Engineering News, 4 October, 2017.
BY: TERENCE CREAMER Johannesburg’s electricity utility City Power is warning that the current structure of South Africa’s electricity sector is unsustainable and that, in the absence of a coherent national policy, the sector is approaching “breaking point”. Demand- and supply-side manager Paul Vermeulen says that municipal distributors, along with Eskom, are facing major technological, demand and tariff “disruption” and that the prospect of “forced restructuring” is now chillingly real.
(Ed. note: Various energy bodies have been warning of this looming crisis for years – but the DOE and Nersa have been in denial, as have Eskom and most municipalities – Let’s hope they all wake up now and take the necessary action!)
He attributes the crisis to the stagnation in distributor-level consolidation and the lack of progress in advancing the Independent System and Market Operator (ISMO) legislation. The ISMO is seen as a necessary condition for facilitating competition among generators, as it would be an independent body that buys electricity from Eskom and independent power producers (IPPs).
Eskom’s “uncompetitive tariffs” are likely to result in an increasing number of municipalities challenging the current single-buyer model, a Cabinet decision of 2007 which stipulates that Eskom act as that buyer, and an interpretation of Section 34 of the Electricity Regulation Act that a ministerial determination is required for all new generating plant. Already the City of Cape Town is taking EnergyMinister Mmamoloko Kubayi to court over her insistence that the city refrain from buying electricity directly from renewable-energy IPPs.