ESKOM RCA FY 2019 Presentation to NERSA 3 Feb 2020
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OUR VISION To inspire and mobilise society towards a sustainably developed and equitable low-carbon future. OUR MISSION A change focused organisation aiming to bring about significant, positive change in the way we, as humans, engage with earth systems and each other. Support the involvement of South Africans in a just energy transition.
Research and publications https://90by2030.org.za/wp-content/uploads/2018/02/ Energy-Sector-Transformation-in-SA-June-2017.pdf
Research and publications https://90by2030.org.za/wp-content/uploads/2018/06/ Just-Energy-Transition-low-res.pdf
Outline 1. Sympathy 2. Good news and bad news 3. Our key message 4. RCA is not working 5. Prudency 6. Just Energy Transition
Good news 1. This presentation is straightforward: based on principles and logic. No complicated maths and technical detail. 2. The Eskom crisis actually presents an opportunity, provided there is the political will to do what it required.
Bad news 1. Most of these comments have been made before, but have not been taken up, and the situation has got worse not better. 2. In some areas of energy planning, South Africa is moving backwards.
Image: Cartoonstock
Our key message STOP ESKOM BAND-AIDS FIX THE CORE ISSUES
Examples • Above-inflation electricity tariff hikes • Recurring government bail outs for Eskom These do not solve the long term problem
Core issues • Eskom debt
Core issues • Need to accept and urgently act on: o Eskom reform/restructuring/unbundling (must be consultative) o Plan for an energy transition in a fair and just manner.
Innovative ideas
Innovative ideas Working title: ‘Just Transition Transaction’ Proposal, being incubated by Meridian Economics Assist with Eskom debt and funding for just transition Linked to accelerated coal phase-out, increased uptake of renewables and Eskom reform Addressing multiple core issues
Recommendation: Until such time as a robust plan to reform Eskom is set in motion, and until government develops and starts to implement a credible plan for a just transition to low-cost and low-carbon electricity generation, further electricity tariff increases are unacceptable and must not be granted.
I need real solutions, not temporary patches ….. and temporary patches delay action on really grappling with the big problems
Why RCA is not working Reward Eskom for: Spending more on making less Predict the future Punish consumers for: Buying less All by comparisons to an upfront guess
What?!
‘utility death spiral’ RCA Utility puts prices up Encourages this cycle (above inflation) Customers go off grid, increase energy efficiency, buy less units from utility, businesses close etc. Utility makes less revenue
Evidence as to why RCA is not working https://www.poweroptimal.com/2019-update-eskom-tariff-increases-vs-inflation-since-1988-with-projections-to-2022/
https://www.dailymaverick.co.za/article/2019-07-25-south-africas-power-conundrum-a-debt-managers-view/
https://businesstech.co.za/news/finance/332227/eskoms-20-year-road-to-financial-crisis-in-a-nutshell/
Source: CSIR
Prudency Ongoing problems at Medupi and Kusile……
Prudency Research from 2017 showed that it would economically advantageous for Eskom to abandon completion units 5 and 6 of Kusile. So how can any further spend on those units be deemed prudent? http://meridianeconomics.co.za/wp-content/uploads/2017/11/Eskoms-financial-crisis-and- the-viability-of-coalfired-power-in-SA_ME_20171115.pdf
Given the climate crisis, how can ANY investment in new coal be prudent?
Just Energy Transition Plan
Coal lobby: “Coal is necessary for baseload electricity”
Coal lobby: “Coal is still a good investment ”
Coal lobby: “Clean coal? ”
1. It would be incredibly expensive (and illogical when there are naturally clean options). 2. Eskom is already trying to avoid meeting minimum emissions standards.
“What about the workers in the coal sector?”
A way forward: https://90by2030.org.za/wp-content/uploads/2019/09/ A-Report-Remaking-our-Energy-Future.pdf
Who should do it? Consultation, oversight and planning Implementation
How to do it…
What should be in the plan? Link to electricity tariffs
Together with Eskom reform and JET planning, design a new electricity pricing system that is fair, equitable, predictable and suits the energy system of the future
Thank you
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