Cape Town Mayor Geordin Hill-Lewis responds to Daily Friend columnist Andrew Kenny
I was pleased to read Andrew Kenny’s critique of Cape Town’s response to the national energy crisis. Andrew is an expert energy commentator whose opinion I take seriously. In this response I aim to explain why I disagree with some of his premises. And more importantly, why I simply cannot agree to accepting another ten years of load-shedding that he says is inevitable.
I’m by no means an expert at his level, but I’ve poured myself into reading on this topic over the last year, primarily because I am outraged at the economic self-immolation South Africa is committing through continued load-shedding.
As he acknowledges further down in his piece, Cape Town’s recently released tender for new sources of independent power makes it clear that we will only consider bids that meet or beat Eskom’s current price. So the risk of higher tariffs does not arise.
He welcomes this, but questions whether it is possible. We believe it is, and time will soon tell, since the bid period will soon close and the competitive prices will be in. The strength of early interest in the bid process is a very encouraging sign.
This also doesn’t take account of Eskom’s steeply rising prices – over 400% over the past decade, and showing no signs of slowing down – while we are procuring new power that beats Eskom’s current price.
This also does two important things for the country, which I’m confident he supports: we’re the first municipality to buy new power at significant scale, in doing so helping to cut through the regulatory thicket that has strangled the market; and we’re helping usher in a more competitive market for power pricing. While the rest of the country is moving this way too, continents and glaciers drift faster.
We must end load-shedding
My point of departure is that we must end load-shedding in Cape Town. This is the single most important thing we can do for the Cape economy – as close as we may come to a single-issue economic stimulus. Ending load-shedding here would attract investment to Cape Town, help get more people into work, help keep people safer, and would protect residents from the failing national state.
I am not prepared (and I don’t think any South African should be) to wait around for Eskom to solve load-shedding. There is no credible plan at national level and no money in Eskom’s coffers to fix this. Indeed, as a country, we are quite likely to become even more energy insecure in the coming years. Fifteen years on, and having just had the worst year of load-shedding ever, we need to get on and do something ourselves.
“Doing something” to end it ourselves is going to require a careful choreography of several complex projects, only one of which is bringing on line more independent renewable power. We have started with this tender first, simply because much preparatory work had already been done, and so was most advanced. But there is much more to look forward to.
Cape Town’s ‘end load-shedding’ symphony (in ‘DA major’) will also require a major dispatchable power (power available as and when you need it) tender in the months ahead – this is the kind of power Kenny wants to see, and which is very much a part of our plan. While it is premature to commit to a view about what form this will take (whether it be gas turbines, gas plus storage or a gas-renewables hybrid) the very reason for this investment will be to ensure that we are able to beat load-shedding at peak times.
Also, a detailed analysis and costing of storage options is already underway, including battery, expanding Steenbras, and decentralised storage. We are about to spend R1.2 billion on upgrading and refurbishing Steenbras, which will deliver more storage capacity. And finally there’s ‘contracted demand management’, technology that allows remote management of load demand, and which could offer protection from an entire extra stage of load-shedding.
Pricing
I now turn to pricing. Prices in the latest renewables procurement round have been as low as 47c/kWh — a fraction of what Eskom charges. Even when there is no load-shedding, when the sun is shining and the wind is blowing, they are able to provide us with electricity at a rate substantially lower than Eskom’s. The more we are able to replace Eskom-supplied power with cheaper sources, the more we are able to lower the overall input costs for electricity, and the more we are able to pass the resultant savings on to the consumer. In the absence of storage costs, renewables will reduce the amount residents are paying for electricity.
With the unacceptably high (and still rising) tariffs charged by Eskom, we are confident that when these projects are brought online, the power they produce will undercut Eskom’s substantially, leaving pricing margin available to address storage costs.
In Cape Town, we have decided to be bold and do something about energy insecurity, instead of just waiting around for the national government to fix our problems. We are constantly looking for the best possible ways to do this.
Bearing in mind the constraints in which the City operates — building a second Koeberg is not possible legally or without our having to borrow hundreds of billions of Rand —what is the alternative Mr Kenny proposes for ending loadshedding in Cape Town? He implies we have no choice but to accept it for the next decade. That is not an option. The mix of renewables, dispatchables, storage, and demand tech that I’ve sketched above, is the only plan any city in the country has put on the table.
The best way forward is to start moving forward, and this is exactly what we’re doing.
[Image: https://pixabay.com/photos/table-mountain-cape-town-night-shot-800681/]
The views of the writer are not necessarily the views of the Daily Friend or the IRR
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