Energy stumbling block
South Africa has a solid plan that places renewable energy into the country’s energy mix. But Terence Pillay says Eskom is throwing a spanner into the works.
Listen to today's topic below, or read it underneath the podcast.
South Africa has had terrible energy issues. We haven’t had enough electricity, and so we are about to sign an agreement for a nuclear power deal. And yes, we do need nuclear in the mix. So if you think of energy as a mix, you’ve got coal, gas, nuclear, and then renewables, which is wind, solar and hydro. And here in eThekwini we have energy from waste, which is the Marrianhill dump that converts waste into methane gas. And there’s a new plant that produces energy from refuse that’s just been opened in Cape Town.
So the idea is that you want an energy mix that’s going to be sustainable not only from a cost point of view but also from a planet point of view. We want to make sure that we don’t just dig coal out the ground and burn it, because we are faced with global warming and all the issues surrounding that.
The country has set down an energy plan that says, “This is the ideal mix that we need,” and part of that process was to give companies contracts to build renewable energy in the form of solar and wind. And so we’ve had about three or four of these processes that have gone thorough and contracts have been awarded.
Now the latest round of contracts is being stalled because Eskom refuses to sign the agreement to say that once the electricity has been generated they will purchase it and put it into the grid. They’re saying that the rates quoted - around ninety cents per kilowatt hour – were based on a projected growth rate of about five percent. At the moment we’re only sitting at around two percent; so they’re saying it’s unaffordable for the country to purchase renewable energy at those rates. Eskom says they will only sign the agreement if the renewable power producers drop the price to about sixty cents per kilowatt hour or less.
The companies in turn are saying that it’s not financially feasible to do that. But Eskom says that their power demands are much lower and they’ve improved the maintenance of their plants; they’ve brought on Medupe and Kusile and all those places so they don’t need as much and question what they are going to do with the excess. This means that they have to, in order to make it viable for the renewable power producers, purchase from them first. They actually need to reduce their own production in order to make it viable. And they say it’s just too expensive.
It’s obviously quite a complex issue and there are conflicting reports. The Renewable Energy Association of South Africa is saying that they have done the analysis and that Eskom are presenting fake information in order to justify their decision. And this make one start to wonder about the political influence behind the scene of Eskom refusing to sign this agreement and then going ahead with a R1-trillion nuclear power deal when they don’t need to do that.
If you look at the international context, Ireland for example is pushing for an agreement that says they will not use any state money, meaning no public money will be used to purchase non-renewable energy. They believe public funds should be used to generate renewable energy. If the state is going to spend money on producing electricity, it should be in the form of renewables.
Cape Town has just opened a new plant which is converting waste from the landfill to electricity but Eskom won’t buy the electricity. Cape Town is now taking them to court saying that the city of Cape Town would like to purchase directly from independent power producers and not from Eskom.
At the end of the day, Eskom is a parastatal and we need to ask, “In whose interest are they operating?” Should they be operating in the interests of its bottom line as a profit making organisation or should they be saying “sometimes we make decisions based on the good of the country and future generations!” As a country we’ve bailed them out so many times. Is it really necessary to be making these decisions as a purely economic one? Surely it should be about what kind of future we want for our country.
The Department of Public Enterprises ultimately needs to sign off on this agreement with the Department of Energy. Eskom is says that if they were to go ahead with these agreements, electricity would cost more. So that’s part of the difficulty – we’re going into a new cycle of elections, for example the national elections in 2019 – and the question we need to ask is: can we really afford to put the voters into a position where they have to pay more for things. The government says that ultimately the man on the street will pay more if we go ahead with a massive renewables programme.
So how do we get the public behind this? For one, we don’t want to pay more for electricity, and we also don’t want pollution in our country. The fact is: for ordinary people, there might be bigger issues; just trying to get clean water and a decent education for their children, for one – they don’t really care where electricity comes from. It should just come and it should be cheap.
