Page 3 - Energize September 2021 HR

FROM THE EDITOR:

Government’s conundrum

regarding Eskom

by Roger Lilley, Now Media

he South African government is faced with a before the damage inflicted by the Covid-19 pandemic – and
conundrum regarding Eskom. It must transition has caused an increase in unemployment.
Tfrom a carbon-based power generation system to This led to the government’s Renewable Energy
renewable energy or at least to a clean-burning carbon- Independent Power Producers Procurement Programme in
based technology, such as natural gas, to comply with the 2011, which was essentially an invitation to the private sector
requirements of the Paris Agreement. It must also urgently to generate additional electricity for the country.
reindustrialise the country to create jobs. Electricity is the key But electricity generation is not the only source of
to industrialisation. And although Eskom has received big carbon emissions. Road transport (cars and trucks) in
bailouts before, the utility is still drowning in debt. Government South Africa contributed approximately 13% of total CO 2
must either allow Eskom to continue to struggle to “keep the emissions in 2020.
lights on” or come to the rescue. However, just as the transition from coal-fired to
South Africa’s electricity sector is in a state of flux. renewable energy sourced electricity cannot happen
Most of the state-owned generation infrastructure, which overnight, so too a rapid transition from petrol- and diesel-
is both ageing and largely polluting, must transition to new, powered vehicles to electric vehicles – as many other
cleaner technologies in order to comply with Government’s countries are doing – is impossible for South Africa, primarily
commitment to the Paris Agreement. because it lacks the necessary charging infrastructure and the
South Africa, as a signatory to the Paris Agreement, is availability of electricity.
legally bound by this international treaty on climate change It seems then, that the solution must be for the
to reduce its CO 2 emissions. The country is one of 196 government to take over Eskom’s R402-billion debt, thereby
Parties which adopted the Agreement at COP 21 in Paris, on providing the power utility with the capacity to upgrade
12 December 2015. and install the necessary pollution-mitigating equipment to
It has been reported that Eskom’s power stations its existing coal-fired power plants from its balance sheet,
contribute about 60% of the country’s carbon emissions. without robbing the country of electricity. It might also result
But to transition to new clean technologies is no easy matter. in finally reaching the goal of universal access to electricity in
Eskom cannot simply close its coal-fired power stations and South Africa.
build new ones in their place. Neither can the power utility However, while this might seem logical, there are other
retrofit the necessary pollution-mitigating equipment to its challenges. Could Eskom’s transmission and distribution
existing power stations due to the high cost of this equipment. networks cope with more power being injected at new points?
The power utility’s current chief executive, Andre de We have already heard Eskom’s Transmission division’s
Ruyter, is in a bind. Not only is his fleet of power stations – insistence that it can accept no more power injection in the
with the exception of two new power stations – old and dirty, Northern Cape province.
but he is prevented from addressing the problem by being But perhaps, if the power utility’s load of debt were to be
weighed down with an enormous debt burden. removed from its shoulders, there would be money available
The question which is frequently asked is whether the for the strengthening of the transmission system so that more
state, as Eskom’s sole shareholder, should absorb the debt power from the private sector could indeed be injected into it.
– or at least a very large portion of it – and enable Eskom to However, if government took over Eskom’s debt, other
focus on upgrading, replacing, or retro-fitting the equipment services would suffer. The reality is that there’s only so much
which would reduce the carbon-emission problem from its money to go round.
own revenue. This would also provide the necessary funds to One way or another, the government must decide what to
improve the utility’s dangerously low energy availability factor. do. Eskom keeps saying that it cannot survive on its current
While this is going on, the private sector could get revenue because it spends too much servicing its debt. But if
involved in the generation of more electricity now that the government takes on Eskom’s debt, which other areas would
licence-free threshold has been increased to 100 MW. This suffer? Or would it increase tax or VAT to pay for it? One way
too, would have an impact on Eskom, since it will suffer from or another it seems likely that South Africans can expect to
losing sales to its “competitors”. pay more for the electricity they consume.
It has been shown that the current shortage of electricity
has had a negative impact of the country’s economy – long Send your comments to rogerl@nowmedia.co.za

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