From the Inside: We have a game changer for the power supply problem – we must now implement it

When a crisis like sustained load shedding hits a country, citizens want straight answers.

They’re not interested in hearing about the different responsibilities of various spheres of government, or our complex inter-governmental relations system.

They only want to know what caused the mess, how long it will last, and when it will be sorted out, so that they can minimise the disruption to their lives and jobs.

After years of trying to get accurate answers to these questions, in order to take whatever (limited) pre-emptive and remedial action we can within our provincial powers, I have abandoned hope of getting the reliable information we need to execute our responsibilities properly.

But we have prepared a provincial plan, nevertheless, that we believe is path-breaking and that the national government will eventually adopt, because it is the only way we can salvage South Africa’s electricity supply system.

For the record, the constitutional division of government responsibilities in relation to electricity is as follows:

The national government is responsible for bulk supply (generation) through a state-owned entity, Eskom, which currently generates about 90% of South Africa’s electricity.

The national government is also responsible for transmitting electricity across the country, to the major distribution centres.

Local government is responsible for a significant amount of electricity distribution to individual households and businesses, through municipalities.

Provinces are notably absent from this delivery chain. However, we have overall responsibility for key institutions such as schools, hospitals, clinics and libraries, as well as major infrastructure, such as roads. None of these can function without reliable energy supply.

Even basic communication networks, such as email and telephone systems, collapsed this week due to load shedding.

This is particularly challenging, given our provincial responsibility for managing and coordinating provincial disasters, which requires stable communication networks.

Not even Minister Pravin Gordhan’s briefing this week brought us any closer to the kind of clarity we need to make strategic decisions about how to prepare for such eventualities.

Quite the opposite. For the first time, the real prospect arose of South Africa also running out of diesel. That, in combination with Stage 4 or higher load shedding, would be truly catastrophic.

How did it come to this?

In order to keep some of the lights on some of the time, bankrupt Eskom was compelled, during the past week, to spend R6,3-million per hour to keep the Western Cape’s turbine generators running, according to reports I received from the Disaster Management directorate.

Apart from the cost, this also involved syphoning off all available diesel stocks.

And once the stockpiles are depleted, there is no solution. Suppliers tell us that if they were to produce only diesel 24/7 (halting the production of all other petroleum products), they would not even be able to meet Eskom’s diesel requirements at the current rate, let along service the rest of the economy.

Without a steady and reliable supply of diesel, the many generators we have installed – in crucial institutions such as hospitals – will fail.

What’s more, our entire disaster management vehicle fleet also runs on diesel. If another type of emergency, such as a fire or flood, were to occur, we would be paralysed without diesel.

These are the issues that kept me focused this week, as we grasped at any available straw of reliable information to plan for various scenarios.

In the current situation, we are literally groping in the dark. Eskom has told us that if a total blackout were to occur, it would happen suddenly, without warning. Load shedding, they said, should be a source of comfort, because it is the most reliable signal that Eskom is still in control of the grid. But for how long?

This is why the province’s disaster management team has spent a lot of time studying international best practice in the management of blackouts – and is as well prepared as it is possible to be in the circumstances.

The lack of information we are receiving should, however, not be confused with a lack of communication.

Eskom briefs us regularly, with disarming frankness. We are told of the coal shortages, the poor quality coal, the wet coal; we are told about the work stoppages, even the occasional act of suspected sabotage; we know about the design and construction flaws of the “new build”, Medupi and Kusile, which have resulted in significant under-performance; we know these projects ran hundreds of billions over budget, pushing the country’s economy to the edge of the precipice; we have heard how the maintenance schedule of the entire country’s generation capacity was abandoned to follow instructions to keep the lights on no matter what. This involved “running the plant to failure”.

When Cyclone Idai devastated parts of Mozambique, Zimbabwe and Malawi last week, cutting the power supply from Cahora Bassa, the moment of failure arrived. The cyclone was an Act of God. But the fact that seven of Eskom’s generating units were also “out of commission” because of boiler tube leaks was the result of the actions (and inactions) of human beings.

It meant that our country’s installed generation capacity of 48,000 megawatts could only supply 28,000 megawatts. That discrepancy dumped us into a week of Stage 4 load shedding.

I was stunned to learn (again retrospectively) that the undetected boiler-tube leaks arose because a crucial Eskom contract (for early leak-detection) expired 18 months ago. And that the money budgeted to renew this contract had allegedly mysteriously disappeared, in shady tenders.

A “crack team” from the Hawks is apparently investigating the matter (is there anything a “crack” Hawks team isn’t investigating?). But nothing ever seems to come from these investigations except more confusion.

I have always understood the devastating consequences of corruption for the economy. What I now appreciate is how corruption destroys reliable information flows. Corruption involves hiding data and destroying records – and thrives on circulating false information. That is partly why it took such a long time to identify the failure to renew the leak-detection contract, which made pre-emptive steps impossible.

The chaos has also made provincial planning extremely difficult.

The core challenge is that our starting point is fundamentally different from that of the national government.

The national department believes Eskom can, and must, be saved.

