President Cyril Ramaphosa has used this year’s SONA to signal very clearly that he understands what needs to be done in order to overcome South Africa’s crippling electricity crisis.
Ramaphosa has outlined concrete steps that must be taken so that South Africa can rapidly begin to produce more electricity for the sake of economic growth and the well-being of all South Africans.
He has instructed the Minister of Mineral Resources and Energy to issue a Section 34 Ministerial Determination in order to accelerate the implementation of South Africa’s Integrated Resource Plan (IRP), which will see the rolling out of additional solar, wind, gas and other sources of electricity generation capacity.
It is significant that President Ramaphosa used the SONA to announce that Bid Window 5 of the renewable energy programme will be opened and that government will work with producers to accelerate the completion of Bid Window 4 projects.
The renewable energy programme has significant potential to assist in the expansion of lower cost electricity production in a relatively short time. The increase in renewable energy will assist in creating jobs and has the potential to stimulate upstream and downstream industries, including new, low-carbon green industries.
The President has used the SONA to make it clear that the way is now open for commercial and industrial users to produce electricity for their own use and that such applications should be processed by the regulator within a maximum of 120 days. Measures will also be put in place to allow municipalities to procure power from independent power producers.
Overall, President Ramaphosa has made it clear that the long-awaited IRP 2019, which was promulgated last year, must be implemented assiduously as it provides a clear roadmap for South Africa’s electricity expansion over the next decade and beyond. Any additional emergency measures which government undertakes should run parallel with the IRP and should not delay or disrupt the IRP’s implementation in any way.
Post SONA, much needs to be done to get South Africa out of its current electricity crisis. As in other countries, as South Africa implements the IRP, the country will undergo an energy transition, driven by technological and techno-economic changes. This transition must be ‘just’ in the sense that seeks to minimise the dislocations which threaten certain workers and communities.
The energy transition will also require the restructuring of Eskom. After the restructuring, Eskom’s Transmission Entity will purchase electricity from Eskom’s Generation Entity as well as from independent power producers and will transmit this electricity around the country. Eskom’s Generation Entity will operate alongside, and compete against, other power producers which will bring new efficiencies to the electricity sector.
Through a social compact, including government, business and labour South Africa can drive a successful, just energy transition.
Through the disciplined implementation of the IRP, together with the restructuring of Eskom, South Africa will over time put the current electricity crisis behind us, so that lower cost and lower carbon electricity will become reliably available to South African households and industry.
* Dr Creamer is an academic economist at the University of the Witwatersrand.