On March 19, Executive Deputy Mayor and Financial Director in the City of Cape Town, Mr Neilson, announced that Eskom wants a 22.27 percent increase instead of the currently approved 12.69 percent increase. The City of Cape Town is blaming Eskom for the delay, but the City have already delayed their usual budget announcement by about a month as they have been waiting for NERSA to confirm this higher increase.
The City blaming NERSA for the delay is hypocritical. What isn't hypocritical is the huge increase that consumers will get, not just in electricity prices, but as electricity is in everything, everything is going to increase, including the cost of petrol and diesel which have big electricity components. Considering massive wage increases demanded by union members, plus this electricity increase, one can expect car manufacturers and mines to close down due to this increase and the South African economy is going to suffer, as if a "junk bond" (non-investment grade debt) financial status we also earned on March 19 isn't enough!
The reason the City delayed their budget announcement was because they've been expecting this additional increase! Rumours have been circulating for some time of a proposed 24% increase. NERSA's actual suggested increase is 22.27 percent and historically the City has increased tariffs by more than Eskom, so if Eskom put the price up by 22.27 percent, then we can expect a City increase of more than 22.27 percent.
Note that the after years of very high price increases NERSA moderated Eskom's requests for this year and next to eight percent, but Eskom has already managed to push the increase to 12.69 percent and now they appear to be getting towards 22.27 percent. One should note that Eskom's 22.27 percent increase is close to 17 cents per kWh, so the City only needs to increase their electricity tariffs by about 10 percent to recover this increase, and if they add inflation, then we should expect an increase of about 15 percent!
But the City have never chosen to increase tariffs by the cents amount Eskom have given them, and rather increased tariffs by the same or a higher percentage than Eskom have been given. This is grossly unfair.
For example, if Eskom charges the City 50 cents per kWh and the City charges homeowners R1.70, then if Eskom puts the price up to 60 cents, which is a 20 percent increase, the City could increase the price to R1.80, which is a 5.9 percent increase, rather than to R2.04, which is a 20 percent increase. Taking this into account, the City could "give back" to its homeowners and limit the increase to 11 percent whatever happens, and the City will still not lose any money when looking at the increases the City have already earned over the past seven years. Many more people would come to live in Cape Town, a City which would have relatively cheaper electricity prices than the rest of the country.
The benefit of these increases is that homeowners, including ones in townships, will shortly, with the right financial arrangements, be able to make their own electricity cheaper than they can buy it, including using batteries, and therefore a sea-change will be upon us as everyone gets into the electricity generation and sharing game.
South Africans, inventors and entrepreneurs, will force the Eskom monopoly to come to end, and a true competitive environment will finally emerge.
Yours faithfully,
David Lipschitz
Portfolio Head of Energy on the Greater Cape Town Civic Alliance (GCTCA) Exco.
Monday, March 30, 2015
Sunday, March 29, 2015
South Africans Against Rate Hikes
In a week, 12,000 people have liked a Facebook page which is against the proposed 24% Electricity Rate Hike in South Africa in July 2015: https://www.facebook.com/eskomprotest/
It calls on Eskom and the Government to Level the Playing Fields and allow competition in Electricity Provision. The ANC's 1998 policy White Paper on Energy called for 30% of the grid to be in private ownership by 2010 and the 2003 White Paper on Renewable Energy put in place the processes like Feed in Tariffs to allow Renewable Energy to be part of the mix. But this hasn't happened. Please sign
https://secure.avaaz.org/en/petition/South_African_Government_Level_the_Playing_fields_in_the_Electricity_Industry/?miJGmbb
and show your support for the alternatives. Don't just be against something. Be for something as well!
and show your support for the alternatives. Don't just be against something. Be for something as well!
