EDITORIAL: SA’s muddied energy policy in need of transparency
Minister of Energy Jeff Radebe's approach is a beacon of hope for a rational and transparent process essential to get us back to evidence-based policy making
If there is one area of policy and planning that has been thoroughly fouled up by political interference and political agendas, it’s energy.
SA, business in particular, has been kept in the dark for more than five years over the country’s energy future as a succession of ministers tried to bend and force and twist the Integrated Resource Plan (IRP) into impossible shapes.
The aim of the plan is to map out the country’s projected energy needs over 20 years and to model the most cost-effective and secure energy mix. The information in the IRP gives both consumers and investors who want to make energy-reliant investments some perspective on supply. It also provides the government and Eskom (and now private producers too) with information on when to build what.
On the face of it, this is a largely technical exercise. Political decisions, such as the need for energy security, do come into the plan, but it is for the most part an exercise in modelling economic growth, energy demand, price expectations and environmental goals, such as the commitment to reduce carbon emissions.
Because corruption was so strongly suspected, the debate between nuclear energy and renewable energy was irrational and shrill. There is now a real prospect of getting back to the real planning issues
The last plan was published in 2010 along with the intention that it would be updated every two years. Since then there has been a global revolution in renewable energy with the most advanced economies having shifted dramatically towards wind and solar-powered energy. Also since then, SA has adopted ambitious carbon targets, which must be factored into the model.
So it is great news that Minister of Energy Jeff Radebe has said that when he publishes a new IRP he will also make the technical work available for interrogation by all stakeholders. A rational and transparent process is now essential to get us back to evidence-based policy making.
It has been common cause for some time that the reason for all the manipulation was former president Jacob Zuma’s nuclear ambitions, which coincided with his close relationship with Russian President Vladimir Putin. Officials were constantly being told to force nuclear power into the model even though it did not fit into the lowest-cost scenario. Nor was it justifiable in terms of projected demand.
Because corruption was so strongly suspected, the debate between nuclear energy and renewable energy was irrational and shrill. There is now a real prospect of getting back to the real planning issues.
The IRP is also of critical importance to Eskom. What it implies about a future energy market and the role that private producers and competition will play will have a large bearing on how Eskom is reshaped. The future of coal and the assumptions made about the remaining life of Eskom’s coal-fired power stations are also important.
Eskom in its current form is unsustainable. Its new leadership, appointed four months ago, identified that problem immediately, stating that both the amount of debt and its inability to charge cost-recoverable tariffs placed the company’s future in question. Add to this the technological revolution in renewable energy — of which Eskom has almost none — which has brought down prices and made migration from the grid possible, and put Eskom in a deeply precarious situation.
The last leadership corps at Eskom — to the extent that they cared about the company at all — clearly believed that the way to save Eskom was to sabotage competition by blocking independent power producers and enforcing its monopoly. The government has not given any clues on how it sees the future of Eskom. There are big questions to answer over private participation in its power stations or completely overhauling its structure and splitting it up in a manner that will open the way to real competition.
These are decisions that will attract a great deal of lobbying by political interests. That the debate over Eskom’s future is as open and transparent as Radebe says the IRP process will now be, is of prime importance.