Eskom Transformed: Achieving A Just Energy Transition for South Africa
The Eskom Research Reference Group | Press Alert | 09 July, 2020
On the 23rd of July, a new report on Eskom will be released, which presents a compelling case for a modern national power utility – a “Transformed Eskom” that is vertically integrated and publicly owned – while drawing attention to serious problems in the current “unbundling” approach.
The report is titled “Eskom Transformed: Achieving A Just Energy Transition for South Africa”
Working closely with the trade unions involved in organising workers at Eskom – the National Union of Mineworkers (NUM) and the National Union of Metalworkers of South Africa (NUMSA), the report has been drafted by the Alternative Information and Development Centre (AIDC) in Cape Town, Trade Unions for Energy Democracy (TUED) in New York, and the Transnational Institute (TNI) in Amsterdam.
In the past few months, we have seen the formation of a mainstream consensus in the South African energy debate. Here the words “Eskom”, “publicly owned”, and “energy monopoly” have become expletives in their own right. At the same time, the push towards unbundling and privately-owned renewable energy has been uncritically praised as a “common sense” way forward for solving the Eskom and electricity crises.
Before Covid-19 replaced Eskom’s crisis as the central issue facing South Africa, it was only unions and their very close allies that held a consistent line both against both this proposed “unbundling” of the utility, as well as the consequent incursions of the independent power producers (IPPs). Many believe that this opposition merely reflects the desire on the part of trade unions to protect coal sector jobs and to do so in a way that is oblivious to the economic, social and ecological problems that come from the continued use of coal.
Similarly, union opposition to the IPP system – including the Renewable Energy IPP program known as “REI4P” – has in some quarters been seen as an opposition to renewable energy and economy-wide decarbonisation more generally.
The Eskom Transformed report sets the record straight. The position of the unions is not simply about protecting jobs in coal, or about preserving Eskom as it currently operates. The unions generally support a move towards both clean energy and economy-wide decarbonisation, but the problem is that the current “unbundling + IPPs” approach will achieve neither. The research contained in the Eskom Transformed report shows why this is the case, and why this approach threatens to seriously compromise the country’s energy sovereignty by making it dependent on technologies and supply chains that are almost invariably located in Asia and Europe.
The report also shows how the current discourse on energy transition in South Africa has, for some years, become distorted by a number of damaging misconceptions. Three misconceptions stand out in particular and are confronted head-on in the report.
The first misconception pertains to the cause of Eskom’s crisis. Rather than simply reducing the problems to abstracted financial mismanagement and corruption, the report shows how the “electricity-for-profit” paradigm adopted at the behest of the likes of the World Bank is a direct factor in the development of the utility’s current dysfunction.
The report argues that, until the current obsession with the Margaret Thatcher export of “full cost recovery” policy is confronted and displaced, the financial crisis at Eskom will simply get worse. In addition, and while acknowledging that no “quick fix” solutions to the crisis exist, the report also offers a promising short-term solution to Eskom’s debt crisis.
The second misconception is that the transition to renewable energy through private power producers is inevitable as it is supposedly driven by economics, specifically the falling costs of renewable energy. This has also led to the idea that renewables are the “least-cost option”, both domestically and globally. Drawing on domestic and international experience, the Eskom Transformed report shows how the rise of low cost for-profit renewable energy is a story of public money being used to shore up the profits of companies that would otherwise not be profitable. This is not a case of the market, waving its mythical hand; rather, it is a story of public funds being used to drive a “reform” agenda that leads to the privatisation of public energy systems. In addition, the report also points out signs of a coming investment crisis for private renewable energy, throwing doubt on the idea that the private sector could deliver a transition to clean energy.
The third misconception is that there are no major technical hurdles standing in the way of South Africa’s energy transition. The report shows how this “painless decarbonisation” perspective does not take into account the “system costs” that accompany high levels of renewable energy coming into a system. In doing so, the report draws attention to the need for careful planning and a facts-based approach that accounts for this reality instead of ignoring it.
In highlighting these misconceptions, this report opens the door to a fresh assessment of South Africa’s energy crisis and the challenges of an energy transition. The report shows how public energy through a transformed national utility is our best bet in dealing with the current crisis and transition-related challenges, both technical and economic, in ways that are both effective and equitable.
In conclusion, the report’s proposals for a Transformed Eskom are constructed around three core commitments:
- Building a “New Eskom”, fully public and in service of the people
- Securing a democratic and just energy transition
- Working towards socially owned renewable energy
For more details about the “Eskom Transformed: Achieving a Just Transition for South Africa” launch please contact Rekang Jankie at email@example.com