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Winds of change needed to keep lights on

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Power utility hampered by huge debt faces challenge to finance any new power generation

ENERGY experts agree that Eskom’s huge debts and inability to finance new power generation capacity have left South Africa with no choice but to opt for alternative hybrid energy systems of gas, solar power and wind energy.

Director of the Power Futures Lab at the University of Cape Town’s Graduate School of Business, Professor Anton Eberhard, said: “Eskom has huge debt, more than R450billion. It is unable to finance any new power generation capacity and the country desperately needs more power.

“We thus have to open the power market for privately funded independent power producers (IPPs).”

Eberhard was speaking after Premier Alan Winde promised in his State of the Province address that the Western Cape would help councils procure energy from renewable energy independent IPPs (RE-IPPs) to speed up processes.

This after President Cyril Ramaphosa stated in his State of the Nation address that municipalities would be allowed to source energy directly from RE-IPPs.

On fears of the expense procuring power from RE-IPPs, energy economist Ted Blom said: “RE-IPPs would turn out to be a very expensive option if there was no supplementation. Currently, gas prices around the world are cheap, so renewable energy combined with gas could be more economical than Eskom depending on the expertise of the architect of the system.”

But Blom cautioned: “There are very few experienced engineers who can put together a hybrid system as well as the interconnections and software.”

“If the RE-IPPs are not combined with gas IPPs they would have to be reliant on Eskom for peak-time supply and then they would be far worse off as Eskom would increase its peaking tariffs to above R30/kWh,” said Blom.

Deidré Baartman, chairperson of the Standing Committee on Finance, Economic Opportunities, said: “The Western Cape’s recently released feasibility study for integrated liquefied natural gas importation and gas-to-power project shows that Saldanha Bay port is the most suitable port for the importation of LNG.”

Asked if it wouldn’t be cheaper in the long run to fix Eskom and continue getting power from it, Eberhard said: “We have to continue to try to fix Eskom. It currently supplies close to 90% of our electricity. But this is a long, difficult process. And they don’t have enough power to meet South Africa’s needs. On the other hand, structural and regulatory reforms to accelerate private investment in power is relatively easy,” said Eberhard.

Tobias Bischof-Niemz, Centre Manager for Energy at the Council for Scientific and Industrial Research, said: “Eskom has the wrong technology focus. Eskom itself could of course build solar and wind farms but for that Eskom/the government would have to raise the capital, which is difficult at the moment.”