But we all should care, because somewhere in this country, there are people living under the shadow of a coal-fired power station getting lung cancer. And ultimately, once you’ve taken all the coal out the ground there will be nothing left. And once you’ve dumped your nuclear waste into the ocean somewhere what then? When children are born with three arms and other deformities, it will be too late to say, “We should have gone with renewable energy!”
So the idea is that you want an energy mix that’s going to be sustainable not only from a cost point of view but also from a planet point of view. We want to make sure that we don’t just dig coal out the ground and burn it, because we are faced with global warming and all the issues surrounding that.
The country has set down an energy plan that says, “This is the ideal mix that we need,” and part of that process was to give companies contracts to build renewable energy in the form of solar and wind. And so we’ve had about three or four of these processes that have gone thorough and contracts have been awarded.
Now the latest round of contracts is being stalled because Eskom refuses to sign the agreement to say that once the electricity has been generated they will purchase it and put it into the grid. They’re saying that the rates quoted - around ninety cents per kilowatt hour – were based on a projected growth rate of about five percent. At the moment we’re only sitting at around two percent; so they’re saying it’s unaffordable for the country to purchase renewable energy at those rates. Eskom says they will only sign the agreement if the renewable power producers drop the price to about sixty cents per kilowatt hour or less.
The companies in turn are saying that it’s not financially feasible to do that. But Eskom says that their power demands are much lower and they’ve improved the maintenance of their plants; they’ve brought on Medupe and Kusile and all those places so they don’t need as much and question what they are going to do with the excess. This means that they have to, in order to make it viable for the renewable power producers, purchase from them first. They actually need to reduce their own production in order to make it viable. And they say it’s just too expensive.
It’s obviously quite a complex issue and there are conflicting reports. The Renewable Energy Association of South Africa is saying that they have done the analysis and that Eskom are presenting fake information in order to justify their decision. And this make one start to wonder about the political influence behind the scene of Eskom refusing to sign this agreement and then going ahead with a R1-trillion nuclear power deal when they don’t need to do that.
If you look at the international context, Ireland for example is pushing for an agreement that says they will not use any state money, meaning no public money will be used to purchase non-renewable energy. They believe public funds should be used to generate renewable energy. If the state is going to spend money on producing electricity, it should be in the form of renewables.
Cape Town has just opened a new plant which is converting waste from the landfill to electricity but Eskom won’t buy the electricity. Cape Town is now taking them to court saying that the city of Cape Town would like to purchase directly from independent power producers and not from Eskom.
At the end of the day, Eskom is a parastatal and we need to ask, “In whose interest are they operating?” Should they be operating in the interests of its bottom line as a profit making organisation or should they be saying “sometimes we make decisions based on the good of the country and future generations!” As a country we’ve bailed them out so many times. Is it really necessary to be making these decisions as a purely economic one? Surely it should be about what kind of future we want for our country.
The Department of Public Enterprises ultimately needs to sign off on this agreement with the Department of Energy. Eskom is says that if they were to go ahead with these agreements, electricity would cost more. So that’s part of the difficulty – we’re going into a new cycle of elections, for example the national elections in 2019 – and the question we need to ask is: can we really afford to put the voters into a position where they have to pay more for things. The government says that ultimately the man on the street will pay more if we go ahead with a massive renewables programme.
So how do we get the public behind this? For one, we don’t want to pay more for electricity, and we also don’t want pollution in our country. The fact is: for ordinary people, there might be bigger issues; just trying to get clean water and a decent education for their children, for one – they don’t really care where electricity comes from. It should just come and it should be cheap.
But we all should care, because somewhere in this country, there are people living under the shadow of a coal-fired power station getting lung cancer. And ultimately, once you’ve taken all the coal out the ground there will be nothing left. And once you’ve dumped your nuclear waste into the ocean somewhere what then? When children are born with three arms and other deformities, it will be too late to say, “We should have gone with renewable energy!”
At the end the day, behind the scenes, there are a bunch of politicians and business people who are making decisions that will ultimately affect your life. You should make sure that you are aware and that you have a say in these decisions.
Do you believe renewable energy is the way forward? You can email Terence Pillay at [email protected] or follow him on Twitter: @terencepillay1 and tweet him your thoughts.