Beyond Patronage Politics: Where Is South Africa Going With Eskom?

Beyond Patronage Politics: Where Is South Africa Going With Eskom?

- Piet Van Staden

IN A WORLD WITHOUT ENVIRONMENT constraints, where economies of scale and advances in technology resulted in ever-decreasing costs, centralised electricity generation worked well. Lately though, the opposite applies: the cost, by way of environmental damage and compliance with safety requirements, of mega coal and nuclear projects is ever increasing, while localised generation using renewables is becoming cheaper.

South Africa is in the process of commissioning the giant Medupi and Kusile coal-fired power stations – they have been under construction for more than ten years – that will produce electricity at a cost of some 120c/kWh. But already, electricity generated using a mixture of renewables and gas technologies would be cheaper, cleaner and more flexible.

There is no doubt that agility and flexibility in responding to fluctuations in demand will fetch a premium in future power markets.

Eskom’s current system of base-load generation is at risk of being unable to meet the ramp rates (sudden and frequent increases or drops in demand) required for balancing renewables. With the de-carbonisation of the electricity grid, the industry will restructure, whether by design – or default.

Restructuring by default will happen if Eskom is overtaken by disruptive events outside its direct control, such as the proliferation of solar PV eating into its market and altering the load profile, hence the call for a well planned transition to a lower carbon future in a manner and within a timeframe that can enhance, not erode the competitiveness of our economy.