State of the Union speech: Key reform can help reverse power crisis

Henry

This week’s State of the Union Address presents Pres. Cyril Ramaphosa the golden opportunity to announce key reforms to help reverse the power crisis in the country, said James Mackay, chief executive officer of the Energy Council of South Africa.

He believes that good progress has already been made to look back on, and says the government can confirm their commitment to a sustainable energy future in the country by announcing important interventions to the country. This includes “pressing further for the passage of the Electricity Regulation Amendment Bill (ERA)” currently before the National Assembly.

“A strong message in this regard is of key importance to build the necessary investor confidence to unlock economic growth and job creation,” says Mackay.

“When reflecting on the most visible part of our energy crisis, namely load shedding, there is increasing confidence that the historical downward trend of Eskom’s plant availability has stabilised. This is supported by continued positive performance at priority power stations.

“While there is still a lot of work ahead for Eskom – especially with its new chief executive officer starting on 1 March and the board of the new National Transmission Company of South Africa (NTCSA) already in place – a clear message of performance and accountability in Eskom important.”

According to Mackay, the most important reform message should be that the government should continue to push for the approval of ERA, as it will help lay the foundation for the long-awaited sector modernisation, including the unbundling of Eskom and the introduction of South Africa s first energy market.

“A clear message on ERA will greatly improve confidence in energy policy, including the important need to expand the power grid under the new NTCSA.

According to Mackay, this will help shift the focus to effective regulations and implementation capacity.

He also welcomed the Department of Mineral Resources and Energy’s (DMRE) announcement that the deadline for public comments on the draft integrated resource plan (IRP) 2023 has been extended by a month to 23 March this year.

The IRP is an electricity generation plan that seeks to ensure security of electricity supply by balancing supply with demand, while taking into account the environment and total cost of supply.

“This is an opportunity to emphasize the government’s commitment to open and robust debate on national energy policy, which has multiple and significant impacts on all South Africans and must therefore be accessible to all, including labor and communities.

“Our reality is that business confidence is near historic lows, leading to continued reluctance to make the much-needed capital investment needed to grow our economy and create jobs.”

Mackay says it is well accepted that the majority of future energy investment will come from the private sector. The establishment of a national energy vision that has the buy-in of the public and private sector is therefore of key importance.

“It is important that Sona recognizes the important role of the private sector and the significant efforts of the business sector, and supports the acceleration of an investor-friendly environment.”