Wednesday, March 25, 2015
Understanding Renewable Energy - Jargon Busting - Training
Please follow Load Sheding Guru on Twitter: https://twitter.com/LoadShedingGuru
Shedding has two D's except on Twitter :)
Please tweet this:
Understand Renewable Energy. Online Training (Webinar) by @LoadShedingGuru . http://loadshedding.guru/webinar-web-seminar/ #LoadShedding
Shedding has two D's except on Twitter :)
Please tweet this:
Understand Renewable Energy. Online Training (Webinar) by @LoadShedingGuru . http://loadshedding.guru/webinar-web-seminar/ #LoadShedding
Friday, March 20, 2015
A Great App To Read All Publications Can Be Made Even Better With A Few Tweaks: David Lipschitz's Letter in the Cape Times on Thursday 19th March 2015
A Great App To Read All Publications Can Be Made Even Better With A Few Tweaks: David Lipschitz's Letter in the Cape Times on Thursday 19th March 2015
Dear Editor
Thanks for adding the "Who wrote the article" to the top of each article on the iPad app.
Would it be possible to split the Opinion section into Opinion and Insight, like in the Cape Times?
Lastly, if one opens the Cape Times, for example, and reads some articles, or perhaps even the whole paper, and then uses the back arrows to open another newspaper (for example, Business Report), most of the time the other newspaper doesn't open, and the app hangs and then one needs to close the app to go into another newspaper.
Thanks for a great app, which allows one to read your publications from anywhere in the country or world.
Yours faithfully,
David Lipschitz
PS: I wasn't expecting the Cape Times to publish this letter, but they did, and perhaps part of the reason was because of my last paragraph, especially in light of the Premier of the Western Cape, Helen Zille, cancelling her Cape Times subscription and some negative publicity in the press. Personally I feel that the Cape Times is balanced in their opinions and always allows all sides in a particular debate to have their say.
Bring Culprits to Book: David Lipschitz's letter in the Cape Times on Monday 16th March 2015
Dear Editor
There is so much happening in the electricity industry at the moment, and so few of us who are up to date on proceedings and commenting on them. Thank you for the recent letters and articles that you have published.
The suspension of these Eskom executives couldn't have come at a worse time for South Africa and its electricity supply.
It is possible to conduct internal audits without suspending the most
crucial people on your board of directors. And that board was elected by the President and his cabinet!
There is so much happening in the electricity industry at the moment, and so few of us who are up to date on proceedings and commenting on them. Thank you for the recent letters and articles that you have published.
The suspension of these Eskom executives couldn't have come at a worse time for South Africa and its electricity supply.
It is possible to conduct internal audits without suspending the most
crucial people on your board of directors. And that board was elected by the President and his cabinet!
As the cabinet has a "war room", set up on December 11, concerning Eskom, shouldn't the entire cabinet be suspended? This would create an automatic election. Or at least suspend the current and former ministers of energy and of public enterprises.
[I listed their names: the Cape Times left the names out: They are Lynne Brown, Malusi Gigaba, Dipuo Peters, Ben Martins, Tina Joemat-Pettersson.]
Former Eskom chief executive Brian Dames, who the position from July 2010 until March 2014, should also be called to book as well as all the suppliers and unions who signed contracts to build the Medupi and Kusile power stations in eight years, and at budgets 37 percent lower than currently, and who have failed miserably in this task.
[I listed their names: the Cape Times left the names out: They are Lynne Brown, Malusi Gigaba, Dipuo Peters, Ben Martins, Tina Joemat-Pettersson.]
Former Eskom chief executive Brian Dames, who the position from July 2010 until March 2014, should also be called to book as well as all the suppliers and unions who signed contracts to build the Medupi and Kusile power stations in eight years, and at budgets 37 percent lower than currently, and who have failed miserably in this task.
