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City of Cape Town’s new draft energy budget of R16.4 billion welcomed

The City announced its R16.4 billion draft energy budget which it hopes to use towards building energy resilience in Cape Town. Picture: Ayanda Ndamane/African News Agency (ANA)

The City announced its R16.4 billion draft energy budget which it hopes to use towards building energy resilience in Cape Town. Picture: Ayanda Ndamane/African News Agency (ANA)

Published Apr 4, 2022

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Cape Town - Economists and energy experts have weighed-in on a City draft energy budget of R16.4 billion that aims to achieve greater energy security, reduce load shedding and implement measures to reduce vandalism.

The budget comes after increased electricity interruptions, load shedding and costly electricity infrastructure damage across Cape Town.

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“Our multibillion-rand budget is very clearly being directed toward the City and mayor’s commitment to end load shedding over time by bringing on board independent producers, self-generation and developing our small-scale embedded generation market. It is about diversity of supply to enhance the energy security of the people of Cape Town,” Mayco energy member Beverley van Reenen said.

She said about R40 million was earmarked to help curb and prevent vandalism, about R22.6 million was allocated to reach independent generation and procurement to end load-shedding over time, and R15 million was set aside for energy generated by Small-Scale Embedded Generators (SSEG) through a feed-in tariff of 75.51 c/kWh (excluding VAT).

The allocation to curb vandalism would be used to secure infrastructure, deploy security patrols in hot spots and permanent security deployments at strategic infrastructure points, Van Reenen said.

Hilton Trollip, an energy expert and research fellow in the UCT Global Risk Governance programme, said that while R16.4 million sounded like a lot of money, it was necessary to secure electricity infrastructure worth tens of billions in the city – especially tackling the scourge of cable theft – a problem the police and the justice system struggled with.

About what the City’s draft energy budget should address, Trollip said the first priority should be to break even and not run at a loss. This was to ensure that the electricity system was financially sustainable, he said. In previous years the City had shown it could achieve this, Trollip said.

“The City also needs to make sure that people who cannot afford the full electricity cost are still able to buy electricity – in other words, they need to address energy poverty. The City does this, in part, already, as there is a large subsidy for poor households that use less electricity which enables them to pay a much lower tariff,” he said.

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On the allocation for vandalism, energy specialist Khetsiwe Mtiyane said: “The R40 million budget is insufficient as for February alone vandalism/theft amounted to approximately R1 million. Vandalism is widespread and also largely affects middle-income areas – which is a sign that, as a result of Covid-19 and slow economic growth, more of these households are also battling with energy costs.”

Mtiyane said as the City focused on protecting infrastructure against illegal connections and cable theft in this draft budget, it also needed to focus on providing alternative clean energy sources to low-income and indigent households to mitigate rising energy costs which could further plunge these households into energy poverty.

She questioned if it was time for the City to encourage public-private partnerships to begin to subsidise solar installations for households to reduce reliance on the energy grid.

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Economist Dawie Roodt said while the main idea of the draft was to achieve higher energy security, it seemed as if the City tried to establish more private sector participation in electricity provision, which he welcomed.

“I would like to see the City of Cape Town encouraging the private sector participation in the last mile (distribution), which local authorities do not typically want to offer as it was a real milch cow for them,” Roodt said.

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