Sat, 04 Jul 2020

Debt-ridden power utility Eskom has recently lost its CEO Phakamani Hadebe, and apart from relying on another financial bailout from the state, it also needs to keep up with global transitions to cleaner energy.

A study, commissioned by Greenpeace Africa, has endeavoured to map a way forward for the power utility, which has debt levels approaching R500bn. More than half (R350bn) of this debt is guaranteed by government.

"Eskom's reform is almost laughably overdue; the utility is technically insolvent, inefficient, unable to guarantee security of supply, wildly unprepared for an energy transition to renewable energy and is the country's biggest emitter of toxic pollutants and greenhouse gases, which are driving us towards a climate and pollution emergency," said Greenpeace Africa's senior political advisor Happy Khambule.

"The decisions that need to be taken about Eskom's future will not be easy, but it is the government's responsibility to ensure that a bold shift to renewable energies, with Eskom as a public good at the centre, becomes a reality," Khambule added.

Earlier this year, president Cyril Ramaphosa announced Eskom would be unbundled into three entities - generation, transmission and distribution. Treasury has allocated R69bn over three years to financially support the unbundling, Fin24 reported previously. According to Greenpeace Africa, the restructuring of the electricity sector requires coal-fired power stations to be completely phased out by 2040 and the "just transition" plan must create room for consultation or engagement with all stakeholders in a social compact.

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In the report, energy economist Professor Dr Uwe Leprich unpacks the details of the reforms needed at Eskom and SA's electricity sector. The recommendations would allow Eskom to "stabilise" its economic situation, reduce its debt and be a significant player in promoting a transition to renewables, according to Greenpeace.

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4. Set up 6 regional electricity distributors

Electricity distribution grids are important as they link between power plants, the transmission grid and end-users. Regional electricity distributors must be publicly owned, through shares from Eskom, municipalities, cities and other public companies, Greenpeace recommends.

Greenpeace adds that the National Energy Regulator of South Africa should regulate the network changes for the distribution grid and the level of the sales margin to avoid a monopoly situation.

5. Create new services

Eskom could create new services for consumers, as a means to stabilise revenues in the retail sector, Greenpeace says. These offerings particularly are aimed at end-users relying on self-generation through solar PV panels as an example. "Without new service offerings for customers, it will not be possible to absorb the declining revenues," Greenpeace notes.

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