TOWARD A PUBLIC GOOD APPROACH

by Dec 21, 2021Amandla Issue 79/80, Articles, Renewable Energy

Brian Ashley interviewed Sean Sweeney from Trade Unions for Energy Democracy

Amandla!: Globally, and particularly after COP 26, there is a great urgency for addressing climate change and moving away from fossil fuels, particularly for countries with a high carbon intensity like South Africa. In Glasgow, a deal was struck to hasten South Africa’s energy transition from coal.

However, climate change is not the only crisis South Africa is experiencing. There is the crisis of mass unemployment and inequality, of a stagnant economy highly dependent on electricity provision. The entire structure of the economy has been shaped, and to a large extent continues to be shaped, by a Minerals- Energy Complex. The Renewable Energy Independent Power Producer Procurement Programme (REI4P) has introduced private electricity generators into the electricity supply system. What impact will this have? Will it hasten the transition to clean energy and fix our collapsing electricity system?

Sean Sweeney: LET’S START WITH THE REI4P program: it has been hailed as a major success story in that it appears to mark the first major steps towards the transition away from coal. From the perspective of the World Bank and the multinational wind and solar conglomerates, South Africa is praised.

But the REI4P programme pushes back the role of public energy while making room for private investors and developers. They want to dramatically scale-up wind and solar by way of the IPP model.

And this is not a “market-driven” approach to energy transition; it is a subsidies-driven approach. And the subsidies add to Eskom’s debt. The full cost of wind and solar – including “system costs” such as transmission upgrades – cannot be recovered through electricity tariffs.

The IPP model is not a “market-driven” approach to energy transition; it is a subsidies-driven approach. And the subsidies add to Eskom’s debt. The full cost of wind and solar – including “system costs” such as transmission upgrades – cannot be recovered through electricity tariffs.

And so far, the REIPPP program only accounts for about 3-4% of South Africa’s electricity consumption, and it’s been in place for almost a decade. So, if this is what the energy transition looks like, then it’s not going very fast, whilst adding to Eskom’s financial headaches.

Many progressives take a “nothing is perfect” approach to this kind of privatisation by stealth. And what’s wrong with undermining Eskom anyway? I have heard people say that Eskom is not only a massive contributor to CO2 emissions and other life-threatening forms of pollution; it is also consumed by the “culture of coal” and will never deviate from that path.

I look at Eskom as the provider of close to 90% of the country’s electricity. Its fleet of coal-fired power stations, transmission networks, etc., are essential public property. The IPP system reduces Eskom’s market share, while at the same time forcing it to purchase power from the IPPs at an above-market rate. This contributes to the “death spiral” of Eskom, which in turn leads to cuts in maintenance and upgrades of the current infrastructure. This contributes to load shedding.

The more the IPPs are allowed to generate power, the faster that deterioration will be. The capacity of renewable energy to advance in South Africa is tied to the capacity of the entire system to accommodate this new generation. Right now, the IPPs are cannibalising the system, and that has its limits. And it certainly won’t help prevent load-shedding.

A!: Where does unbundling, or “divisionalisation”, fit into fixing Eskom and the electricity supply system. Government talks about opening up the electricity market to the private sector. How does unbundling facilitate this? What are the consequences for the supply of electricity? And will this facilitate the so-called energy transition? Previously you have stated that unbundling will lead to privatisation. Is that so bad if it will result in stopping load-shedding? Surely things cannot get worse.

SS: THE WORLD BANK IS CLEAR: unbundling should not be pursued unless it is part of a broader privatisation agenda. Unbundling is part of a package – the Bank calls it “The Standard Model.” But the idea that the private sector will commit capital without first having negotiated guaranteed returns on investment is naïve.

Look at the recent so-called “groundbreaking” deal with South Africa announced on November 2nd in Glasgow at COP26. The International Just Energy Transition Partnership with South Africa talks about creating an “enabling environment through policy reform in the electricity sector, such as unbundling and improved revenue collection.” This is 1980s or 1990s structural adjustment in green clothing. It’s saying that the financial package – the details of which have still to be worked out – is contingent upon the South African government continuing with its neoliberal reform agenda.

So, could it possibly get worse? Yes, it could get a lot worse. Accelerating the transition away from coal without having new capacity to take its place is a recipe for more load-shedding.

A!: The transition from coal to clean renewable energy is a complex and a lengthy process and goes beyond just giving licenses to independent power producers. Can you spell out both the technical and social challenges which will accompany such a transition. What are the dangers for SA in depending on the private sector to lead this transition?

SS: IT’S BECOMING INCREASINGLY CLEAR that IPPs want to sell power, but they want someone else to pay for transmission upgrades and other system costs that accompany efforts to integrate renewables into the system. At 5% or 10%, these costs are not significant; above 20% and the costs of balancing the grid become much more substantial. Mexico has cancelled its renewable energy auctions because these problems were becoming too formidable. In South Africa, replacing coal with renewables also requires a tripling of capacity in order to meet existing demand. This is because 1MW of wind or solar does not produce as much electricity as 1MW of coal or gas. I get a sense that these considerations get lost in the public debates on the energy transition.

A!: What is a global public goods approach to energy transition and what is its relevance in a South African context? What role

The transition from coal to clean renewable energy is a complex and a lengthy process and goes beyond just giving licenses to independent power producers.

should trade unions play and who are their allies locally and globally?

SS: AT FIRST glance, calling for a global public goods approach seems like pie in the sky, but it isn’t. The Paris Agreement is not being implemented; emissions continue to rise, and there is an investment deficit confronting the energy transition that runs into hundreds of billions of dollars annually.

Within a public goods approach, the Energy Transition Partnership idea that came out of Glasgow could have been written as follows: “Because emissions reductions are a global public good, they are everyone’s responsibility; therefore we, the rich countries of the North, will partner with South Africa to set up a Task Force to examine all aspects of the energy transition, including its likely impact on workers. Once a plan has been developed, we will provide the finance needed. We will bypass the private sector because private investors want guarantees in order to make returns. We will, instead, embark on a public pathway, one that will include skills development, technology transfer and assistance, and advice on how to set up domestic production in South Africa. This will reduce dependency on imported technologies.”

Unions and their allies in SA can champion this approach in a way that intersects with the work being done by other social movements.

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