Picture: 123RF/PETKOV
Picture: 123RF/PETKOV

As Eskom hit stage four load-shedding again this week, the prospects for economic recovery dimmed along with the lights.

With a 7% contraction in GDP forecast for 2020 it is estimated that due to the economic damage caused by the Covid-19 lockdown, it will take SA five years to recover to the GDP levels of 2019. Frequent load-shedding may put even that out of reach.

That load-shedding would return as soon as the economy restarted was the baseline expectation. Eskom CEO Andre de Ruyter has warned us to expect it to continue for at least the next 18 months as long-neglected, bigger maintenance is done.

We have a good idea of what went wrong. The government failed to instruct Eskom to build new capacity in time; it then ordered the company to “keep the lights on at all costs” and maintenance work was postponed.

When Eskom did start to build, it did so with unrealistic ambition, putting two of the largest coal-fired power stations in the world into construction at the same time. It had also lost the skills to build and project manage such an enormous undertaking. Corruption hugely inflated costs and undermined quality.

It is now up to Eskom to fix its power stations as best it can. De Ruyter has shown us plans and projections. He has conveyed a sense that he has got to grips with the nature of the Eskom problem and has developed a plan of action. It is up to the government though to fix the energy market and the wider security of supply problem. This is halfheartedly under way, strangled by red tape and lacking in all urgency.

When the department of energy presented the integrated resource plan in October 2019, officials acknowledged that SA would face a 2,000MW supply shortfall in the immediate future. They would rectify this, they said, through an emergency procurement of 2,000MW of generation capacity to fill the gap.

It is important to note though that the CSIR, which has also modelled the supply and demand but using more realistic numbers of Eskom’s plant availability, believes that the real immediate shortfall is closer to 4,500MW.

In December 2019 the country went to stage six load-shedding, precipitating a crisis which caused President Cyril Ramaphosa to urgently fly back to SA from a trip overseas. Ramaphosa could unfortunately not say that the situation was in hand: the department of energy had taken no steps to put the emergency procurement into the pipeline.

The procurement of new energy is cumbersome. It first requires a ministerial determination under the Electricity Regulation Act and then concurrence from the National Energy Regulator of SA. But it should not be as slow as this.

It was only at the end of February that minister of mineral resources & energy Gwede Mantashe issued a determination. In June, Nersa concurred. In mid-August — 10 months after it had signalled that it had an emergency on its hands — the department issued a request for proposals. It expects that the successful bids will feed power to the grid by June 2022.

It is common cause that the quickest and cheapest way to bring more generation capacity to the grid is to enable those who can to produce it themselves. Mantashe has made this difficult by requiring every project above 1MW to be licensed by Nersa.

Nersa has made it more difficult with an inordinately slow and inefficient licensing process. Industry believes that 1,200MW could be rapidly added to the grid by commercial enterprises desperate to meet their own supply gap.

It is also common cause that the technologies that can construct new capacity most rapidly and cheaply are wind and solar PV. SA’s renewable independent power producer programme has been a tremendous success. After years of political opposition the government has given expansion of renewable energy the thumbs up, but it has not opened the window to a new round of bids.

This is an appalling neglect in the face of a crisis that will continue to stunt economic growth and with it SA’s prosperity.

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