Old energy solutions are running out of steam - Africa in Fact

Jul 03, 2023
South Africa’s power crisis has become one of the defining features of its present and a window onto its prospects. Both an expression of the deep-seated pathologies afflicting the country and a contributor to them, the failure of Eskom, the state utility company, to supply the needs of the country is a chilling warning of what the future may hold.
Old energy solutions are running out of steam - Africa in Fact

Terence Corrigan

South Africa’s power crisis has become one of the defining features of its present and a window onto its prospects. Both an expression of the deep-seated pathologies afflicting the country and a contributor to them, the failure of Eskom, the state utility company, to supply the needs of the country is a chilling warning of what the future may hold.  

For a country in which half of the population is estimated to live in poverty of one degree or another, with a third of the working-age population unemployed and economic performance lethargic for the past 15 years and well below that of its developing market peers, the failure of the energy supply is a catastrophe. The situation has even produced its own euphemistic nomenclature, notably the phrase “load-shedding”, which denotes the regular compulsory power switch-offs that interrupt the days of South Africans; at the time of writing, load-shedding deprived South Africans of electricity for up to 10 hours a day, with possible deterioration ahead. President Cyril Ramaphosa has termed it “an existential threat to the economy and the social fabric of our country” and said that “|our most immediate priority is to restore energy security”. 

As Chris Hattingh, director of the Centre for Risk Analysis, an analytics body based in Johannesburg, told Africa in Fact, load-shedding acts as a “ceiling” on business activity, job creation, and growth – and Eskom is key to this state of affairs. Effectively a public-sector monopoly for generations, its problems started with a failure to expand generation in the 1990s. This was accompanied by rising demand, inadequate maintenance, growing mismanagement, and misdirected priorities – such as using the utility’s procurement and staffing practices to advance policy goals unrelated to power supply – and outright corruption. New power station builds have been beset by delays, cost overruns and poor design. Eskom is now unable to meet demand or to provide a reliable supply, and there is little indication (or public confidence) that it will be able to do so again.  

Electricity distribution is also a competence of municipal governments, which derive a large proportion of revenue from surcharges on the sale of electricity. Municipal governance has been a perennial concern for the country: municipalities are endowed with significant powers and developmental responsibilities but are often plagued by governance pathologies. Part of the upshot has been an inability to maintain infrastructure systems – some of which are old and in need of comprehensive revamping – and often a seeming disinterest in doing so. Repeated interruptions to the flow of power place additional stress on these systems that they were not designed to handle. As former Johannesburg mayor Mpho Phalatse put it: “Because our infrastructure is old – built in the 1950s and not designed with load-shedding in mind – repeated load-shedding causes further damage.” 

Thus, with the centralised mass provision of power – South Africa’s existing model – not viable for the foreseeable future, alternatives are very much front of mind. Most obviously, individual households and businesses have tried to make their own arrangements since the earliest days of outages: candles and torches for rudimentary lighting, gas cylinders for cooking, ensuring that devices were kept changed. 

These rapidly gave way to more systemic measures, such as batteries and power packs to keep laptops and modems running, and diesel generators and UPS arrangements to bridge interruptions. As the crisis has ground on, going “off-grid” has become something of a mantra, with rooftop solar panels a growing feature of the country’s suburbs. But this naturally runs up against the barriers of affordability. A modest inverter can cost upwards of R6,000, with periodic outlays for new batteries. A generator can go for more than R20,000 and requires diesel to operate. Capitec Bank puts the cost of installing hybrid household solar – the gold standard of mitigating solutions at present – at between R150,000 and R350,000; going off the grid totally could set a household back as much as R700,000. These costs are manageable only by more affluent households, and where businesses must make such investments, they represent a considerable cost-of-doing-business burden. Solutions to South Africa’s energy malaise will therefore require more than individuated action, as useful as that may be. Something at a greater scale is needed.  

The small town of Frankfort in Mafube municipality in the Free State province has received a lot of attention recently for a court case in which local solutions to the energy crisis came under scrutiny. For more than a decade, a private operator, Rural Maintenance, had handled Mafube’s power distribution, entering into a 25-year contract with the local municipality, which was struggling to keep the lights on or collect payments due to it. By all accounts, Rural Maintenance performed well in this role and in 2021 introduced additional generation from a solar power facility in the area. With this, it was able to provide relief to the town during load-shedding. 

On the face of it, this was a local solution worth emulating. Eskom, however, was less enthusiastic, and after an initial trial period, ordered the arrangement to cease. Its position was that Rural Maintenance did not produce enough electricity to cover all demand (meaning it would sometimes have to draw power from Eskom), and permitting it to continue would place the grid at risk of overload. Clearly, Eskom feared that other municipalities would embark on similar initiatives, which would compromise its ability to manage the grid. 

Rural Maintenance, supported by several other parties, challenged Eskom in court; this bid failed because Mafube municipality – originally an applicant in the case – failed to submit its papers. This was met with widespread bewilderment. Chris Bosch, the CEO of Rural Maintenance, confirmed to Africa in Fact that it intended to approach the country’s statutory electricity regulator to challenge Eskom’s stance. 

Yet this episode demonstrated that the solution to the broader electricity problem could be found in limited local solutions. The Rural Maintenance project has demonstrated proof of concept and points to the viability of localised generation units to supply communities of beneficiaries. In common parlance, these are termed mini-grids.  

