Implementing the energy [r]evolution in south africa
2.1 international energy policy
At present, renewable energy generators have to compete with old nuclear and fossil fuel power stations which produce electricity at marginal cost because consumers and taxpayers have already paid the interest and depreciation on the original investment. Political action is needed to overcome these distortions and create a level playing field for renewable energy technologies to compete.
At a time when governments around the world are in the process of liberalising their electricity markets, the increasing competitiveness of renewable energy should lead to higher demand. Without political support, however, renewable energy remains at a disadvantage, marginalised by distortions in the world’s electricity markets created by decades of massive financial, political and structural support to conventional technologies. Developing renewables will therefore require strong political and economic efforts, especially through laws that guarantee stable tariffs over a period of up to 20 years. Renewable energy will also contribute to sustainable economic growth, high quality jobs, technology development, global competitiveness, as well as industrial and research leadership.
2.2 south africa’s energy policy
By Ferrial Adam and Melita Steele
This section examines the energy sector in South Africa. It provides a short background to the development of the energy sector both during and after apartheid and reviews the energy mix and supply in the country. In addition, the section pays particular attention to electricity supply. Finally, some emphasis is given to the range of government policies on energy have been developed, which have influenced the developments in the energy sector in South Africa.
2.2.1 background
It is a fact that South Africa has benefited from an abundant and cheap supply of electricity since the founding of the monopoly public utility, the Electricity Supply Commission, or Eskom, in 1928. Low labour costs under apartheid, combined with South Africa’s large reserves of coal, enabled Eskom to subsidize industrial development and to become a surplus producer. The surplus ultimately resulted in Eskom exporting electricity to neighbouring countries and the utility is the largest producer of electricity in Africa.
The apartheid government was principally concerned with security of supply in the face of increasing sanctions. During the 1950s the government focused on the production of synthetic fuels and nuclear energy. In the 1960s and 70s the South African government invested hugely in electricity generation which was mostly coal fired. By the eighties and the nineties economic growth had begun to decline but the supply of electricity remained constant. This resulted in an excess of capacity and in 1992 electricity capacity exceeded peak demand by 63% - another reason for low electricity prices (Winkler10). The combination of cheap and abundant coal and the low cost of electricity resulted in South African industries becoming energy intensive. In addition, the low cost of South Africa’s electricity has deterred foreign power companies from entering the market. As a result, even today Eskom supplies 95% of the country’s power. South Africa has an installed generation capacity of approximately 40,000 MW.
Since the early nineties there has been rapid growth in electricity demand without the necessary growth in capacity development, which is one of the factors that led to the recent electricity crisis. In 2008, South Africa experienced a massive power shortage which resulted in an unreliable supply of electricity as Eskom was forced to switch off parts of the electricity grid to lighten the load (load-shedding). It is believed that the immediate cause was a shortage of coal at Eskom’s power stations and a very wet rainy season that had flooded coal mines and impeded transport of coal to the power stations.
South Africa’s robust economic growth, the government’s most desired outcome, has put additional pressure on South Africa’s electricity supply. Furthermore, since 1994, the government’s electrification policy has led to the doubling of the population served by electricity. Eskom’s 1.2 million customers in 1990 grew to 4 million in 2007. At the same time the government decided not to build more power plants and even mothballed two existing plants, reducing generating capacity from 45,000 megawatts to 37,000-40,000 megawatts.
Some believe that the electricity crisis was a blessing in disguise. It forced the government to review its energy policies and promote generation of power by private enterprises. More importantly the crisis was a step towards giving more serious attention to renewable energy, energy efficiency and greater public awareness of the need to conserve energy.