While South Africa currently sits with an electricity supply crisis, businesses need to look beyond the “doom and gloom” and start preparing for a much better power scenario, says Busi Muvaso, chief executive officer of Business Leadership South Africa (BLSA).
Eskom has once again laid out a week-long plan for load shedding across South Africa, announcing on Sunday that stage 3 outages will have to be implemented between 17h00 and 22h00 on Monday and Tuesday – during the evening peaks – falling back to stage 2 for the rest of the week in the same time slot.
The power utility has faced increasing breakdowns at its power stations over the last several weeks, with unplanned outages sitting above 17,500MW offline.
With winter approachings, Eskom has reported increased demand in the mornings (05h00 to 09h00) and evenings (16h00 to 22h00) and warned that the system is and will remain particularly vulnerable during these times.
According to Muvaso, it is easy for South Africans and businesses, in particular, to lose sight of the longer-term outlook for electricity generation and distribution while being besieged by seemingly never-ending load shedding.
“But this should not blind us to the fundamental changes that are occurring in the policy environment. They lead inevitably to a world in which the private sector is going to be largely responsible for generating and selling electricity, and I expect distributing some of it too,” she said.
Despite the current energy crisis, Eskom’s unbundling into three distinct units is progressing – and the Electricity Regulation Act (ERA) has been amended to allow companies to build electricity plants that produce up to 100MW for own use, she said.
This points to a future where South Africa will have an independent system operator, free to buy electricity from whoever can sell it at the lowest price.
“Eskom’s generation unit will be one of those bidding to supply, but perhaps most of the supply will come from other generators from the private sector,” she said. “Dedicated generation companies can be set up which can wheel across the grid directly to customers. Larger generators can obtain licences and also wheel,” said the business leader.
“You can start to imagine how this will look – a competitive electricity supply market, selling to customers or the independent system operator as supply and demand patterns shift.
“The opportunities for business are obvious – as generators and consumers. Plants created for own-use can become viable in the knowledge that excess capacity can be sold into the grid. Investment that is now impossible because of electricity insecurity can be made viable through contracts with future suppliers.”
Muvaso said that this outlook is some years out, but encouraged businesses to start planning for it – while also being aware of some “serious impediments” that still lie in the way.
“The ERA amendment has hit a new roadblock with the National Electricity Regulator of South Africa insisting on a registration process that is almost as cumbersome as licensing.
“The Eskom unbundling is going to be difficult – Eskom’s balance sheet remains stressed and debt holders will have to agree to an unbundling that will change the asset mix that they currently have rights to. These are daunting obstacles to navigate,” she said.
But even despite these significant roadblocks, Muvaso said that progress is being made, and that South Africa will end up with a “thoroughly modern electricity supply sector”, including:
- Many generators competing with each other;
- An efficient and effective distribution operator;
- A wide marketplace for consumers to buy electricity;
- It will deliver both the reliability and low-cost production;
- It will be far greener than our current reliance on coal-based generation;
- It will support significant domestic economic activity through the supply chain required to build and maintain it.
“For business, the challenge is to see through the doom and gloom of our current electricity mess,” Muvaso said. “There is a much brighter future on the horizon. The strategic thinking needed now is how to plan for it.”