During the closing panel of the Electricity Forum, Manufacturing Circle executive director Philippa Rodseth said municipalities were the missing piece of the energy security puzzle and an elephant in the room in terms of South Africa achieving a just energy transition.
From an industrialisation perspective, she said, the rubber hits the road when municipalities start being engaged – they either enable power to operations or compromise on business’ ability to operate, owing to either a lack of electricity infrastructure and maintenance thereof, or mismanagement of administrative matters.
With more than 280 municipalities in the country, it becomes a problem if they are not aligned in terms of markups applied and tariffs asked, for example.
“We need a model whereby investors, suppliers, municipalities, businesses, communities and Eskom work together to get, monitor and maintain infrastructure,” Rodseth suggested.
Eskom CEO André de Ruyter agreed, stating that many municipalities contributed to interruptions in electricity supply.
The State-owned entity (SOE) pursues an active partnering approach with them to increase the necessary competence and capacity to operate electricity distribution systems, since they lack skills required for billing, maintenance and enforcement, besides others.
However, he mentioned that not all municipalities welcomed this and remained unwilling to accept assistance, leading to Eskom having to opt for a heavy-handed approach to debt collection from municipalities, including ceasing assets.
De Ruyter said South Africa had a major opportunity to solve its energy security issue. “We can give dignity and development to communities, including through modular micro-grids. We are looking for black industrialists who can commercialise solutions.
“We need industry associations and the manufacturing sector to indicate what needs to be done.
“We need to roll out renewable energy sources in South Africa in the most optimal way from a financial return perspective and an addressing the generation capacity shortfall perspective.”
He said Mpumalanga was a “juicy opportunity” for investors to get ahead of the energy transition curve and help roll out solar photovoltaic (PV) plants.
De Ruyter explained that, unlike in the Northern Cape where a lot of PV installation activity was happening, Mpumalanga had existing infrastructure in place to evacuate electricity.
Eskom is a large land owner in Mpumalanga, owning various surface rights to coal mines – ceased and operating ones alike.
“If we convert these sites to PV and wind opportunities, we can install 40 GW of wind and PV in the province, whereas it could take the better part of a decade to expand the grid to accommodate renewable energy in the Northern and Eastern Cape.”
De Ruyter noted a disadvantage of being an SOE was that there were often rules governing public-private partnerships, making it difficult to engage; however, Eskom was in the process of developing a model that would give investors access to projects, if they were willing to take risk – since not all risk could be taken on by the State.
“We will soon be in a position to make available some of these land use rights so that investors can come and install their capacity and help us solve the electricity shortage in the country.”
Continuing the discussion on how to solve the energy security issue, National Cleaner Production Centre director Ndivhuho Raphulu suggested a multiple stakeholder engagement approach, in particular involving the South African Local Government Association (Salga).
Although, admittedly, the association was weak technically, Raphulu believed it was indeed strong politically.
He deemed it necessary to capacitate Salga with the help of knowledgeable executives from industry, and expert engineers that could work with the association, who could, in turn, work with municipalities.
Notably, Raphulu remarked that this kind of partnership would not bode well for financial gains, but indeed for strategic gains that can advance the manufacturing sector and other industries that need functional municipalities.
As a suggestion to Eskom, Raphulu said the SOE needed to set up a core investment vehicle for it to become part of facilitating the development of alternative energy in the country, so Eskom can be more directly involved.
“Because of South Africa’s energy regulation framework, it takes longer for these alternative energy sources to come into the system, but if Eskom is co-invested, then it can help facilitate projects coming online faster.”
Navitas Energy MD Mike Levington weighing in on the topic, said electricity supply was in need of a proper functional local or district municipal model that involved different types of ownership – competent people to be part of infrastructure management, and communities and employees need to be shareholders of electricity generation infrastructure.
Actom CEO Mervyn Naidoo said South Africa often got caught in planning and consulting and conferencing, but hardly ever ended up doing something. “Many companies have the resources to get municipalities to deliver reliable electricity, particularly if it impacts on business customers’ operations, and in turn their own revenue.
“We need government to allow companies to get more involved in substation maintenance, if that is what will keep businesses in certain areas going.”
De Ruyter echoed this sentiment, saying that South African officials and executives alike needed to spend less time planning and more time implementing plans.
“If we miss the opportunity there is now for concessional financing, and with power stations needing low-carbon replacements, we might lose it forever. I implore us to display a collective sense of urgency and get going on solving energy security.”