South Africa: New electricity minister’s hands are tied in trying to fix Eskom

The new post, announced by President Cyril Ramaphosa on 9 February and yet to be filled, “won’t make much of a difference”, says Hartmut Winkler, a professor in energy at the University of Johannesburg. Likewise, Ramaphosa’s declaration of a state of disaster due to power shortages was made “largely for public relations purposes” and “will only have negligible impact.”

The creation of a new ministry leaves multiple ministries with authority over Eskom, including the treasury. Pravin Gordhan is still the state representative to Eskom, and there remains a minister of minerals and energy in the shape of Gwede Mantashe. That creates scope for political competition with the new minister, Winkler says. Mantashe takes “very bad advice” and, despite his self-confidence, is unable to resolve the power crisis, Winkler says.

“The new minister will be undermined and attacked from the word go,” Winkler says. Mantashe “is not going to make the job of the future electricity minister easy.” It’s likely that the new minister will attempt a major renewables rollout, “something that the fossil-fuel fundamentalist Mantashe is not going to like at all,” he argues.

“Given that Mantashe is also one of the president’s most important allies, he is very unlikely to be shifted out of his portfolio. So the turbulence is set to continue, and little progress is likely to happen.”

Paul Miller, who runs the AmaranthCX consultancy in Johannesburg, agrees. There is “unlikely to be any resolution of the energy crisis arising from anything the president does or says,” says Miller, a former Nedbank investment banker. Ramaphosa, Miller notes, was appointed to head the ‘Eskom War Room’ in 2014 by former president Jacob Zuma. “Things have only got progressively worse on his watch.”

None of the “cabinet cooks” have ever personally experienced the inconvenience of load shedding “as the state provides them with 24/7 diesel generators”, Miller says. He sees a growing public resignation that the problem will never be solved. “What did the people of South Africa use for light, prior to candles? Electricity.”

Development Finance

Not everyone is so pessimistic. Not enough is yet known about the mandate of the new ministry to judge if it will be able to cut through the red tape, or simply create a new bottleneck, says Vincent Obisie-Orlu, natural resource governance researcher with Good Governance Africa, a non-profit civil-society organisation, in Johannesburg.

The core of the energy crisis is that South Africa’s grid capacity for decades “did not keep pace with population growth and urbanisation,” Obisie-Orlu says. Meanwhile, Western development finance institutions interested in increasing energy access in Africa were unlikely to have South Africa near the top of their agenda, he says. The country has been left trying to achieve an energy transition with an outdated grid, with risk premiums for renewable energy financing creating interest rates which are at least double for those in Europe or the US, he argues. “Better financial terms will be needed from international development partners.”

Corruption within state institutions has further complicated the task. Key to reducing the risk premium for financing renewable energy projects in South Africa will be institutions which are demonstrably free of corruption, Obisie-Orlu says. “Reducing financing risk perceptions is going to be critical.”

Obisie-Orlu spoke after four days of rain in Johannesburg, during which those who rely on solar power “have been suffering.” That highlights the fact that renewables alone can’t solve the crisis alone in the short term. “Coal is not going to go away overnight,” and gas and nuclear power will also have a role to play. In the long term, he argues, advances in battery technology mean that “the arguments about intermittency will fall away.”

Grid strengthening

The new minister of electricity will need to focus on the installation of new generating capacity, Winkler says. The only way this can be achieved within three years is a “massive” increase in solar power generation, and, to a lesser extent, wind power, he argues.

There is “almost nothing” that the new minister will be able to do about improving performance from the many broken coal power plants, Winkler says. “That is because they are seriously damaged, and cannot quickly be fixed to run as new. A special minister is not going to change that.”

In the long term, renewables will be able to meet baseload needs rather than being just a supplement at times of peak demand, Obisie-Orlu argues. Solving the energy crisis will mean more access to the grid for independent suppliers of renewable energy, and increased grid capacity and better maintenance will be essential, he says. “When more electrons come onto the grid, there must be somewhere for them to travel to.”

The new minister might be able to enhance the capacity for solar panel imports and the training of the large number of skilled installers needed, Winkler says. They may also be able to assist in incentivising private power generation, such as through tax rebates. But real progress, Winkler says, would need a ”lack of ideological dogma which is currently simply not present in the ruling party. There are some fans of renewables clustered around Ramaphosa that have seen how well these work in other countries. But there are also many nuclear die-hards and coal fundamentalists.”