EDITORIAL: Cape Town shows the way on energy. Others should follow
City’s successful negotiation of a feed-in tariff for businesses and residents should be replicated nationally, and fast
The City of Cape Town is leading the way with innovative fixes to our energy crisis.
The city’s mayor, Geordin Hill-Lewis, announced on Tuesday that it would soon to pay businesses and residents a feed-in tariff for supplying excess electricity to the local grid.
This is a significant step by the city and the National Treasury, which has had the foresight to exempt it from debilitating bureaucratic hoops that made such payments impossible.
The nature of the energy revolution means that generation technology that was inconceivable when we created our public finance institutional and legal framework more than two decades ago is available now.
As an unintended consequence of strict public finance law, municipalities were hitherto not legally able to buy excess, privately generated electricity. Cape Town shows what is possible when you have committed visionary leadership and a clear goal.
SA needs viable and quick solutions to the energy crisis. These start and end with leadership and planning. Only last week, President Cyril Ramaphosa cancelled a trip to the World Economic Forum’s Davos gathering as snowballing energy losses left businesses reeling and households in the dark.
More than a week later, there is no sign of any attempt to embed a “business unusual” approach in how our national government responds to the crisis. Instead, more committee meetings are being held to discuss the outcomes of previous committee meetings, as demonstrated by the painfully dull announcement of the national energy crisis committee on Saturday. After a week of meetings, the committee told us what we already knew.
The president has suggested that he strike down by decree the legally binding determinations of the regulator, and contradicted the chair of Eskom, who was himself contradicted by his own CEO on technical issues. He may as well have gone to Davos, for all he has achieved.
Instead of endless talk, we need to pluck the low-hanging fruit, in addition to rolling up our sleeves and tackling the deep and daunting task of fixing Eskom.
A few things could be done. The private sector can be encouraged to contribute to the grid quickly. The same can be done for private households. The energy crisis calls on us to imagine things differently. For example, we are seeing banks and some energy companies provide loans for wide-scale solar adoption by residents and businesses. That would reduce the pressure on Eskom’s generation machinery and allow more fleet to undergo maintenance.
Another easy solution is to make solar equipment tax deductible. Knowing they would get a rebate for the equipment, businesses and private residents would snap up the opportunity to acquire instruments that help them contribute to the grid and secure their own energy security. These measures would cost the fiscus far less than the cost of buying diesel to prop up Eskom’s dying fleet, and the benefit far outweighs the economic losses associated with missed economic activity.
What derails SA is endless talk and little action. We tend to fixate on big-ticket items and topics that are hard to implement, especially in our noisy public policy and discourse environment, despite our poor state capacity. The energy crisis needs a blend of vigour and pragmatism. The Fifa 2010 World Cup is an example of how national projects can work, despite some associated corruption and controversies. The event required that, for a short period, we dispensed with the usual planning and procurement processes to create a faster implementation environment. We saw a wave of public and institutional commitment to achieving a dream.
The fragmentation of the government is a brake on change. Cape Town is taking the opportunity to demonstrate what is possible. More municipalities need to consider following suit. Organised business formations can do more and come to the party in a big way by forcefully campaigning for the government to remove the institutional and legal shackles that hobble simple and meaningful innovation.
Ramaphosa should use the next couple of weeks to fire up his new-look cabinet and his colleagues in the ruling party to encourage innovation. His state of the nation address is an excellent opportunity to table concrete and urgent plans that will see more entities and residents playing a role, however small. The past week, despite the president’s apparent focus on the topic, has been shambolic. We need a different approach.
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