In my humble opinion, the major problem in South Africa is lack of electricity. We are somewhere between 5GW and 40GW short depending on who you talk to. South Africa's biggest exports are raw materials and jobs. And then we import the finished goods when we could manufacture them here. Our balance of payments is badly skewed for such a resource rich and employee rich country. Yet the government sees electricity as a taxation cash cow and milks it at every opportunity. However electricity is an enabler that gets an economy going. What's better: a few billion from electricity sales or country growth at 7%+ like at least 25 other countries in the world (in this so called recession) which would add over R400 billion to South Africa's GDP in the next year, and therefore R120 billion to the governments's coffers as the government represents 30% of our economic spend. Our failing: lack of electricity.
And yet we have incredible policy like the 2003 Renewable Energy White Paper which calls for increased competition in the electricity sector. And the recent renewable energy announcements like Feed In Tariffs in 2008 (supposed to be implemented in 2009) and then the IPP bidding windows (which have been delayed time and again).
Why hasn't the policy been implemented? The same reason as the policy in Italy wasn't implemented in the 1990's. Enel. Enel is the Italian monopoly. It helped to create a series of laws which prevented the adoption of Renewable Energy (RE). South Africa has 15 laws, 10 standards and 10 documents one needs to fill in to be connected to the electricity grid. The USA has two laws, 3 standards and one document. In Germany it take 8 working days to get a grid connection, reverse feed and feed in tariff agreement. In South Africa it is almost impossible, yet companies like Mondi have this agreement!
This overburden of red tape and bureaucracy is what is causing the lackluster implementation of RE in South Africa at exactly the time we need it most. We can decrease our costs whilst at the same time all become power stations helping ourselves and helping the economy at the same time. Yet we are prevented from doing this by our government and by Eskom, which say one thing and do another. Yet the citizens of South Africa are lashing out at high taxation and high electricity, fuel and food costs. And the solution is so simple! We can copy what other countries are doing at no cost to ourselves. We don't have to invent anything. Many of the problems foreseen in the 1990s have been solved, even though Eskom still sees them as problems.
The grid should be a nationally owned resource which people can feed into and take out of. This is called "retail wheeling" where a power producer can sell to a power consumer. And there are already retail wheeling tariffs in place, for example in the City of Cape Town. The City of Cape Town even has a Net Metering Tariff, but there is no way to implement this and so the tariffs send false signals to investors and homeowners and waste huge amounts of consultants and potential installers time.
This green washing should be illegal. Sending a message whilst preventing its adoption should be illegal. Someone should be accountable for this disaster.
Retail Wheeling is already in place in grids like:
- The train network in Europe where private train owners like Virgin can run their trains on the public network
- The airport network worldwide where operators pay to use airways and airports
- The telephone network which is the most complex system of all in terms of its billing.
In each of these cases there is a charge per km and a charge for using the station.
And there is a process in electricity called Net Metering which allows one to sell electricity and buy electricity at the same rate. I have said that I am prepared to sell at my rate less the retail wheeling tariff and to buy back as my rate. With a R3000 smart meter it isn't difficult to know how much one buys and how much one sells. And this meter can automatically update a central database.
Then there is the problem that Eskom keep telling us about which is peak demand which is outside sunny hours in South Africa. Yet Eskom created a standard called NRS 097 02 1 in December 2010 which allows Net Metering and Time of Use (TOU) Tariffs. And this Standard was adopted by NERSA in November 2011!!! TOU Tariffs in the City of Cape Town have a R5939 per day service fee. This service fee prevents homeowners from using TOU Tariffs and therefore helps to prevent the adoption of NRS 097. Yet it gives large users of electricity the opportunity to save money, make higher profits and pay their directors bigger bonuses. If the TOU Tariffs where R1.50 at normal (standard) time, R3 at peak time and 75 cents at off peak time (10pm to 6am), then the homeowner would be incentivised to cook at 10pm. For example a few weeks ago my wife ran our washing machine and did some baking from 10pm to 12pm. Why did she have to pay the normal rate for this usage?
In parts of Europe the rate is determined per minute and in some cases one can get electricity at 1 Euro Cent a kWh. Therefore in South Africa when the turbines are pumping and the sun is shining and the other RE sources are feeding power and the pumped storage dams are full and the big users have taken the additional demand they need at these points, then the price of electricity could be dropped to 10 cents per kWh. I know three friends with Kilns. They could set their Kilns to run at this low tariff.
TOU Tariffs also incentivise people not to use electricity at peak time and importantly incentivise people to install battery backup systems so that they can sell electricity to the grid at peak time.
Eskom currently spend between R4 and R11 per kWh running peaking power stations, in many cases using diesel, so if they can get electricity at R3, its a bargain for them.
And then there are solar powered power stations which have storage which is done using molten salt or molten sulphur. There are already power stations in Spain which run for 16 hours a day using the sun. And there are already cases of these power stations running for 24 hours. And these power stations cost less than nuclear power stations to build. And we have the huge North West Cape and Namibia region where these power stations could be built and a one hour time difference to the Eastern Part of South Africa, so there is a way to solve our electricity crisis, even at night.
All this renewably, sustainably, with prices that are coming down rather than going up. And this will avoid further widespread violence in South Africa because prices are going up so much faster than people's wages. The government says that job creation is its highest priority, But currently it is exporting jobs at an alarming rate to countries like Korea, China, Germany, etc, which are adding vaste amounts of electricity including renewable energy weekly. It is estimated that by the end of 2013 Germany will have more photovoltaic PV electricity than South Africa's entire capacity and that in 2013 China will add more wind energy than South Africa's entire capacity.
The RE industry worldwide is growing at around 14% as a whole and the PV component of that industry is now growing at 40% per annum and for the past 10 years it grew at 35% per annum compound annual growth rate. The reasons are obvious. People want cheaper electricity. And they also need electricity for their economies, businesses and homes.
The answers are available. They are easy to implement, but they demand that we all stand together.