Alex Romero

Currently, South Africa is the 5th highest coal producer in the world. About 90 percent of South Africa’s entire electricity production comes from coal firing power stations, making us the 14th highest contributor to greenhouse gasses in the world. This coal also brings in billions of Rands through exports, employs hundreds and thousands of South Africa’s majority unskilled labour force and annually provides about 77 percent of South Africa’s energy needs fuelling our industrialization and mass electrification programs.

From this, and the above diagram it is clear that the South African electricity production relies heavily on coal. A problem lies in the fact that this reliance will grow exponentially with time, and by 2030 South Africa is estimated to double its current energy requirements. This a massive problem because South Africa is already depleting its coal reserves and soon, there, quite simply, won’t be any coal to use, and that’s without worrying about its environmental impact. Once, not if, these reserves are fully depleted, there will be mass unemployment, deficits in energy production and huge foreign investment lost, things all on which our economy so greatly relies. These are the reasons for a new, renewable energy system needing to be implemented.


But first, a brief summary of South Africa’s current energy production situation. General mismanagement has seen Eskom, our monopolistic parastatal energy supplier, unable to cope with South Africa’s increasing demands. This comes as a result of lack of long term maintenance, stretching back to the late 90’s,  of existing power stations, and the almost ten year delay on the construction of 2 major coal-fired power stations Medupi and Kusile. The main reasons for these delays come down to a lack of clear funding and policy decision, this made worse by difficulties in Labour  relations. Because of this these delay the commissioned power stations have cost more money than they will ever generate, because soon majority of existing coal fields will exhaust, south Africa's main existing coal fields in the Ecca deposits (seen to the right  in mustard yellow) are expected to be the first to exhaust. An additional R90billion will be needed to establish new coal fields adding to the R340billion spent on the construction of these plants. And even these new coal fields are estimated to exhaust before Medupi and Kusile break even.


So it is clear that mistakes have been made and that we cannot turn to burning fossil fuels as a means to produce electricity any longer. The government understands this, as it became a signatory to the Kyoto Protocol, in which constituent parties must reduce greenhouse gas emissions, based on the premise that global warming exists and that man-made CO2 emissions have caused it. The government also implemented the Integrated Resource Plan in 2010, in which it aims to support a diverse range of green energy programs and to have 42percent of energy produced renewably by 2030. On top of this, the National Treasury, Eskom and the Development Bank are working on a program that will work with independent green power producers. And this is where I believe the problem will be solved. 


The reason being that the problem, in my opinion, lies in Eskom’s monopolistic control of electricity production. We need a system whereby multiple privately held companies, in competition with one another and Eskom, generate green electricity. This would bring the core principles free market operation, promoting efficiency for both the consumer and supplier. However at the moment government policy and legislation make it very difficult not only for companies selling back to the grid as a commercial venture (IPP’s, Independent Power Producers), but also for ordinary households to do so. Time must be spent to draw up new, national legislation on this issue by government and relevant municipalities. Included in this new legislation must be an increase in payment to these IPP’s per kilowatt put back on the grid. The current coal-fired power stations Produce electricity at roughly R3 a kilowatt. IPP’s receive a maximum of only 50c a kilowatt produced. If this rate is increased, there will be more willing to invest in becoming an IPP.


Because of these legislative problems, certain companies have offered to install solar panels to household or corporate users, in return they receive a monthly payment that would be charged at a slightly lower rate to that of their normal electricity bill. Eventually the users would have paid off the solar panels, and can enjoy free, clean energy for years (purple line).


A system could be put in place whereby government either subsidizes these solar panel companies (to allow for monthly payments from clients rather than a once off payment, seen in the purple line in the above graph), or the corporations themselves. In the latter option, corporations could then send back surplus electricity onto the grid without fee to compensate the government subsidy. These solar panel companies are already in existence and money to perform the subsidies mentioned above could be found in the decommissioning of the Medupi and Kusile power stations amongst other places.


These power stations will not generate enough electricity to compensate their cost, proof of this was reported earlier. They need to be decommissioned, problem is that this would see a massive loss with the money invested, however the sooner it happens smaller the loss. 


The money left in both station’s budgets could then be put into the subsidies mentioned above. Or it could simply be put into other forms of renewable energy production. The options are diverse and extensive for where this money could go, but what is important is that government understands its obligation to plan for the future, to ensure the future stability of electricity production in South Africa. To do this it must decommission the power stations, change its IPP policies, look into subsidizing these IPP’s and lose Eskom's monopolistic hold on South Africa’s energy production.



* Alex Romero is a Grade 11 student at Rondebosch High School