Page 29 - Energize January 2021

VIEWS AND OPINION

the problem becomes. Whatever the decision, there will be pain for But the Municipal Finance Management Act makes this difficult.
electricity customers or taxpayers. It seems that government All the independent power producers which supply the national
cannot bring itself to inflict this inevitable pain. grid have so far received generous government guaranteed
Continuing to make taxpayers pay isn’t good for the economy. 20-year tariff and off-take agreements. This means it’s been
But the National Energy Regulator of South Africa, which regulates profitable and low risk for independent power producers to invest
Eskom’s tariffs, says Eskom’s costs are neither prudent nor in producing power. But after the economic impact of Covid-19,
efficient. That leaves the ball in the taxpayer’s court. will the government be able to continue taking on such liabilities?
The regulator will have to change its stance or throw the whole Anecdotal evidence suggests that the banks won’t lend to
country into default. Electricity customers should brace independent power producers without government guarantees,
themselves for further steep increases. especially when Eskom has undermined them in the past.
Meanwhile, intermittent load-shedding continues. And several
commentators have predicted shortages of generation capacity Going forward
from 2021 to 2023. Eskom forecasts a 4000 MW shortfall in 2021, Eskom is broke and can’t invest in any further capacity.
assuming its fleet is operating at an optimistic 70% energy Independent power producers will have to do it. But if there are no
availability factor by 2021. 20-year government guarantees they will need an independent
transmission and market operator that they can trust.
What the government is banking on Unfortunately, the Eskom roadmap doesn’t offer that. It only offers
Renewable energy projects, which were delayed, should an Eskom-owned version which still needs various government
commence soon and supply 2200 MW to the electricity authorisations but is scheduled for March 2022.
network. Independent power producers have been invited to Will independent power producers have sufficient faith in
deliver 2000 MW by June 2022 – a tall order. Bidding to supply Eskom’s transmission subsidiary to invest billions? If not, the
11 813 MW by building new power stations is about to open. country may be without lights some of the time for years to come,
Large firms are permitted to generate power for their own use unless more thorough market reforms occur. n
and small businesses can get tax breaks for installing generators
under 1 MW. This may be the quickest option, especially if they Acknowledgement
were able to sell surplus power back into the grid. The licensing This article was first published by The Conversation and is
requirement has also been removed for these small generators. reprinted here under Creative Commons licence.
The few municipalities in good financial standing are now
authorised to buy power from independent power producers. Send your comments to rogerl@nowmedia.co.za