What can business and regional government do about the energy crisis?

March 18, 2015
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South Africa’s energy crisis is a reality. Load shedding is a regular occurrence and heavy users of electricity such as manufacturing companies are being asked to reduce usage by up to 20%. With the delay of new builds and a huge maintenance backlog, this crisis is likely to be with us for the next 5 -7 years.

To address this issue and find solutions in the Western Cape, Accelerate Cape Town recently collaborated with the Western Cape Government, EDP, City of Cape Town, GreenCape and business organisations, to share proposals from local and regional government and to brainstorm ideas from business. This is part of a series of engagements to explore what is possible to ensure continued productivity, profitability, economic growth and job creation.

The format of the first engagement on 3 March was for Government to highlight what options are available given that Eskom is the sole distributor of electricity in South Africa. Lance Greyling, Director of Trade and Investment in the City of Cape Town outlined the City’s priority actions to support business and deal with the crisis. These include:

  1. Load shedding certainty to enable businesses to plan better e.g. Commitment to Stage 1 or 2 load shedding for the month whether it is needed by Eskom or not;
  2. Use City-controlled levers (e.g. pumped storage, geyser control) to help avoid or mitigate load shedding;
  3. Load shedding schedule design – having load shedding at a consistent time or day;
  4. Contracted demand response to avoid or mitigate load shedding;
  5. Agree a baseline with Eskom i.e. if we as a city reduce demand by 10% can we be excluded from Phase 1 load shedding;
  6. Incentivise rooftop PV – Black River Park, largest solar PV in the southern hemisphere – incentives with higher feed-in tariff;
  7. Direct power purchasing agreements (PPA) with IPPs – renewables and gas;
  8. Solar water heaters and heat pumps – which include working with the insurance industry who are the largest installer of geysers in SA. Also work with financial institutions regarding the financing of alternatives;
  9. Time-of-use tariffs e.g. investigate cheap night time power to enable load shifting through battery systems;
  10. Show leadership with the City of Cape Town’s own energy use.

The workshop then engaged business to state what’s important to business and propose additional solutions. These included:

  • Load shedding predictability is key though having a set schedule would not work across all industries;
  • Increase generation capacity – find solutions from LNG (Liquid Natural Gas), renewable energy (solar, wind);
  • Regulatory and polity issues need to be addressed for IPP uptake including the passing of the Independent Systems and Market Operator (ISMO) bill;
  • Demand management – reducing the tax on diesel as it is expensive for businesses to run generators;
  • Tariff restructuring;
  • Agree savings and incentives with Eskom;
  • Ensure an ongoing platform to manage and communicate between Eskom, Government and business;
  • Support forums to achieve goals i.e. in industrial areas.

Helen Zille, Premier of the Western Cape, closed the meeting and raised the issue that Eskom’s monopoly and municipal financing is a key issue in this crisis. Electricity sales ensure a steady income for municipalities and changing that structure would bankrupt most municipalities and curtail services to the most vulnerable. She called for business to co-design medium- and long-term solutions to the energy issues of the region.

As this is part of ongoing discussions to find energy solutions, Accelerate Cape Tows is hosting an energy security discussion at our next Sustainability Forum on 27 March. We are working with our members and government to ensure an ongoing dialogue to create solutions. Please let us know if you would like to be part of the discussion.

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