7 steps to save our electricity system

[LazyLion]

South Africa’s severe shortage of electricity is threatening our economy and way of life. This is not an exaggeration. We must save our electricity system or South Africa will get stuck at our current level of development, no matter what else we try.

Here are the seven urgent steps needed to save the system, according Corporate Finance Consultant Dirk de Vos:

1. Electricity must get more expensive

Cheap electricity is over. Forever. We must pay at least what it costs to generate it on a sustainable basis.

2. Realise that Eskom’s problems started a long time ago

Eskom’s problems are not a recent phenomenon; it has always been inefficient. The cheap and abundant electricity of the past has always been funded by the taxpayer.

Even before 1990, South Africans consumed Eskom’s capital base through the lowest tariffs in the world and an unfunded electricity rollout programme.

Today Eskom is severely under-capitalised and over-indebted.

3. We must know exactly what’s going on at Eskom

Is Eskom being honest about the extent of its problems? Are they drip-feeding us little bits of bad news, because we supposedly can’t handle the whole truth?

We must know how much it will cost to get electricity generation back to acceptable levels. We must know and understand gridlock on coal supply agreements after 2016 and we must know the exact reasons for the massive cost over-runs and delays at Medupi and Kusile.

4. Make subsidies and developmental objectives explicit

Eskom should not have to fund things such as providing limited, free electricity; government must plan for this in its social welfare budget.

Municipalities must stop utilising enormous margins over Eskom’s electricity to fund various unrelated expenses. Energy efficiency won’t improve if local governments depend on consuming electricity for revenue.

Highly energy intensive industries such as aluminium smelting will have to close down.

5. Do no more harm

South Africa must become far less energy intensive.

Also, we simply must avoid any mega-projects such as a fanciful and unaffordable nuclear programme. We should rather incrementally build our generating capacity and get the private sector to participate so that they can shoulder the risk of delays and cost over-runs.

6. We need to solve this problem with the rest of Africa

Cheap South African electricity has inhibited generation in the rest of the continent, but this should start changing soon. Our neighbours might soon, for the first time, sell us something we actually need.

7. A last word

Our future prosperity is at stake. We should accept that we have adopted and invested heavily in the wrong energy generation model. Providing stop-gap funding to Eskom without addressing the root causes will not solve anything.

http://www.702.co.za/articles/1144/7-steps-to-save-eskom

 

[The_Unbeliever]

And no 8 - stop stealing 'leccy.

The more expensive it gets, the more people will start to steal.

 

[Budza]

All that makes too much sense to ever be implemented

 

[HavocXphere]

Step 1: Travel back in time

 

[Arthur]

What an idiotic list. "Corporate Finance Consultant", eh? What an embarrassment.

Gaan blaas doppies, I say.

On phone now so can't answer him point by point. Thank goodness. Just ignore him.

 

[HavocXphere]

What an idiotic list.

Can you do better though? As I said right now time machine sounds like the most viable fix to me...

 

[itareanlnotani]

My fixes:


1) Open up power production to 3rd parties. ASAP.

REIPP allowances are pitiful, especially when green energy is currently priced **cheaper** than Eskom can provide electricity at.

REIPP phase 3 bids were 70c/KW. Eskom generates at R2+ per KW currently for their Diesel turbines.
We're literally burning money at the moment.

Green energy includes a basket of Solar, CSP, Biogas etc, we need a mix of generation, to cater for different requirements. The REIPP tenders have proven that its feasible, Eskom, NERSA, and Tina Jomaas... wheres my bribe need to stop fighting it, and get with the program.


2) Break out Transmission, and Generation.

Sure, Eskom has underinvested in Transmission over the last few years and, that needs re-investment. Luckily its not as borked as everything else is, and can be fixed in the short term.


3) Eskom should be investing longer term in towards storage, rather than generation.
Leave generation to the private sector, as they're more efficient.

Storage on the other hand works far better in large scale, and should be done by the government.
World Bank is happy to loan money for Hydro / Green projects too..
The issue with that is that there isn't any kickback for that vs say... Nuclear, or Fracking, both of which are bad options for us at the moment.

Nuclear *is* a good option, but its a long term one, and we need short term year fixes. Longer term 10-20 years we can look at that - eg after we're back up and running.

4) Invest heavily in Hydro.
Lesotho is a prime area for that, and situated extremely well for transmission of generated power.
Boggles the mind why we don't have more done there.

5) Allow feedback into the grid / home generation.

Right now solar is on the cusp of being viable for the home user. It needs to be encouraged to lessen our load, vs castigated as it is now. Policies to encourage takeup should be made.

6) Pricing.

NERSA mandated that by 2007 all users would have "smart meters". Hasn't happened.
Needs to happen. Smart metering allows for demand based pricing.
Currently 9-11 and 6-8pm is peak time, and needs to be priced accordingly. Pricing will encourage people to invest in more efficient systems.

7) Eskom needs to stop being a political football. The ANC has literally killed Eskom with BEE, budget theft, Tender rigging, and more.
Eskom and NERSA need teeth, and their management clout to implement what needs to be done, without interference.

 

[Vrotappel]

Missed a couple of steps.

1) Privatize
2) Appoint people that know what they do to the board and management

No further steps necessary.

Number 2 of OP is not actually a step just nonsense.

 

[ReggaeBoyz]

Lesotho hydropower

We built the Muela underground Hydropower station in the 1990s and if you do a Google search you will see that they are looking to construct another one to give more power.