everything is untangled, some parts are kept under state control and there is a mix of private and state-owned companies. This diversification allows to stabilize the energy crisis.
Separation of different entities could help reduce power outages in South Africa.
Unbundling
There are plans to separate Eskom into generation, transmission and distribution.
The 2019 Roadmap for Eskom says: “Restructuring or ‘unbundling’ into separate subsidiaries of Eskom Holdings will allow management to focus, improve efficiency, create greater transparency on performance, provide greater protection against corruption and rent-seeking, and will provide greater visibility to capital providers from the component parts of the sector, resulting in more investment comfort.
“This new business model for Eskom must provide reliable, affordable, economically competitive and environmentally sustainable electricity that will lead to inclusive economic growth in the context of the Fourth Industrial and Green Revolution.”
The plan was behind schedule, especially the separation part. They need political will. Perhaps a new acting CEO can lead the unbundling of Eskom. The Treasury and the presidency have listed it as a priority and we will have to wait and see if and when it happens, it will be effective in reducing the burden.
There is also the problem of Eskom’s debt. Eliminating it will free up funds that can be used elsewhere. Utilities need stability, and De Ruyter and the corruption saga can be put to bed, the better. Then the focus can be to stop load-shedding.