It is not lost on anyone in the energy space that as South Africa entered its umpteenth hour of blackouts, minister of environmental affairs, Barbara Creecy, talked the talk on South Africa’s commitment to fighting the climate crisis.
The South African economy groaned under the pressure of Stage 4, then Stage 6 and again Stage 4 load shedding on Monday, this week.
Then, on Tuesday, Creecy told the world at the COP25 talks in Madrid, Spain, that South Africa would ramp up its efforts to fight climate change.
Africa, Creecy said, would bear the brunt of climate change more than any other place on earth, but the continent bears the least responsibility for this impending global disaster. Still, South Africa intends to lead by reducing its carbon footprint on the continent, Creecy said.
And yet, as the country runs out of electricity, once again, South Africa’s energy policies don’t seem to align with the solid message articulated in Madrid by Creecy.
Ideological opposition to independent power producers (IPPS) and renewable energy IPPs (REIPPs) in particular, is rife in the ANC and in government.
South Africa has yet to open the 5th window for the procurement of REIPPs. The last window was opened in 2015. Those IPPs are almost ready to be connected to the grid, News24 understands.
Many experts are at a loss as to why the government has not opened the 5th REIPP window, given the energy crisis. Renewable energy is cheaper to buy, faster to build, and nimbler to operate than any future coal prospects, they say.
So what is the hold up? Why has South Africa dragged its feet on the issue?
The answers are not simple. But the solutions exist, should the government choose to listen, many experts interviewed by News24 agree.
On Tuesday afternoon, the mineral resources and energy department outlined some measures it is considering to plug South Africa’s energy shortage. This is not the opening of the REIPP window 5, as the department’s head of communications, Thandiwe Maimane explained to News24. Maimane said new REIPP projects would take up to five years to come online, so this is an interim measure.
According to the department’s statement, new requests for information (RFIs) will be issued, and will allow the department to have “a sense of immediate generation options available (3 to 12 months) to fill the short-term gap”.
Maimane explained that this would include any kind of energy source allowed for the country’s energy road map, the integrated resource plan (IRP), whether renewable energy or non-renewable-energy sources.
Maimane did not say so explicitly, but the new RFI issuance is an emergency stopgap intervention to plug the holes in SA’s energy supply.
But the department has had years to procure more electricity supply.
“This problem should not have reached this stage,” says Tracey Davies, director of JustShare, a non-profit organisation that advocates for “responsible investment”.
“If the government in all its iterations had not and did not continue to obsessively maintain the coal status quo, for whatever reasons… we would not be in this position,” she told News24.
“We have reached the point where the answers are clear and we’re still not taking action. Open a new round of renewables (procurement) and lift the restrictions on private power generation, it will open up the whole space.”
Investors chomping at the bit
Davies said the renewables industry is chomping at the bit to break ground.
“There are people poised with bated breath; waiting, checking the news every day to see if this has been opened up. It’s just such a no brainer.”
Bryce McCall, a researcher at the University of Cape Town’s energy systems research group says many renewables industry players have moved their money elsewhere in the world, because the government has dragged its feet on the latest round of REIPP procurement.
But this is not an insurmountable problem, he says, adding that there is still enough interest here to move forward, should Minister of Mineral Resources and Energy Gwede Mantashe decide to kick off new energy procurement now.
McCall says that lost infrastructure and investment will return quickly once the new REIPP rounds are announced.
An energy expert who has extensive experience working with Eskom, the unions and the government in trying to solve SA’s energy problems, told News24 that the new REIPPs would not solve our energy crisis completely.
But it will certainly go a long way to fixing our problems, he says, adding that without proper maintenance of the coal stations on which we rely, we can expect problems until at least 2025.
“In a way, Gwede [Mantashe] is unlucky because he’s the minister holding the grenade that went off on his hand,” the expert says.
Part of the problem is that the former president Jacob Zuma had an obsession with building big nuclear plants and various Eskom CEOs agreed. They, too, have historically downplayed the importance of renewables.
But they are mostly misinformed, he says.
It is a question of climate change and keeping the lights on, and the two issues are Siamese twins only separable by the most creative, inhumane surgery.
Coal, coal and more coal
Eskom and Mantashe continue to punt the line that South Africa still needs coal for years to come as part of its energy mix. This is stated clearly in the IRP, and Mantashe has made similar statements publicly.
But Eskom knows it is facing an uphill battle on the coal front, the expert says.
In the first place, two new coal power stations on the cards, on which Eskom is banking to relieve some pressure on the grid, will optimistically take at least five years to construct, News24 understands.
And they will undoubtedly be tied up in litigation for years as environmentalists try to stave off more environmentally and socially disastrous coal projects. The court papers are as good as drafted.
But this is not the only problem with new coal procurement.
Most banks and finance institutions are on record saying they will not fund new coal projects, leaving it to government to dig deep into the fiscus to fund the new power stations.
This scenario is unlikely to prompt Finance Minister Tito Mboweni to pop open a bottle of Moet in celebration.
Intellidex chairperson Stuart Theobald said on Twitter on Tuesday night that the “all-in” costs of Medupi and Kusile are higher per kilowatt/hour than new IPPs per kilowatt/hour.
“The next megawatt of capacity that is added to the grid would be cheaper if it was commissioned from REIPPs than coal-based generation,” he added.
On Tuesday, as many South Africans languished in darkness, Creecy sent a strong message to the COP25 delegates. She did not say so explicitly, but read between the lines, and Creecy knows South Africa cannot keep up its reliance on coal.
Yet Eskom and the Department of Mineral Resources and Energy keep pushing the “coal is here for now” line, while leaving the 5th REIPP window closed. Some say this is to appease the unions who oppose the immediate closure of power stations, which employ thousands of people.
But, Davies explains, no one expects the coal industry to shut down tomorrow. In fact, what activists, and even parts of the government buy into is the idea of a “just transition” away from coal. This means ensuring that coal workers and the communities relying on the industry are not left destitute while new renewable energy sources are added to the grid.
That requires planning. It means an inclusive approach, whereby workers are reskilled, and communities are properly compensated for possible job losses.
International examples of how to do this abound, and the government knows this.
It is possible to save the grid, the environment, and the economy. The government only has to act.