Rikus Grobler | Oct 18, 2017 | 0
The winter of our energy discontent
With the first portent of another winter arriving during the week, energy is again on everybody’s mind. And it is not only the dreaded fear of an exorbitant electricity bill that haunts the local psyche, but also the very real threat that South Africa may run short during cold spells, and decide to flip the switch, casting us into darkness and cold nights.
Despite all the fingers pointed at SA’s energy utility, Eskom, I find the accusations and recriminations rather senseless. If we were not able to improve our energy situation significantly almost a quarter of a century, what can we expect to achieve in the future, either near or far.
In the beginning power from South Africa was cheap and convenient, relieving us of the immediate need to come up with a domestic solution, or solutions. But energy analysts have been telling us for at least 15 years, the end of the road is in sight. The seriousness of this dependency should have dawned upon us two years ago when Eskom asked its regulator permission to increase the cost of electricity by some 36% to make it “market related”.
The outcome we have all experienced. When electricity goes up in South Africa, it goes up in Namibia. When it goes up in SA by an exorbitant jump, it also jumps here. Check your municipal account for confirmation of this simple truth. So, in my eyes there is no room to blame the powerful neighbour. The power is now at an end and we have been caught with our pants around our ankles.
But what is in this pseudo-economic concept of a market related cost for energy? Looking at this question, there are a number of fundamental issues which we need to acknowledge before embarking on any scatterbrain scheme to become energy self-sufficient.
Energy is required in unlimited quantity if an economy is to grow and at the same time, become competitive. On top of being abundant, energy must also be cheap otherwise it kills all the intended industrial developments even before they take off. When energy is cheap, it can be supplied to the household and business consumer at a rate far below what we pay now. But the most attractive aspect is that the excess energy can be made available to large industrial investors, at even cheaper rates. This single aspect of the affordability of electricity is what drove South Africa’s massive industrialisation programme in the sixties and seventies. There was such an abundance of electricity, generated cheap smack on top of the coal fields, energy as an overhead cost component was almost negligible when industrial investors had to calculate the financial feasibility of their projects. Alas, that is no more and there is growing strife in South Africa because large mines and mineral processing plants pay so much less for their electricity than the punitive rates dumped on ordinary consumers, and on us.
Again, dissecting the earlier SA model of cheap energy, it is distressing to admit that after 23 years of talk talk talk, we have not made one tangible move to develop our own substantial coal field located in the Aranos district. This resource has been saddled with controversy after controversy, with infighting between landowners, infighting between project partners, and infighting between party fatcats and the government, on who should get the biggest slice. Meanwhile, Namibia as a whole, is facing the consequences while the immense strategic advantage of building a power station on top of the coal field, gets shifted to the back burner.
It is not as if the homework on the Aranos coal field has been neglected. No, in fact it is arguably one of the best-researched mineral deposits in the country. The groundwork was laid by Anglo American when a project was mooted to mine and export this coal. But control issues quickly derailed this effort so it was abandoned. After Independence, it featured again, twice, even with talk of extending the existing railway line to reach the coal field, again with a view on export.
In my mind, these attempts were basically all undermined by greed and this scenario will probably be repeated if left to private interests. I think it is now time for the government to step in as development facilitator, to force the realisation of the potential of the Aranos coal resource.
If we take self-enrichment out of the equation and we view it as a strategic national resource, then we can generate our own electricity, in fact far more than we need ourselves, at a fraction of the cost that we now have to pay Eskom. Then we do not need to worry about prohibitively expensive projects like Kudu, or a second hydro project in the Kunene. But then the power station must be built on location, and only the energy must leave the site, through the transmission lines we have already built. Think what it can do for the local market if a project like that is floated on the stock exchange from inception to operation.