7 steps to save our electricity system

South Africa’s severe shortage of electricity is threatening our economy and way of life. This is not an exaggeration. We must save our electricity system or South Africa will get stuck at our current level of development, no matter what else we try.

Here are the seven urgent steps needed to save the system, according Corporate Finance Consultant Dirk de Vos:

1. Electricity must get more expensive

Cheap electricity is over. Forever. We must pay at least what it costs to generate it on a sustainable basis.

2. Realise that Eskom’s problems started a long time ago

Eskom’s problems are not a recent phenomenon; it has always been inefficient. The cheap and abundant electricity of the past has always been funded by the taxpayer.

Even before 1990, South Africans consumed Eskom’s capital base through the lowest tariffs in the world and an unfunded electricity rollout programme.

Today Eskom is severely under-capitalised and over-indebted.

3. We must know exactly what’s going on at Eskom

Is Eskom being honest about the extent of its problems? Are they drip-feeding us little bits of bad news, because we supposedly can’t handle the whole truth?

We must know how much it will cost to get electricity generation back to acceptable levels. We must know and understand gridlock on coal supply agreements after 2016 and we must know the exact reasons for the massive cost over-runs and delays at Medupi and Kusile.

4. Make subsidies and developmental objectives explicit

Eskom should not have to fund things such as providing limited, free electricity; government must plan for this in its social welfare budget.

Municipalities must stop utilising enormous margins over Eskom’s electricity to fund various unrelated expenses. Energy efficiency won’t improve if local governments depend on consuming electricity for revenue.

Highly energy intensive industries such as aluminium smelting will have to close down.

5. Do no more harm

South Africa must become far less energy intensive.

Also, we simply must avoid any mega-projects such as a fanciful and unaffordable nuclear programme. We should rather incrementally build our generating capacity and get the private sector to participate so that they can shoulder the risk of delays and cost over-runs.

6. We need to solve this problem with the rest of Africa

Cheap South African electricity has inhibited generation in the rest of the continent, but this should start changing soon. Our neighbours might soon, for the first time, sell us something we actually need.

7. A last word

Our future prosperity is at stake. We should accept that we have adopted and invested heavily in the wrong energy generation model. Providing stop-gap funding to Eskom without addressing the root causes will not solve anything.

Listen to the Soundcloud clip for more detail or click here to read the original Daily Maverick article.

CapeTalk welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

  • Racism (including offensive comments based on ethnicity and nationality)
  • Sexism
  • Homophobia
  • Religious intolerance
  • Cyber bullying
  • Hate speech
  • Derogatory language
  • Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the CapeTalk community a safe and welcoming space for all.

CapeTalk reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

CapeTalk is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

Read More
Bafana Bafana star raises awareness around mental health

Bafana Bafana star raises awareness around mental health

Bafana Bafana soccer star Delron Buckley uses his book 'My Life' to raise awareness for mental health.

Movie review | The Snowman

Movie review | The Snowman

Movie writer Gayle Edmunds talks about upcoming thriller and crime film 'The Snowman'.

Load shedding - what you need to do

Load shedding - what you need to do

We explain what it is, who does it and why and how you know when you will be affected.

Video: Eskom's Majuba coal silo collapse

Video: Eskom's Majuba coal silo collapse

Watch the collapse of the coal silo that has plunged many parts of SA into darkness.

Eskom's Majuba silo collapse timeline

Eskom's Majuba silo collapse timeline

Eskom had a busy day on Saturday as news of the collapsed silo the the Majuba power plant spread on social media.

South Africa's Nuclear 'deal' with Russia - Prof. Renfrew Christie weighs in

South Africa's Nuclear 'deal' with Russia - Prof. Renfrew Christie weighs in

Prof. Christie of UWC says we need nuclear power stations to meet electricity demand, and government is also investing in renewable energy

Popular articles
LISTEN: Gerrie Nel on why he's persuing prosecution against Duduzane Zuma

LISTEN: Gerrie Nel on why he's persuing prosecution against Duduzane Zuma

AfriForum will prosecute Duduzane Zuma after NPA declined to do so in 2015 following a 2014 accident where a woman died.

How we invented the modern concept of sleep

How we invented the modern concept of sleep

Dr Bodhisattva Kar reveals how industrial capitalism influenced the world's current sleep patterns.

Hassen Adams (he brought Burger King and Dunkin’ Donuts to SA) talks money

Hassen Adams (he brought Burger King and Dunkin’ Donuts to SA) talks money

The Money Show’s Bruce Whitfield interviews Adams about his attitude to money (hopes and fears, successes and failures, etc.).

Kloof Street residents living in fear as crime multiplies

Kloof Street residents living in fear as crime multiplies

A Cape Town man was stabbed to death on Saturday while trying to assist two women who were being mugged on Kloof street.

‘I started my thriving business with R5000 (and made a profit in the 1st month)’

‘I started my thriving business with R5000 (and made a profit in the 1st month)’

After 3 years there are 3 Nic Harry stores (incl online) that sell 100 000 pairs of socks in over 20 countries around the world.