Yours faithfully,
David Lipschitz
Thursday, March 19, 2015
Potential electricity price increase of 24% in July 2015
One way to prevent Load Shedding is to make electricity unaffordable:
CITY OF CAPE TOWN
19 MARCH 2015
STATEMENT BY THE CITY’S EXECUTIVE DEPUTY MAYOR, IAN NEILSON
City concerned at Eskom’s application to NERSA
The City of Cape Town yesterday received correspondence from Eskom with respect to their reopening of the MYPD 3 determination in an application to the National Energy Regulator of South Africa (NERSA).
This application is a request from Eskom for a reopening of the current tariff fee so that an adjustment in the revenue requirement be considered during the 2015/16 financial year, which equates to a price adjustment of an additional 9,58%. This is in addition to the already announced 12,69% for 2015/16.
The City of Cape Town is very concerned that this application has come so late in the process for the drafting of budgets by municipalities.
Our draft budget to be tabled next week, including the City’s electricity tariffs, is based on the approved 12,69% increase.
If Eskom’s application is approved, this will result in a staggering 22,27% increase in bulk electricity tariffs in just one financial year, which the City will have no option but to pass onto our own customers.
This puts us in the unfortunate position of having to tell our customers, at this late stage of the budget cycle, that the draft budget that will go for public participation next week has not considered this unexpected new possible price hike and that the tariff increases proposed may have to be further significantly increased if NERSA agrees to the Eskom application.
The size of the proposed increase may be unaffordable to many of our electricity customers, particularly the residential users.
We apologise to our customers in advance that we will have to proceed with a budget announcement on electricity tariffs that will likely increase even more than tabled, but this is not of our own making.
We call on NERSA to resolve this application as a matter of urgency.
End
Issued by: Integrated Strategic Communication, Branding and Marketing Department, City of Cape Town.
CITY OF CAPE TOWN
19 MARCH 2015
STATEMENT BY THE CITY’S EXECUTIVE DEPUTY MAYOR, IAN NEILSON
City concerned at Eskom’s application to NERSA
The City of Cape Town yesterday received correspondence from Eskom with respect to their reopening of the MYPD 3 determination in an application to the National Energy Regulator of South Africa (NERSA).
This application is a request from Eskom for a reopening of the current tariff fee so that an adjustment in the revenue requirement be considered during the 2015/16 financial year, which equates to a price adjustment of an additional 9,58%. This is in addition to the already announced 12,69% for 2015/16.
The City of Cape Town is very concerned that this application has come so late in the process for the drafting of budgets by municipalities.
Our draft budget to be tabled next week, including the City’s electricity tariffs, is based on the approved 12,69% increase.
If Eskom’s application is approved, this will result in a staggering 22,27% increase in bulk electricity tariffs in just one financial year, which the City will have no option but to pass onto our own customers.
This puts us in the unfortunate position of having to tell our customers, at this late stage of the budget cycle, that the draft budget that will go for public participation next week has not considered this unexpected new possible price hike and that the tariff increases proposed may have to be further significantly increased if NERSA agrees to the Eskom application.
The size of the proposed increase may be unaffordable to many of our electricity customers, particularly the residential users.
We apologise to our customers in advance that we will have to proceed with a budget announcement on electricity tariffs that will likely increase even more than tabled, but this is not of our own making.
We call on NERSA to resolve this application as a matter of urgency.
End
Issued by: Integrated Strategic Communication, Branding and Marketing Department, City of Cape Town.
Monday, March 16, 2015
"Power stations should be embedded in the system and owned by ratepayers". Insight article by David Lipschitz in the Cape Times on Friday March 13th 2015
Dear all
Article in Friday's Cape Times Insight Page. They called it "Power stations should be embedded in the system and owned by ratepayers".
Dear Editor
Ian Neilsen's announcement, in yesterday's Cape Times, that the City of Cape Town will get into the gas power station business - "Power cuts are costing Cape Town R1 billion a month" - is interesting and on the surface seems as if it should be applauded.
Neilsen said, at the Energy Efficiency Workshop at Old Mutual on March 10, that Angola is flaring its gas, and that this gas could be brought to South Africa.
