Off-grid Eskom exodus will leave supplier’s “finances in ruin”

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I’ve written before that as much as I believe off-grid, renewable energy is the future for households in South Africa, the way it’s happening right now is just piling up the problems for the country at large. The problem is straightforward: while the monopoly power producer continues to struggle, those that can afford it will go off-grid. What happens to those who get left behind?

Parkhurst residents, for example, made a big announcement about the solar energy deals they’ve put together for their suburb last week, which effectively make it cheaper to supply your own electricity than remain tied to Eskom. Now Parkhurst should be saluted for yet again showing the initiative here, but at the same time alarm bells should be sounding over at Eskom HQ. Losing rich, paying customers means fewer ways to spread the costs of keeping businesses and lower income households lit up.

Localising power generation and giving citizens control over their utilities is a good thing. But there’s more than enough ways in which South Africa is a divided society already, and ultimately those living in rich suburbs will end up having to subsidise those in poorer areas through higher taxes and more Eskom bailouts, because the country can’t afford to have most of its workforce living in the dark – we already know that loadshedding has huge economic costs – estimated at R80bn a month – before you get into the question of the humanity of it all.

So it’s interesting that the one organisation that seems to get this and is actively discussing how to encourage localism in the energy supply chain in a way that benefits all is metalworkers’ union NUMSA. You might expect that a trade union of this type would be a bit old school when it comes to the big job-generating potential of centralising the power source – after all, its members are exactly the people government is wooing with promises of jobs building nuclear power plants.

And yet, writing over at the South African Civil Society Information Service (SACSIS) today, sustainable energy expert and Worldwide Fund for Nature board member Saliem Fakir says that NUMSA tackled this issue at its conference last week. The union wants to create “multi-stakeholder and interest group” to put forward alternative options to the five point Eskom plan, which relies on shoring up what we have and building more traditional power plants.

Here’s a choice quote from Fakir’s piece.

NUMSA’s approach at its conference was unconventional. It opened the door to unions like Solidarity, the Independent Municipal and Allied Trade Union (IMATU) and even business chambers. That broad interest groups willingly participated is testament to the fact that ordinary consumers, both rich and poor, are bearing the brunt of the energy crisis.

NUMSA is undertaking what others rarely do. It is forging alliances between different communities and organised formations alongside its powerful worker-base to tackle the energy crisis head on and find alternative solutions.

As the conference noted, the energy crisis is multi-pronged and not simply limited to aging machines that have run out of steam – in both the figurative and literal sense.

Fakir clearly shares my opinions. “In the next five years,” he writes, “Decentralised power does have the potential to disrupt Eskom’s business model, which is reliant on customers who pay to remain on the grid. But if they defect, Eskom’s finances will be in ruin. Payment defections due to boycotts, disputes and electricity ‘theft’, already show the damage that can be done to Eskom’s balance sheets and its ability to borrow.”

Fakir argues that local power generation should be encouraged, but it should be approached strategically in a way that promotes a new business model and strategically and can benefit all. That means changing Eskom fundamentally, not simply shoring up a failing business model.

It’s an interesting piece. You should really go over to the SACSIS website and read it.

[Image – CC Bruce Guenter]



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