We have come to the conclusion that Eskom is unsalvageable.

It is trapped in what is known as the Utility Death Spiral from which there is no escape. As its debt grows and its generation capacity falls, it needs to increase revenue by raising electricity prices. This encourages people to move off the grid and to install electricity generation infrastructure in private homes and businesses. This causes Eskom’s revenue to fall further, which requires additional price increases, which, in turn, encourage more people to move off the grid. And so on, in a race to the bottom.

The real victims of this death spiral are the poor who depend exclusively on Eskom-generated energy because they cannot afford to go off the grid.

Until we all understand the extent and impact of Eskom’s “death spiral” it will be very difficult to pursue a coordinated solution for the country as a whole.

But not impossible. Indeed, since 2014, when the country hit Stage 3 load shedding, the Province has been driving an Energy Security game changer, to reduce our reliance on Eskom-generated power. To do this we have successfully driven the installation of solar Photovoltaic Systems, and are on track to meet the target of 135 megawatts in daily generation. Together with other sources, this programme has been so successful that, if we were to “island” the province, we could be energy self-sufficient.

However, given the fact that Eskom controls the national grid, all the provincially-generated energy is fed into the common distribution network and used for the country as a whole.

Let me be clear: this is as it should be. We believe a national distribution grid is essential for the country. Where we differ from Eskom and the national government is in our belief that many more independent “green” power producers should be encouraged and allowed to feed into the grid; and that local authorities should be able to purchase their electricity supplies directly from these sources.

The government rejects our approach because it is trying to prop up Eskom, by protecting its virtual monopoly. This will have the opposite effect. Instead of purchasing more Eskom-generated power, people will have additional incentives to move off the grid entirely.

Our Energy Security game changer has recognised these trends, and has encouraged consumers to install solar PV while remaining on the grid. In this way, they can sell back any excess energy they generate to the local authority, or to Eskom, and benefit everyone, even those who cannot afford the capital cost of installing their own energy generation infrastructure.

Eskom, however, regards this as a threat, and is strictly controlling the right of independent power producers to make up the shortfall and save the country from the crisis Eskom has created. If Eskom continues down this myopic path, those who can afford to will simply abandon the grid entirely, leaving only the poor to purchase Eskom energy at inflated prices, even as the utility enters the final stages of its death spiral.

The City of Cape Town has taken the matter to court, demanding the right to purchase energy directly from Independent Power Producers. This week I wrote to President Cyril Ramaphosa urging him to drop his government’s opposition to this move and support our plans, which are essential to overcome the current crisis. I also raised the matter with him during a brief helicopter trip we took together. I look forward to his response.

Although we require national government support, we have not hung around waiting for it. We have already enabled 22 Western Cape local authorities to adopt a legal framework for Small-Scale Embedded Generation. We have also developed a “wheeling” framework together with the City of Cape Town, enabling private electricity generators to sell electricity to others, using the national distribution grid.

And in a truly path-breaking move, we are planning to establish the new PACE model – an acronym for “Property Assessed Clean Energy”, with major international funders waiting in the wings to support it.

The PACE model enables an institution, using international green funding, to lend money to homeowners to install solar panels on private property. The debt attaches to the property, not the owner, and is paid back through the rates account over 20 years. The savings are enormous, while restoring crucial energy security in the system.

The foundation is there. Now we just need the go-ahead from national government through the Integrated Resource Plan 2018, that has still not been released.

The most crucial enabling aspect of this plan is to define small-scale embedded generation as distributed generation up to 10 megawatts (a ten-fold increase from the current 1 megawatt), and to relax the requirement that all systems up to 10 megawatts must be licensed through NERSA. That will allow our game changer to spring to life and help resolve the current crisis since there are many companies that have the capacity to install such systems within the next two years.

The critics who tell us that renewables cannot provide a reliable base-load (because the sun does not always shine, nor the wind always blow). Our answer is Liquified Natural Gas (LNG), that we are ready to land at Saldanha Bay, which would put our Special Economic Zone on steroids while saving the country billions as a substitute for diesel fuel to power the turbine generators.

Infuriatingly, former Energy Minister, Tina Joemat-Pettersson excluded the Western Cape from the first round of licence allocations to import LNG, which went exclusively to Couga in the Eastern Cape and Richard’s Bay in KwaZulu Natal. The not-so-hidden agenda was clear. No province is as prepared for the new system as we are, but as often happens, the national department (ab)used its powers to apply the brakes.

This is ironic, given that our energy plan is entirely aligned with the National Development Plan to which the national government professes allegiance.

Now is the time for Cyril Ramaphosa to demonstrate his leadership, take on the dinosaurs that are preventing progress, and move boldly to meet the requirements of the Fourth Industrial Revolution.

There is really no time to waste if we want to prevent a total meltdown. As usual, the Western Cape is willing, able and ready to act as a guinea pig for a new electricity generation, transmission and distribution system.

If President Ramaphosa is really serious about a new dawn, he will enable us to make it happen, and help him to keep the lights on, countrywide. DM