The Africa Minigrid Developers Association (AMDA) is an organisation operating across the continent advising on the rollout of solar-powered mini-grids as a solution to what it accurately calls Africa’s “energy poverty”. Abraham Mudasia, AMDA’s communications director, made a persuasive case to Africa in Fact about the suitability of mini-grids as part of ensuring Africa achieves its energy goals. Improving technology and falling costs make this an attractive option, both as standalone systems and as a complement to national grids.  

“With costs of installation and components going down, and the quality of the electricity mini-grids deliver constantly improving, they stand to transform sub-Saharan Africa’s power sector,” Mudasia said. “Solar mini-grids enhance the economic viability of expanding the main grid. Mini-grids can build out grid-ready infrastructure while also stimulating demand for high-quality electricity, thus increasing the economic viability of expanding the main grid.” 

Mini-grids are being rolled out in numerous jurisdictions, including Senegal, Kenya, and Ghana. In South Africa, the Gauteng Triangle Project, a collaboration between three universities in the province, has been piloting the rollout of solar solutions in informal settlements.  

Mudaisa said emerging technologies are overcoming the difficulties associated with solar power, such as limited storage capacity and power interruptions in inclement weather: “As extreme weather gets worse due to climate change, mini-grids have proven to be more mobile and quickly-deployable assets with robust back-end software that optimises operations,” he said. Using the latest technologies, mini-grids are electrifying households and improving the reliability of electricity supply in remote areas, where supply from national grids is frequently disrupted by unplanned outages caused by technical issues and extreme weather events.   

In South Africa, civil society group AfriForum, a sometimes controversial, Afrikaner-based outfit, which has nonetheless won some admiration for its hands-on solutions to pressing problems confronting communities, has come up with a suite of proposals to tackle the energy problem, which the organisation’s Johan Kruger set out for Africa in Fact. As a first step, this involves helping householders and small communities deal with the crisis, for example, by providing advice on installing solar solutions. Long-term, they advocate working with communities and local governments to achieve local-level energy production and independence – very much the model that Rural Maintenance pioneered. 

In the long-term, AfriForum has in mind local energy generation, including the step-change deployment of small pebble-bed nuclear reactors to service communities, though this remains sometime in the future, probably a decade.   

But the Rural Maintenance case showed that even an apparently successful experiment in local provision can run into official opposition, irrespective of the implications for consumers. Governments and utility firms, after all, have their own interests; this is more the case where these institutions perform an extractive function, feeding politically enabled patrons and their networks.  

In South Africa, these pathologies account significantly for the state of Eskom; they are acknowledged to be well advanced in government – and especially pronounced at the local-government level. The latter has been susceptible to capture by powerful local interests (not least party machines), and an accessible forum for dispensing jobs and procurement opportunities. 

The trade in electricity is a major part of this. According to Stats SA, South Africa’s statistical authority, the combined revenue of the country’s municipal governments was R453.7 billion in the 2020/21 fiscal year. Of this R118.1 billion – or a full 26% – was generated by electricity sales, the largest source of own-generated revenue for this tier of government, exceeding even property rates. In some municipalities, electricity accounts for more than half of revenue.  

For Eskom, meanwhile, purchases from municipalities represent a large contribution to its balance sheet – critically important given the utility’s overall financial malaise – while direct sales to consumers (this being done in certain areas, bypassing municipal systems) represents another (Incidentally, a failure of many municipalities to pay Eskom is a significant contributor to the utility’s financial woes). 

Neither the country’s municipalities nor Eskom seems keen to relinquish control of power provision in large measure because of the resources it provides. Indeed, it’s questionable whether the current model of municipal governance could endure if stripped of its revenue from electricity. Many municipalities would find it all but impossible to maintain the de facto political role they have acquired as engines for patronage.

Nevertheless, the reality of an unreliable grid is progressively pushing more affluent households and businesses to seek their own sources of power (aside from those who might quit the country altogether). Noticeable but piecemeal, though still limited to those able to afford it, municipal spokespeople acknowledge the migration of customers from public grids.  

Mini-grid solutions, however, would enable larger numbers to escape state providers, in principle even whole cities. Doing so would undermine the municipal fiscal base as it is currently constituted, even in partnership with the state. 

Already, suggestions have been floated for levies on solar installations. Chris Hattingh cautions about this trajectory: “We should not discount the possibility of more tariff rate increases in the future, as Eskom and the state try to recoup as much as possible from fewer and fewer ratepayers.”

He adds, however, that the state of the country might shift the government’s position: “A sense of pragmatism and the harshness of reality could force the government to realise it cannot pursue a ‘developmental’ state ideal as it has before, and so must make room for private-sector and civil-society actions and solutions.”

For AfriForum, this means that civil society needs actively to push for change, advocating easing the stranglehold municipalities have on consumers as far as electricity provision is concerned. 

Given the impasse in South Africa, it’s hard to disagree with this. Municipal governance in South Africa has largely failed to live up to the hopes invested in it and will need to accept a reduced role for itself and accept the solutions proffered by diverse stakeholders for the benefit of the country’s people.  Resolving the challenge of electricity provision will take not just a combination of suitable technology – which fortuitously is becoming available – but a change in official mindsets and a dogged society to demand it.  

Terence Corrigan is projects and publications manager at the Institute of Race Relations (IRR).

Old energy solutions are running out of steam  - Africa in Fact

Old energy solutions are running out of steam - Africa in Fact

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