The SA Independent Power Producers Association general secretary Dave Long spoke about whether purchasing independent power could cost consumers more. Picture: Bhekikhaya Mabaso/ African News Agency (ANA)
The SA Independent Power Producers Association general secretary Dave Long spoke about whether purchasing independent power could cost consumers more. Picture: Bhekikhaya Mabaso/ African News Agency (ANA)

Could Capetonians end up paying more for power if the City ditches Eskom?

By Mwangi Githathu Time of article published Nov 21, 2019

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Cape Town - The SA Independent Power Producers Association (SAIPPA) general secretary Dave Long on Wednesday tried to calm fears that the province’s hopes for purchasing independent power could cost consumers more than they are currently paying.

Speaking after Energy Minister Gwede Mantashe addressed issues around the use of independent power producers (IPPs) in the province, Long said: “The eventual costs of power would be decided by market forces.

“Electricity is a commodity and subject to the laws of supply and demand.

“The free market should decide the price of power, though being aware of our country’s history, this should not be without constraints.”

UCT research associate and co-founder of Power Futures SA, Lauren Hermanus said: “The problem with knowing whether it will be cheaper or costlier is that at the moment we don’t have a good, clear sense of all the costs in the sector and because of that we cannot have a real debate on who should carry those costs.

“We have an idea of how much power we need and that energy can be produced by anyone, Eskom, IPPs or municipalities. After all, there is a precedent in municipalities providing their own electricity. Look at the now-decommissioned Athlone power plant. Nelson Mandela Bay has a one-off agreement that lets IPPs feed power to its grid to sell to corporate clients.”

Premier Alan Winde said: “People want IPPs to be a part of the energy mix, in the face of both load shedding and climate change.

“The integrated resource plan (IRP) determines the mix of electricity that the country requires. In this IRP there is an allocation that we believe can be procured by Western Cape municipalities and the metro without any National Treasury guarantees.

“The Western Cape can play a positive role in helping South Africans secure their energy future. If the City of Cape Town and some of the province’s municipalities directly contract with IPPs, this would alleviate some of the immense pressure that Eskom is currently experiencing and would give Eskom the opportunity to address its growing maintenance backlog, this would be a win-win situation for everyone involved.”

The City will argue in court next year that it would like the choice to buy power from suppliers other than Eskom. The province is backing the move and believes that such a move would go a long way to ensuring the province’s energy security.

Currently, the situation is that the City must procure its electricity from Eskom. The City would like to diversify its energy mix for greater energy security and cleaner energy supply while combating rising electricity costs and the impact of climate change.

The Electricity Regulation Act allows the Minister of Mineral Resources and Energy to prescribe the amount of energy and the type of energy resources that can be used for new generation. The City is contending that it is in their Constitutional mandate to provide power to its customers and that customers should be able to choose the type of power that they receive.

Winde said: “People want IPPs to be a part of the energy mix, in the face of both load shedding and climate change.”

“The Western Cape can play a positive role in helping South Africans secure their energy future. If the City of Cape Town and some of the province's municipalities directly contract with IPPs, this would alleviate some of the immense pressure that Eskom is currently experiencing and would give Eskom the opportunity to address its growing maintenance backlog, this would be a win-win situation for everyone involved,” said Winde.

The integrated resource plan (IRP) determines the mix of electricity that the country requires. In this IRP there is an allocation that we believe can be procured by Western Cape Municipalities and the Metro without any National Treasury Guarantees.

The Good party’s Brett Herron said: “Agreeing to such a determination would bring more renewable energy into the mix faster and also save valuable taxpayers money that was being spent on opposing the court action on this issue. The fight was to allow towns and cities to be able to buy their electricity independently from Eskom, specifically from renewable companies that now generate solar and wind energy cheaper than Eskom's coal-dominated supply.”

@MwangiGithahu

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