Flaring is a process that has happened for decades where miners mine the oil, and burn the gas, which they see as a valueless by-product!
At a gas conference in Johannesburg on February 20, I learnt that South Africa will probably be able to directly import gas from the off-shore gas fields off the North West Coast of South Africa and offshore Namibia. In the short term, this might also be shipped to Saldanha Bay as a port of entry into South Africa. The short term in the energy business is five years!
I asked what about the new Mozambican gas fields and was told that all this gas is already sold to Asian countries who are prepared to pay more for this gas than the "market price", and more than we South Africans are prepared to pay.
I also learnt that building a gas pipeline from Saldanha Bay will take at least two years and the technology to take very high pressure gas off ships and decompress it to land-based working pressures is incredibly expensive. Neilsen said that there are ships that can decompress the gas themselves. But how expensive are these floating decompression ships, and how much demand is there for them worldwide?
So even if the City of Cape Town goes full steam ahead with its new gas strategy, the gas is at least two years away from getting to Eskom's Ankerlig power station, near Atlantis, which currently runs using diesel. And if the City starts building a gas power station in its own territory today, how long will that take, and what of EIA's, building permits, etc? How far is the City down the road of actually working out how to implement their gas strategy?
Therefore it seems to me that Ian Neilsen is being irresponsible by promising the Western Cape that our saviour is imported gas, which is at least two years away from actually helping us with any kind of energy generation.
Businesses that are already looking at alternatives might delay their purchase decision while waiting for the City's new power stations to come on stream, and might actually be much worse off, as opposed to taking action now.
We already know that South Africa's load shedding will continue for at least another five years and probably longer. Some weeks it will not be there, but sometimes it will be daily.
What we really need is for the Western Cape government and the City of Cape Town to allow the local economy to dramatically grow by allowing embedded generation (EG) on peoples' and businesses' rooftops, gardens and fields.
Statistics from utilities in the US show that "avoided costs" in the transmission and distribution system are more than the cost of allowing net metering and EG.
Job growth in cities which allow EG are 10 times faster than the economy as a whole and that 75% of installation jobs are local and cannot be exported.
Article in Friday's Cape Times Insight Page. They called it "Power stations should be embedded in the system and owned by ratepayers".
Dear Editor
Ian Neilsen's announcement, in yesterday's Cape Times, that the City of Cape Town will get into the gas power station business - "Power cuts are costing Cape Town R1 billion a month" - is interesting and on the surface seems as if it should be applauded.
Neilsen said, at the Energy Efficiency Workshop at Old Mutual on March 10, that Angola is flaring its gas, and that this gas could be brought to South Africa.
Flaring is a process that has happened for decades where miners mine the oil, and burn the gas, which they see as a valueless by-product!
At a gas conference in Johannesburg on February 20, I learnt that South Africa will probably be able to directly import gas from the off-shore gas fields off the North West Coast of South Africa and offshore Namibia. In the short term, this might also be shipped to Saldanha Bay as a port of entry into South Africa. The short term in the energy business is five years!
I asked what about the new Mozambican gas fields and was told that all this gas is already sold to Asian countries who are prepared to pay more for this gas than the "market price", and more than we South Africans are prepared to pay.
I also learnt that building a gas pipeline from Saldanha Bay will take at least two years and the technology to take very high pressure gas off ships and decompress it to land-based working pressures is incredibly expensive. Neilsen said that there are ships that can decompress the gas themselves. But how expensive are these floating decompression ships, and how much demand is there for them worldwide?
So even if the City of Cape Town goes full steam ahead with its new gas strategy, the gas is at least two years away from getting to Eskom's Ankerlig power station, near Atlantis, which currently runs using diesel. And if the City starts building a gas power station in its own territory today, how long will that take, and what of EIA's, building permits, etc? How far is the City down the road of actually working out how to implement their gas strategy?
