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No improvement is expected in electricity provision before the end of 2022 and perhaps longer, says leading independent energy expert Chris Yelland. The only way problems can be addressed is through self-generation – and from independent producers – which can be delivered quickly, provided the legal and regulatory frameworks allow for this. Overhaul of Eskom will take at least three years to gather momentum and probably 10 years to complete, he says. – Jackie Cameron
Chris Yelland on loadshedding:
2020 was worse than 2019. 2020 was the worst on record. I’ve got a feeling that 2021 is going to be worse. The reality is that the energy availability factor – which is a measure of the availability of Eskom current fleet of power stations – is declining year on year, and it has been doing so for several years. The best thing that I think one can hope [for], is that they could stabilise this energy availability factor at the current low levels.
In the meantime, of course, demand for electricity is picking up firstly after the Christmas period. Also, with the Covid-19 situation, the demand is fairly close to back to normal, but it could increase still further. So I am expecting demand to be under pressure. In other words, supply to be under pressure to meet a growing demand.
On the possibility of ‘stage eight‘ loadshedding:
I think that’s somewhat alarmist. You can’t write it off. But to say that we are heading for that I think is premature. But as I say, it’s not impossible, but I don’t think it’s likely at all.
On whether the situation may improve in the foreseeable future:
Not in the short-term. Certainly government procurements of new generation capacity, that means the so-called 2000 megawatts of risk mitigation IPP programme is about to be adjudicated. But then still, orders have to be placed [and] financial closure has to be achieved – that can typically take six months. Then delivery has to be achieved and connection to the grid after the construction period.
I would say that the earliest we can really imagine that that would come on stream – well, the government is talking about the end of 2022 – and I think that’s very optimistic. But certainly I don’t think we can see any improvement before the end of 2022, perhaps even longer.
On whether this is a problem politicians need to rectify:
There have been positive messages coming from politicians, but sometimes mixed messages. Sometimes messages that clearly show that they don’t quite understand the subject matter they are talking about. But then, of course, it sometimes involves legal processes and regulatory process. Regulations are holding things back. At the moment in the regulator, there is a kind of leadership vacuum because [the] chairman of the board of the regulator has recently resigned.
The CEO of the regulator resigned last year. There is a leadership vacuum and so people are not making decisions timelessly. I think there are some agendas within the regulator – within the Department of Mineral Resources and Energy – that really are trying to hold back the uptake of distributed renewable energy. In the form of rooftop solar and wind, different geographic locations to be wheeled through the grid to customers where they need it. There are some internal political agendas and agendas that are trying to slow this uptake. I think this has to be addressed at the highest level.
On what the average business can do:
Let’s just talk about installation’s less than one megawatt. That’s a thousand kilowatt. Now, that is not a very large installation. It could typically be on the rooftop of a parking lot of a building [or] of a warehouse. Those installations do not require a license. They do require registration with Nersa, the regulator. There is a process to go through, but the process is working. There are some cumbersome requirements to get the approval of the local authorities.
If you are supplied by a municipal electricity distributor, you have to get a letter of permission to connect to the grid. The same applies to the Eskom grid. There are costs that are incurred, there’s time that is taken and you have to do and jump through all of these hoops first, before you can apply and register your installation – before you actually proceed with the work.
For installations above one megawatt, it’s more complex. You need a license. The license that you require – the procedure for obtaining such a license – for a one megawatt and above system, is the same process that you would require for an Eskom nuclear power station of 3000 [or] 4000 megawatts or a large coal fired power station. So it’s very burdensome. It’s costly [and] it’s time consuming. You’ve got to get your ducks in a row. You’ve got to spend a lot of time and money doing it.
On whether the problems are with the regulators or Eskom:
I think the problems are with Eskom. In the past, certainly, there have been attitudes of trying to discourage this, because when people install self-generation or use the grid for wheeling, it reduces their own sales – their sales volumes – and it facilitates competition and other suppliers.
So to hang on to their market share, they resist this. The same thing applies to municipalities. So the incumbents are not inclined to make it easy for competition. Quite the opposite. They are inclined to slow it down in every what way they can.
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