As South Africa’s leadership continues to struggle with the overwhelming challenges at Eskom, it’s time for businesses and citizens to start asking a simple question: What if Eskom never gets fixed? What are South African families and businesses to do if the utility giant is not able to repair itself to the point where it is reliably able to provide the power the country needs?
The answer is fairly simple and, I think, one that the government has anticipated and planned for: self-generation – businesses, households, and malls generating and storing their own electricity and becoming independent of the central grid.
Government is onto something
To me, it looks like the government is quietly accepting the reality that self-generation is the way of the future. In December last year, President Cyril Ramaphosa acknowledged the urgent need to get more generating capacity into the grid and – implicitly – the reality that Eskom is not the vehicle to do so, promising that government would open the way to allow businesses to install their own generation capacity to make them independent of the Eskom grid.
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The government had already made some moves to loosen the ties binding the private sector earlier in 2019 – simplifying the project approval process and raising the ceiling on the size of projects. In December, Ramaphosa promised to do more to free up people and businesses to take a DIY approach to electricity.
Theoretically, these promised changes would make it possible for mid-sized power users like shopping malls to build and install their own generation capacity, probably in the form of solar panels (SA is a pretty sunny place, after all). Admittedly, approvals are still too slow and there are some other hurdles to overcome, but it seems increasingly likely that in the future, many South Africans will be providing their own power.
The SA situation
Self-generation is a smart strategy for the SA situation. Relying on a single, large electricity supplier – usually one powered by fossil fuels – is a pretty old-school approach. Today, we have the technology to build a totally different and far more resilient and carbon-light type of power grid. Offshore wind power is becoming one of the cheapest power sources around. Solar panels are getting cheaper and power storage technology is getting smaller and more accessible. A power grid made of thousands and thousands of small producers that store and sell power would be cheaper, more efficient, better for the environment, and much more resilient to shocks.
These days, even a single home in SA can more or less meet its own power needs with a decent-sized solar installation. For townhouse complexes, the option looks even better – the complex can pool resources to install capacity and storage, and the upfront capital cost can be defrayed by lower electricity costs for the long term and improved resale value (who wouldn’t want a house that’s immune to load shedding?).
The case is stronger again for bigger players like shopping centres or businesses. The cost of installing a workable solar solution will be relatively high upfront, but a mall operator would then be able to sell power to tenants (or, I guess, provide it free but charge higher rents). With the right connection to the grid, the mall may even be able to sell any excess power back to Eskom for a profit. Similarly, a mid-sized manufacturer would bear upfront costs but save money in the long term by powering itself. This is why so many SA businesses have applied to NERSA for permission to get started in the self-generation game – the economics make sense.
A grid for the future
These days, even countries with stable power systems are planning for a different type of grid based on renewables. SA is, in a sense, in the lucky position of being forced to adapt early. If the government simply makes good on its promise to make it easier and quicker for businesses to install self-generation capacity, we could solve a lot of problems with one stone.
A renewables-based, self-generation model with sufficient storage capacity and the option of selling excess power into the grid would quickly close the generation capacity gap that Eskom is struggling with. It would reduce demand on Eskom and provide additional power, meaning that Eskom would be able to focus on fixing and maintaining existing capacity rather than rolling out new plants. Such a grid would also lower SA’s huge carbon footprint and stop the bleeding in the manufacturing sector. If companies are freely allowed to build their own capacity, sunbelts like the west of the country could become manufacturing hubs, offering a low-cost workforce and cheap, self-provided electricity, together with decent access to ports.
The Eskom crisis is so deep and huge that most SA minds are focussed on it. But this is an opportunity for government and the private sector to think bigger. Instead of trying to rebuild an old-fashioned, fossil-fuel-based, centralised system, we have the chance to build a better grid – one that is decentralised, efficient, clean, green, and resilient to external shocks like rising oil prices. All government needs to do is open the way.