Therefore it seems to me that Ian Neilsen is being irresponsible by promising the Western Cape that our saviour is imported gas, which is at least two years away from actually helping us with any kind of energy generation.
Businesses that are already looking at alternatives might delay their purchase decision while waiting for the City's new power stations to come on stream, and might actually be much worse off, as opposed to taking action now.
We already know that South Africa's load shedding will continue for at least another five years and probably longer. Some weeks it will not be there, but sometimes it will be daily.
What we really need is for the Western Cape government and the City of Cape Town to allow the local economy to dramatically grow by allowing embedded generation (EG) on peoples' and businesses' rooftops, gardens and fields.
Statistics from utilities in the US show that "avoided costs" in the transmission and distribution system are more than the cost of allowing net metering and EG.
Job growth in cities which allow EG are 10 times faster than the economy as a whole and that 75% of installation jobs are local and cannot be exported.
Furthermore, the levy, a tax that every electricity user in this land has paid since 2009, should be used for the purpose it was designed! At this moment this levy is 3.5 cents a kWh and the recent budget wants to push this up to 5.5 cents a kWh!
The City should immediately take the government to the Constitutional Court to get this money for proper net metering, and if the government is not prepared to allow this, then the tax should be declared illegal and the money should be repaid to all electricity users.
I look forward to the City communicating the reality of the electricity situation in the Western Cape, and while I would like the City to have power stations, I believe that these power stations should be embedded in the system, owned by the City's shareholders, that is, its ratepayers, rather than the City itself. This system is far more efficient and less prone to corruption and time consuming delays.
Yours faithfully,
David Lipschitz
Portfolio Head Energy GCTCA ExCo
Ph 021 813 9895
The City should immediately take the government to the Constitutional Court to get this money for proper net metering, and if the government is not prepared to allow this, then the tax should be declared illegal and the money should be repaid to all electricity users.
I look forward to the City communicating the reality of the electricity situation in the Western Cape, and while I would like the City to have power stations, I believe that these power stations should be embedded in the system, owned by the City's shareholders, that is, its ratepayers, rather than the City itself. This system is far more efficient and less prone to corruption and time consuming delays.
Yours faithfully,
David Lipschitz
Portfolio Head Energy GCTCA ExCo
Ph 021 813 9895
Wednesday, March 11, 2015
Vital Solution Ignored. Letter in Cape Times on 11th March 2015
NERSA has published a request for comment on their web site regarding "net metering" and embedded generation (EG).
In South Africa, peak demand typically happens between 7am and 10am in the morning, and 6pm and 8pm in the evening.
The document assumes that EG cannot help with peak demand and ignores battery-based systems, fuel cells, biodigestors running on farms at peak times, sewerage-mining and so on.
This fundamental assumption causes the document to, again, ignore the huge potential of homeowners and rooftop owners to completely remove their peak demand and thus effectively supply the grid with electricity at peak time. Meaning South Africa's peaking power stations will not be needed, and the economy will expand.
Note that here is my full email to NERSA, based on this document:
Dear NERSA
I have read the latest discussion document dated 25th February 2015 as well as the draft discussion document dated 10th December 2014 and I have the following comments and observations:
1) The new document excludes the PV installation list from around the country. This is unfortunate as your readers will not have an idea of the scale of existing systems already being installed. Of-course this list ignores systems less than 1 MW, but nevertheless it is an interesting list.
2) The list of concerns has also been left out. One of the many reasons for the poor adoption of Embedded Generation in South Africa is because government misunderstands how important electricity generation is for the economy, and instead focuses on potential lost generation and compensation.
3) It is unfortunate that the System Profile Impact graphs have been ignored in the latest version. These graphs show how Renewable Energy will impact on the load profile of the grid. Having this information means that installers and users of EG can make proposals to move their loads to when the sun is shining.
