Financial services firm PwC says that there needs to be a concerted effort by multiple parties across South Africa to deal with the energy shortage and its impact on cities.
The firm said that the continued failings of the national power utility Eskom have negative effects on economic growth and jobs at a time when the country’s cities urgently need to get back up to speed after economic headwinds.
Rolling blackouts have been a constant for South Africans, with Eskom implementing load shedding for weeks on end with little to no reprieve. 2022 has been the worst year of load shedding on record – and there are still two months to go.
Eskom’s power issues are well documented: an ageing fleet, a major shortfall in skills, crime, corruption and all-around mismanagement have left the group with a massive shortfall in energy and not enough resources to deal with the infrastructure crumbling around it.
This has left schools, businesses, industries and entire cities having to find a way to move on without the embattled power utility in tow.
PwC said that resolving the energy shortfall requires a collective effort across private and public sectors, including and especially by cities, which play a key role in the development of sustainable energy strategies.
Years of underinvestment, cable theft, indigent households and the rising cost of electricity provided by Eskom all combine to create a cycle that hurts average consumers.
Under this pattern, the rising cost of electricity leads to rising prices for consumers, which in turn leads to increased evasion or inability to pay service charges – furthering increasing costs and reducing revenue for municipalities, increasing the negative impact on municipal finances, said PwC.
Energy strategies specific to each city will play a key role in achieving sustainability and energy stabilizing in the long run, said PwC.
In an ideal scenario, municipalities would purchase electricity from different suppliers in a competitive market at competitive prices, allowing resale at a surplus and transmission to households and businesses at lower costs to consumers.
PwC listed the following steps that can be taken for short-term results:
1. Municipalities can generate electricity themselves on a large scale
Generating electricity for disruption is very expensive at a time when municipalities lack capital. They may also be unable to match private sector producers in terms of the cost-effectiveness of generating electricity.
2. Municipalities can generate power themselves on a smaller scale
Through ‘microgrids’, small-scale embedded generation, as well as other sources of energy like biogas, can be used to keep cities’ own institutions functioning, said PwC. This would increase energy security, especially during downtime on the national grid.
3. Support and purchase electricity from independent power producers (IPPS)
In line with the recent lifting of restrictions that barred independent power productions, cities can scale up projects already in progress.
The City of Cape Town is currently tendering to provide 3,00MW of renewable energy through IPPs. The City of Johannesburg Metropolitan Municipality aims to procure about 500MW from IPPs and opened its first round of tender procurement for IPPs earlier in 2022.
4. Enable wheeling of energy generation (both the infrastructure and the policy framework)
Municipalities have the opportunity to be involved in the wheeling of electricity, and this can become a future revenue source to pay for municipal services, said PwC.
“This requires municipalities to invest in and set up the infrastructure to enable wheeling (allowing electricity to come into the municipal grid (currently from Eskom) as well as to set up the systems and policies for this to function.”
5. Minimize leakage and non-technical losses
Municipalities need to continue to ramp up security measures and draw on community involvement to help protect local energy infrastructure, said PwC.
6. Municipalities can also encourage households to alleviate pressure on the grid
A city can encourage businesses and consumers alike to save power, similar to how the City of Cape Town encouraged water-saving measures in 2017.
“Municipalities can also incentivize renewable energy generation such as through solar PV and incentivizing households to save power.”