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Business calls for unbundling of Eskom and investment in renewable energy

Eskom yesterday continued to implement Stage 6 rotational loadshedding in the absence of the full plant maintenance staff complement as wage negotiations resume today. Picture: Ian Landsberg (ANA).

Eskom yesterday continued to implement Stage 6 rotational loadshedding in the absence of the full plant maintenance staff complement as wage negotiations resume today. Picture: Ian Landsberg (ANA).

Published Jul 5, 2022

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The business sector has called for an urgent solution to South Africa’s electricity crisis, including accelerating the unbundling process and investment in the transmission grid, as the crippling power cuts weigh in on activity.

Eskom yesterday continued to implement Stage 6 rotational loadshedding in the absence of the full plant maintenance staff complement as wage negotiations resume today.

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Energy expert Professor Anton Eberhard, speaking on behalf of the National Business Initiative (NBI), said South Africa’s national grid was designed chiefly to take power from Eskom’s coal power stations, but now it needed to be reconfigured to connect renewable energy.

Eberhard said investing in the transmission grid would help to stabilize the power supply and meet the growing electricity demands in South Africa.

“A business case can be made for a massive increase in investment in renewable energy and accelerated closure of Eskom’s dirty, old and expensive coal power stations,” Eberhard said.

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“There are plenty of equity and debt providers willing to finance this clean energy future, but the constraint now is access to the grid to transport electricity to consumers.

“Ultimately, the issue of transmission grid constraints will only be resolved sustainably when Eskom’s transmission division is unbundled.”

Eskom estimates that R130 billion is required to alleviate transmission constraints, but it is not clear how it will finance this as it is laden with a debt of more than R400bn.

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A National Transmission Company has been incorporated as a subsidiary of Eskom Holdings, but the process to unbundle Eskom into Generation, Transmission and Distribution units is mired in bureaucracy.

Business Leadership South Africa (BLSA) echoed Eberhard’s sentiments, saying that Eskom’s unbundling would accelerate the rate at which private producers enter the market.

BLSA chief executive Busi Mavuso said Eskom had made progress but it was too slow, adding that the signs were clear that the future electricity market will be a diverse one.

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Mavuso said that industrial action at one producer would not necessarily result in loadshedding as the current workers were holding “the country to ransom”.

“Eskom must complete the unbundling of a separate system operator, one that will be able to buy electricity for the grid from the cheapest sources, only one of which will be Eskom,” Mavuso said.

“We need to put in place clear regulations and processes to facilitate wheeling through the grid – the process by which an electricity producer in one location can sell to customers in other locations through the grid.”

Thousands of Eskom workers have downed tools for two weeks at the utility’s coal-fired power stations, demanding up to 12 percent wage increases while Eskom has tabled an offer of 7 percent.

The striking employees have exacerbated the already challenged state of the utility’s ability to meet the country’s energy needs, forcing loadshedding to Stage 6 for the first time since December 2019.

The country clocked up at least 62 days of blackouts in the first half of the year.

Investec chief economist Annabel Bishop said Eskom had been identified as highly overstaffed and striking workers a direct cause of the current stage 6 load shedding.

“Electricity power stations cannot run on their own, and require a full quotient of workers to produce electricity optimally, as well as a high level of maintenance and repair, quality fuel and well run modern systems, with Eskom losing much needed revenue on the strike,” Bishop said.

“Fractured labour unions are seeking to strengthen their hands in the industrial action at Eskom which risks causing a recession.”

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