Business Day, Robert Laing, 18 august, 2016.
ONE of the best examples of the power of markets is the power market in progressive countries (i.e. not SA).
Switching the electricity market from a state-owned monopoly to one where lots of competing buyers and sellers trade megawatt-hours in much the same way shares are traded via networked computers, has wrought wonders everywhere it has been introduced…
…While SA’s electricity market remains backward, this country is lauded as a world leader in other areas of the power business.
For instance, by the end of March, SA had attracted R53.4bn in private-sector investment to increase this country’s power generation capacity by more than 2GW, To global applause, not only is this additional power no burden on the tax payer, nearly all of it is green.
Competition between the independent power producers has driven the cost of renewable energy down from R2.37 per kilowatt-hour to 77c, according to data available on the government website www.ipp-projects.co.za.
Another area in which SA excels is cross-border electricity trade, with the World Bank citing the Southern African Power Pool as a role model for the rest of the planet.
Sadly, all this innovation is saddled with a dinosaur called Eskom…
…SA’s electricity problems are easy to fix. For starters, policy makers need to officially kill the reds so that municipalities start investing in their electricity grids again. Secondly, the government needs to follow Margaret Thatcher’s example and make Eskom power stations separate, privately-owned companies that not only have to compete against the independent power producers, but also against one another.
It is vital that Eskom’s power stations be separate businesses from its pylons so that the grid is run by an independent operator.
Finally, we need to invite an exchange such as Intercontinental Exchange to operate a modern electricity trading system, to link all these competing power stations with customers such as municipalities and mines.