Electricity users to pay for switch to private sector power

Business Day Live 24 October 2012.

ONE of the many unpleasant messages in Eskom’s tariff application to the National Energy Regulator of South Africa (Nersa) is that electricity users will have to bear the brunt of the switch to private sector power.

The new multiyear price determination (MYPD) differs from the previous one in many ways. For instance, in the five years covered by the determination, South Africa will, for the first time, introduce thousands of kilowatt hours of electricity capacity from private sector producers. This will be bought at levels higher than Eskom prices…

(Editor’s note: Electricity users to pay for their electricity? That makes sense, who else should pay for it? The general tax payers? Far better for the users of a service to pay for the service. A better question I think is whether it is right to spend money on renewable energy rather than coal or nuclear plants, and would coal or nuclear be cheaper? This is where things get more complicated and more emotional. We have to answer questions such as: how do we put a value on harmful emissions, on environmental damage and on climate change. Will a global tax on carbon come into being and how much will this be?What is the price of coal going to do in the future? Are nuclear power plants safe and if not what cost do we put on the risk? In the end I think it comes down to doing what is right and continuing to mess up our planet to satisfy our energy needs is patently wrong, regardless of the economics. In any event, it looks like the economics are swinging in favour of renewable energy. It would be interesting to see the levelised costs of electricity from renewable sources compared to the levelised costs of Medupi and Kusile. )

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3 thoughts on “Electricity users to pay for switch to private sector power

  1. When we have built all the wind turbines and PV plants we need instead of dirt coal power stations and the wind stops blowing and there is not enough back-up power (at affordable prices) to keep the lights on during a freezing winter night a lot of very green people will also get a bit emotional.

    • Thanks for the comment Brian and Jean.
      I think the reality of the matter is that Medupi and Kusile will obviously get built and that will get us ahead of the game again and we will have some surplus power for 5-10 years. That will give us time to get to grips with the realities of significant amounts of renewable energy. However, the amount of renewable energy we manage to build by 2020 is still a relatively small part of the generation pool (using the IRP 2010 figures, by 2020 we will have about 52 GW in total of which about 5200 MW is wind and PV. That is about 10%. Experience in other countries has shown that this amount can generally be accommodated reasonably easily. And of course there is the gas option, that is imported natural gas, because our own shale gas won’t be available for 10-15 years. Gas turbines can be built quickly and relatively cheaply to get us out of any baseline power holes. I think the answer lies in going for a mix of energy sources, but the problem is that going nuclear or more big coal plants will probably divert all cash away from renewables and will take 10 years if we started now, which we won’t. Time will tell!

    • We have lost 3 out of about 435 nuclear plants, this is 0.7%. About 50,000 commercial airplanes have been built by Boeing and Airbus so far. If 0.7% of these would crash we would have about 1 major airplane accident per week. Would you fly with such a machine? Would you still like to have a nuclear power plant in your backyard?
      Btw, I prefer to have a well built and insulated house, where a small fireplace is sufficient to create a cozy atmosphere – no need to dig up half of Mpumalanga for coal, pollute so much water, burn the coal and again pollute water and air, finally transmit and distribute electricity across the country with significant losses and heat my home.

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