"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.
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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