How Thatcher Would Sort Out Eskom

How Thatcher Would Sort Out Eskom

Thatcher Eskom
How Thatcher Would Sort Out Eskom

Love her or hate her, the ‘Iron Lady’, UK Prime Minister (1979-1990) wouldn’t have tolerated the state capture at Eskom. An advocate for transparency, free open market competition, and of course for selling off the country’s assets, which they already owned, resulted in a boom in the UK.

A theoretical opinion of course, but deregulation of the power system in SA would dramatically improve electricity prices for consumers, and the benefits of privatization result in massive inflows to government for spending on essential areas such as education and socio economic uplift for the poorer in society.

Step 1 split distribution (the power lines) and generation (the power stations). Of course this has been put forward since 1998 but never happened.

Step 2, allow consumers to buy electricity from whoever would provide the cheapest prices. This almost certainly would result in a boom in the renewable energy sector today and going forward, as clean energy is now cheaper than coal fired and certainly any new nuclear.

Wind farms, PV farms (electric generation from solar panels), CSP (concentrated solar power) would all compete with coal fired power stations, and with ‘wheeling’ charges for sending electricity down the power grid, it would put all power producers on a level footing.

Time of use metering would also be a big plus, even today. Evening consumption particularly peak would cost more, but this would boost Solar PV generation at home along with Solar Water Heaters, (removing electricity), and consumers would turn to gas stoves rather than electric for cooking. Being more efficient and cheaper, evening peak loads would fall dramatically. Areas such as swimming pool pumps, borehole pumps could all move to solar power.

Selling off Eskom would raise huge funds for government, and at the same time the new renewable power, both utility scale and at home would be funded by private investment. This would remove the need for the public purse to enter into potentially hugely expensive investment that can put the country into debt for decades.

To meet peak demands privately owned gas generation plants would supplement renewables, and although still fossil fuel, vastly more environmentally friendly.

Industry, resources and farming as heavy load users would still need to rely on Eskom and potentially other independent power producers, but for day time consumption could progressively go off grid.

The carbon savings along with reductions in water consumption generating coal fired or nuclear electricity would be huge. Eskom are one of the largest users of water for coal fired electricity generation.

For rural areas micro grids using Solar PV, and storage would provide electricity independent of Eskom, and removing the need for expensive new power lines.

Of course this is all a pipe dream, as Eskom produces 95% of the electricity in South Africa, and it is power on their terms or not at all.

SA government policy is the opposite of the deregulation, and the huge investments in new power stations at Medupi and Kusile and Ingula have been associated not only with huge cost overruns, but massive alleged corruption. What will happen if nuclear ever gets approval - can only be disastrous.

Despite government never going down the logical road, the progressive obsolescence of its owned utility company, will face the conundrum of reducing demand, increasing costs, and mountains of debt.

Even if the larger scale renewables cannot feed more into the grid, as demonstrated by the current Mexican stand off with Eskom not signing power purchase agreements with 38 companies that have committed R60b, there will be change.

It probably will not be the projected additional 9,000MW from large scale renewables before 2030. It is more likely to be middle and smaller renewables along with solar thermal heated water, that will remove daily consumption from businesses and homes, because solar and quite possibly small scale wind, and bio become increasingly attractive (in financial terms).

So while Thatcher would no doubt say lets get on with it, as happened with the development in the North Sea with hundreds of companies investing and operating for profit, the government earned huge tax revenues, received ongoing royalties, and retained interests, this will not happen in SA .

Instead the end consumer will take the initiative away from government. Banks will finance more and more rooftop solar PV, end users at home will overtime embrace solar water heating, and in a few years time rooftop solar PV as well, and Eskom will be confronted by an electrical revolution of their own making.

So deregulation will come, without permission, orchestrated by price advantages, and the end user and country will benefit.

As an aside Ubersolar is now already 80% cheaper in heating water over 10 years than Eskom can be. With capital payback in less than 3 years and life expectancy over 25 years, this is just an example of a first step of what is happening. Go and ‘Get a Quote’, it is quick and simple and you will be better off from day 1.