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Energy future must extend beyond just saving Eskom

Publish date: 12 February 2020
Issue Number: 322
Diary: Legalbrief Workplace
Category: General

Due to the realities of the energy transition faced by SA, along with the rest of the world, there is a need for a broad-ranging social compact for the country’s energy future that extends beyond just saving Eskom, writes Dr Kenneth Creamer, a senior lecturer in economics at Wits University, in a Business Day report. He writes that a social compacting process, led by President Cyril Ramaphosa with the assistance of relevant Ministers, is needed to advance a ‘just transition’ for SA, in which the restructuring and stabilisation of Eskom are not the only focal points but still an integral part. To properly serve the SA economy, Eskom will need to be restructured in a forward-looking manner. But, writes Creamer, if SA falls into the error of simply trying to ‘make Eskom great again’ in a backward-looking manner, certain crippling limitations will quickly emerge. The country will continue to experience severe electricity shortages and load-shedding as Eskom does not have the financial capacity to invest in further electricity generation. On the other hand, writes Creamer, there is a high degree of pent-up demand to invest in renewables and other independent power producers. Allowing private and community investment in this sector makes sense for two important reasons: technological innovation means small-scale generators can be economically competitive and such projects shift the risk and financial burden away from state-owned companies. Cosatu should be congratulated for the leadership role it is playing in proposing solutions to SA’s Eskom and energy crisis, writes Creamer and hopefully, its proposals will stimulate agreement on a social compact that will advance SA’s energy transition towards a more reliable, lower-cost and lower-carbon electricity mix, and stimulate investment and job creation in the process.

Full Business Day report