Time's up - overhaul of SA's energy policy needed 'as in yesterday', Eskom warns

Jan Oberholzer, Eskom COO.
Jan Oberholzer, Eskom COO.
Photo: Elvira Wood/Netwerk24

An energy policy overhaul is urgently required as the time to bridge South Africa's energy supply gap has effectively run out, Eskom's Jan Oberholzer said on Thursday.

Speaking at the McCloskey Southern African Coal Conference, the utility's COO told delegates that government's policy is simply insufficient to solve the country's worsening energy crisis which requires substantial new generation capacity.

"In the next 14 years Eskom will retire 22 000 MW – half of what is available now," Oberholzer said.

"The DMRE [Department of Mineral Resources and Energy] needs to understand that policy is required. We do have an IRP [Integrated Resource Plan] 2019. But it's not adequately sufficient anymore. What is coming at us … means that we need additional capacity - as in yesterday."

The COO noted he first warned that the power generation gap was between 4 000 MW to 6 000 MW wide some two and a half years ago.

While government has made some progress in cutting red tape that had prevented private power generation from coming online, much more is needed to bridge the gap.

"SA Inc needs to understand what is facing us in terms of the energy situation and we need to work together [to solve it]," Oberholzer said.

He agreed with other panelists that renewables alone could not solve the problem.

"There is not a lot of understanding of the difference between energy and capacity, so I fully agree that renewables [are] not going to solve the issue, there is no doubt," he said. "If you retire 20 GW and you are going to rely on renewables, you have to install 60 GW in the same time, which is not possible."

Commenting on the security of supply and price risks that come with importing gas, Oberholzer pointed to Karpowership winning bids as part of the government's emergency power procurement programme.

"To put forward a 20-year PPA [Power Purchase Agreement] while the gas price is not fixed ... this is why Eskom [is reluctant to say] we will sign on the dotted line, because the risk is just too high."

However, he said any forthcoming solutions to the energy shortage, regardless of technology, will require power projects to be small "because we do not have the luxury of time, because we are out of time in terms of available capacity".

Mike Teke, CEO of Seriti Resources, a major supplier of coal to Eskom, said while it is clear all coal-fired power stations cannot practically be shut down in the near term, there was broad acceptance that there will be a mix of technologies in South Africa's power generation in future.

"We're not disputing that, but right now we are talking too much about these things - and time's running out."

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