4) Both documents assume that EG cannot help with peak demand and ignore battery based systems, fuel cells, biodigestors running on farms at peak times, sewerage-mining, etc. This fundamental assumption causes the document to again ignore the huge potential of homeowners and roof top owners to completely remove their peak demand and thus effectively supply the grid with up to 17 GW of electricity at peak time, meaning that South Africa's peaking power stations will not be needed, the economy will expand, etc.
Please acknowledge receipt of this email and add me to your communication database for the Public Hearings, etc.
Yours faithfully,
David Lipschitz
In South Africa, peak demand typically happens between 7am and 10am in the morning, and 6pm and 8pm in the evening.
The document assumes that EG cannot help with peak demand and ignores battery-based systems, fuel cells, biodigestors running on farms at peak times, sewerage-mining and so on.
This fundamental assumption causes the document to, again, ignore the huge potential of homeowners and rooftop owners to completely remove their peak demand and thus effectively supply the grid with electricity at peak time. Meaning South Africa's peaking power stations will not be needed, and the economy will expand.
Note that here is my full email to NERSA, based on this document:
Dear NERSA
I have read the latest discussion document dated 25th February 2015 as well as the draft discussion document dated 10th December 2014 and I have the following comments and observations:
1) The new document excludes the PV installation list from around the country. This is unfortunate as your readers will not have an idea of the scale of existing systems already being installed. Of-course this list ignores systems less than 1 MW, but nevertheless it is an interesting list.
2) The list of concerns has also been left out. One of the many reasons for the poor adoption of Embedded Generation in South Africa is because government misunderstands how important electricity generation is for the economy, and instead focuses on potential lost generation and compensation.
3) It is unfortunate that the System Profile Impact graphs have been ignored in the latest version. These graphs show how Renewable Energy will impact on the load profile of the grid. Having this information means that installers and users of EG can make proposals to move their loads to when the sun is shining.
4) Both documents assume that EG cannot help with peak demand and ignore battery based systems, fuel cells, biodigestors running on farms at peak times, sewerage-mining, etc. This fundamental assumption causes the document to again ignore the huge potential of homeowners and roof top owners to completely remove their peak demand and thus effectively supply the grid with up to 17 GW of electricity at peak time, meaning that South Africa's peaking power stations will not be needed, the economy will expand, etc.
Please acknowledge receipt of this email and add me to your communication database for the Public Hearings, etc.
Yours faithfully,
David Lipschitz
Change your thinking: Does Solar Electric Renewable Energy really cost more?
People complain about the high cost of Renewable Energy. Here is my answer to two of them.
Hi Willem and Mike. You both need to think about it a different way:
Hi Willem and Mike. You both need to think about it a different way:
- What will your cash flow be with a solar system? If you are paying R2,000 per month now, and you can install a system, without batteries, and it costs you R1,800 per month, then even though this represents R180,000 of capital, you should do it. A grid tie system without batteries can be paid over 20 years at 10% interest rates.
- Lots of people, especially those who work from home, or SMME's, and even the big boys, are installing backup systems, which don't supply their entire needs, but which for about R100,000, give them security of supply during Load Shedding and BTW, also reduce their normal electricity cost.
- In 2008, I decided to spend R200,000 on a backup system for my house instead of buying a new Renault Clio. I therefore initially spent R5,000 per month instead of R600 per month. Over 5 years this R600 would have become R1,800 with increases. Eventually my "car" was paid off (in five years), in December 2013, and in January 2014, my electricity bill dropped to R400 per month, instead of R1,800 per month that it would have been now.
- If the government allowed "rich" people (by rich people I mean taxpayers) to install their own systems before Tax and before VAT, just like IPP's can, then these peoples's battery based systems would already save them money.
- If the government had spent the R300 billion it has spent on Medupi and Kusile, so far, on poor peoples' houses, then it could have made 6 million of these houses into power stations already.
So it's just a matter of changing our thinking. And that is the problem.
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