Letter in Cape Times 22nd January 2016: Follow Strategy

Follow Strategy

The Nersa hearings and Eskom's 17 percent price increase request refer.

The reason for Eskom's customers not buying its product, electricity, is because Eskom have told their customers not to buy its product.

The price is too high and it isn't available.

One might think that load shedding isn't happening, but Eskom has 30GW and should already have 50GW, according to their own forecasts.

If South Africa was like the rest of the world, then South Africa would have 160GW by now. Electricity growth worldwide is 4 percent per annum and South Africa had 40GW 20 years ago.

Eskom made "profits" (actually prepayments from its customers to ensure service delivery in the future, which should have got us 50GW by now) in the past and paid massive bonuses. Now it's time for it to tell its employees to pay in, just like the rest of us have to when the going gets tough.

And giving Eskom R8 billion for diesel is like paying them because of the mistakes it has made - rewarding failure! The way to solve this problem is to implement the contents of the Energy White Paper of 1998 and the Renewable Energy White Paper of 2003. White Papers are the basis of government's strategy. If our government followed their own strategy, South Africa wouldn't be in this mess.

Energy Analyst David Lipschitz Interviewed on CNBC Africa - by phone - Open Exchange Program - Interviewed by Tumisho Grater

The points I spoke about are:

1) NERSA: the price increase is not off, just delayed. (NERSA said "Eskom's documentation is not in order." I think Eskom will try for an increase in January so that municipalities can get ready.)

2) Government doesn't want to fund Eskom anymore. Eskom's financing status at "Junk" which means that debt financing is very expensive.

Normal financing isn't working anymore. We need to think differently.


3) Use Time of Use Tariffs for everyone in South Africa. Then people can choose what they want to pay, eg 50 cents per kWh between 10pm and 6am; R2 from 6am to 10pm and R4 at peak time (7 to 10am and 6 to 8pm).


4) Use Demand Response for everyone in South Africa. Then Eskom can do "load shedding" and switch off non-essential loads in peoples houses.


What I didn't mention is that Net Metering should also be implemented without a service fee. This will incentivise people to make electricity and especially to sell it at peak time. Sales can be at 40 cents per kWh, R1.60 per kWh and R3.20 per kWh and Eskom can pocket the difference between their buying and selling price.

TOU and DR for homeowners!!

It's time for Time of Use Tariffs and Demand Response for Homeowners.

Let homeowners decide for themselves if they want to pay more for electricity at peak times and or have load shedding or part load shedding.

And please don't let Eskom say its impossible. I lived in the UK from 1987 till 1995 and we already had Time of Use Tariffs in the UK back then on meters where we paid our accounts in arrears.

http://www.engineeringnews.co.za/article/eskoms-molefe-comes-out-swinging-on-final-day-of-nersa-hearings-2015-06-24/rep_id:3182

Oh, and its about time that homeowners understand these abbreviations:

• TOU: Time of Use Tariffs: paying different rates for electricity at different times of the day
• DR: Demand Response: switching off particular circuits such as cooking, geysers, air conditioning, under floor heating, swimming pool pumps, etc, which don't affect all the things we need to keep running in our houses. And if you are cooking a cake and you don't want the oven to switch off, you press a button and the oven stays on and you just pay a higher rate until your cake is cooked.

CNBC Interview on 23rd June 2015: David Lipschitz in the news

"National Energy Regulator of South Africa (Nersa) begins its public hearings into Eskom's 25.3 per cent tariff increase application for the 2015-16 financial year. To discuss this CNBC Africa is joined by David Lipschitz, energy analyst at My Power Station: Software, Energy, Power."

And the video is here. I was interviewed on CNBC Africa's Open Exchange Program, by Tumisho Grater.

And CNBC's article is here.

On Facebook. On Twitter. On Google+.

And on CNBC Africa's daily news feed here. Click on:

"ESKOM PLEADS FOR TARIFF HIKE, BIG BUSINESS WARNS OF JOB LOSSES"

Unpublished Letter: 20th March 2015: Eskom's possible 24% Electricity Price increase

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.​

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