BUSA acknowledged the Q1/21 1.1% GDP growth, compared to the last quarter of 2020. Unfortunately, any optimism generated by these growth figures has been rolled back by the announcement by Eskom of Stage 4 load shedding today. This is devastating for businesses in all sectors of the economy and is introducing hardship for citizens. The electricity crisis is worsening, yet government does not demonstrate the necessary urgency to address this crisis. Currently, besides the roll-out of vaccines, energy security is the number one priority for economic recovery and growth.
Eskom’s efforts are commendable but insufficient to ensure electricity security. The current generation infrastructure is old, dilapidated, and simple not able to meet the country’s electricity needs. This emphasises the urgent need to bring onto stream different forms of energy, which include solar, renewables and embedded generation. This has got to be the urgent priority for government!
Government relies on the Integrated Resource Plan (IRP2019) as a guide, yet the plan is woefully outdated. The energy availability factor (EAF) is ten percent less than assumed. The supply gap is closer to 8000MW, rather than 2000MW. The implementation of the IRP is delayed, with not a single MW being procured, let alone commercialised, 20 months after the gazetting of the plan. The RMIPPP has faced criticism as a ‘emergency lever’ and is facing serious risk of further delay.
Eskom’s short-term power producer programme (STPPP) and the recent call for additional power from independent power producers (IPP’s) from Bid Window rounds 1-3 have faced similar criticisms for imposing requirements that restrict the capacity that could come online.
BUSA maintains, in line with its recent submission on Schedule 2 of the ERA, that the most practical, fastest, least-cost, and least- risk option for security of supply is through enabling embedded generation. The Schedule is currently not an enabling policy and many recommendations have been made, however there are 2 critical areas that must be addressed expeditiously:
- The exemption threshold under section 3 must be lifted to at least 50MW.
- Licence exempt facilities must accommodate willing buyer/willing seller arrangements.
Many benefits and opportunities can be realised through enabling embedded generation and accelerating a more diverse energy mix. There is pressing need for deep regulatory and policy reform for South Africa’s energy.
It is time that government treated the energy crisis with the urgency it merits and effects the changes needed to create the enabling framework required, particularly to bring alternative energy sources onto stream.
CEO of Business Unity South Africa