Dispelling misconceptions around the energy crisis
Media release: Dispelling misconceptions around the energy crisis - GreenCape returns to Premier’s Energy Digicon
In his 8th Energy Digicon, Premier Alan Winde urged citizens to make their views known on the bid by the Finance Minister to exempt Eskom from the Public Finance Management Act. This would see the power utility not disclosing its irregular, fruitless, and wasteful expenditure in its annual financial statements for the last financial year and the next two years. “Please comment on this issue by going to OAGqueries@treasury.gov.za to take part in the public participation process. The opportunity to comment closes on Friday, 21 April. To us as the Western Cape Government, though, this is a ludicrous and outrageous attempt to hide corruption and maladministration.”
Special Advisor to the Premier on Energy, Mr Alwie Lester then gave an update on the status of South Africa’s power system for the week ahead, focusing on what is called the Energy Availability Factor (EAF), which is currently, in the 14th week of 2023, at 51.63%. A satisfactory EAF is between 85% and 87%. This deficit in EAF is translated into citizens currently enduring higher stages of blackouts – most likely stages 5 and 6.
In his presentation, Bruce Raw, Chief Strategy Officer at GreenCape, explained some of the misconceptions around key concepts in the energy crisis. He first looked at the difference between:
- Variable; and
Mr Raw then moved on to the importance of renewable energy. He cited a study done by Meridian Economics which showed that despite loadshedding being catastrophically worse in 2022 than in 2021, 5GW of additional renewable energy would have eliminated between 71% and 92% of loadshedding, depending on the supplementary measures to relieve diesel supply constraints.
“What we need to get out of the loadshedding hole we are in now is a lot more energy to come online. New power is vital,” he said.
He then unpacked the concept of “going off the grid”, which he said can be very misleading and confusing. He explained, “Typically what is really happening here is additional generation is occurring. Some municipalities are trying to decrease the amount of power they need to purchase from Eskom, but their reliance is still very heavily on the national grid. This is a good thing. The national grid is an asset.”
On small-scale embedded generation (SSEG) Raw spoke of the licencing regulation limit on this form of power generation that has been amended. This is enabling more municipalities and households to turn to SSEG, which is happening across the Western Cape.
Speaking to the issue of municipal revenue loss through more people and businesses installing solar photovoltaic (PV) to benefit from tax incentives, he said, “Those incentives are an important mechanism to adding power. Private sector procurement of renewables is probably the shortest term new power generation that we will see coming onto the grid, so it is an important space for us to be considering.” He pointed out that:
- In the context of a failing National Utility and loadshedding, it doesn’t make sense to argue that new generation threatens revenue;
- Municipal Revenue has already been lost:
- The model of reselling Eskom power relies on there being power to sell
- Additional capacity is ultimately replacing levels of loadshedding, not existing sales
- Even at a feed-in price of 1-1, on a macro level, total municipal revenue is better off.
To watch a recording of this week’s digicon please visit:
Due to next week Thursday being a public holiday the digicons will resume on Thursday, 4 May 2023.