Deputy President Cyril Ramaphosa said on Friday that “affordability” should underpin South Africa’s future electricity generation investment decisions, but also stressed that government remained committed to pursuing a diversified power-generation mix.
Speaking at the conclusion of the twentieth annual summit of the National Economic Development and Labour Council (Nedlac), which had a special focus session on the country’s electricity crisis, Ramaphosa said South Africa had several primary-energy resources in abundance, including coal, wind and solar. There was also a potentially large gas resource base and an opportunity to tap into the region’s large-scale hydropower prospects.
However, he urged business, labour and community representatives, several of whom had raised concerns about government nuclear plans, to “accept” government’s “mixed-energy-source thrust”, which it felt would help improve security of supply and lower the country’s carbon emissions.
“But in the end [the decisions] should be underpinned by one thing: it should be about affordability, particularly the affordability to poor people, but also, importantly, affordability to drive and to fuel our economy,” the Deputy President said.
Speaking earlier, Professor Anton Eberhard, of the University of Cape Town and a member of Ramaphosa’s advisory panel on energy, warned that affordability of electricity would depend heavily on the generation investment choices made.
He said affordability was of “great concern”, with South Africa’s electricity tariffs having surged by 300% since 2007, and noted that demand, particularly from industry, had been falling as prices increased.
Demand was about 1 000 MW lower in 2015 than it was in 2014 and had fallen by about 3 000 MW since 2007, with some of that fall attributed to structural changes as industries adapted to higher electricity prices.
“We have to be especially vigilant around generation choices that are least cost, because the biggest driver of electricity prices is generation – and it’s not just the initial investment, it’s also a question as to whether you are executing the capital in an efficient way.”
Energy Intensive User Group’s Shaun Nel lamented the current focus on generation technologies, arguing that the focus should instead be on affordability.
“The primary driver of investment, particularly in the industrial sector, is around the issue of affordability. The issue of maintaining those costs, while creating an environment for investment in electricity infrastructure, is the balance we have to strike,” Nel said.
Both Nel and Eberhard saw gas having a key role to play, particularly as a complement to renewable-energy plants, which typically had intermittent supply profiles.
Eberhard argued that a combination of renewables and gas “equals baseload”, because of the ability to ramp up gas generation at short notice.
Nel also believed there to be significant opportunities for economic growth and job creation in gas reticulation projects, which would enable households to convert from electricity to gas for cooking and heating.
“The knock-on impacts could be significant. For one, the requirement on the Stated to fund a large electricity build programme is reduced . . . and, two, it does create a significant new opportunity for small localised manufacturers and industrial companies to support reticulation in local communities."