Energy

Question 1

List some key problems in the energy sector.

Answer 1

• Ensuring energy security
• Major economic implications of energy insecurity: investment and uncertainty, growth
• Cost of load shedding
• Affordable energy and education, health, prosperity. Welfare concerns.

Question 2

Is there any dichotomy in the terms “energy” and “electricity”

Answer 2

Yes. Electricity is an energy source (the wider concept).

Other sources include petroleum, gas, coal, wood, biomass etc.

Electricity sources include coal, nuclear, renewables (wind solar), gas and diesel.

Question 3

Give a brief but of Eskom’s history in SA.

Answer 3

State owned enterprise from 1923, they have 27 power plants and at peak were supplying 95% of South Africa’s electricity and 45% of the electricity in Africa.

Question 4

What is the 1998 EWP.

Answer 4

The Energy White Paper is a policy document released by the SA’n government outlining its strategy for the energy sector.
The EWP provided guidelines for restructuring the energy sector, promoting renewable energy sources and enhancing energy conservation efforts.

Question 5

Explain the three pillars of Eskom’s electricity system.

Answer 5

Generation, transmission and distribution.

Question 6

How did the EWP impact Eskom’s three keys?

Answer 6

Generation - it proposed the introduction of independent power producers.

Transmission- free standing grid or transmission system, available to Eskom generating plants.

New distribution system, removal of eskom and municipal distribution. Process rationalised.

Question 7

Describe the inspiration for the EWP

Answer 7

The 1998 EWP drew on the international “standard model”.

Most governments globally had adopted vertically integrated and monopolistic power sectors (single provider).

The common pattern of reform entailed separate generation, transmission and distribution.

IPPs and an increase in internal competition.

A stand alone grid with distribution reforms and a regulator.

Question 8

What issues did the EWP highlight with energy generation in SA?

Answer 8

Overcapacity and underinvestment, need to attract private investors and FDI.

Technologies were outdated, private and international investors NEEDED.

Lack of competitive pressures, market competition is needed to prevent price gauging.

Environmental issues but coal intensity in particular

Question 9

What issues did the EWP have with the transmission system (the grid)?

Answer 9

Underinvestment and fear that within Eskom’s monolith, the transmission system wouldn’t be freely available for IPPs

Question 10

Explain the nature of energy distribution.

Answer 10

Municipalities are the dominant actor, each one charging different tariffs.

Rich municipalities buy cheap from Eskom and sell at a premium to make revenue. Poor municipalities do not pay at all.

Question 11

Households have always been a ….. consumer of electricity

Answer 11

Minority

Question 12

—% of Eskom electricity was being sold to BHP Billiton’s two aluminium smelters at less than —-% of the tariff paid by other consumers.

Answer 12

9.

20.

Question 13

What were added motivations for energy reform in SA?

Answer 13

IPPs posing an opportunity to further BEE and fear of an Eskom monopoly

Question 14

What were the proposed generation reforms?

Answer 14

Increasing competition through IPPs and recruiting private sector investment and technology.

Question 15

What were the proposed transmission reforms?

Answer 15

Autonomy (self governance) for the grid, fairness of access and cost for power producers

Question 16

What were the proposed reforms for energy distribution?

Answer 16

Big energy user to purchase in a transparent market.

Regional Electricity distributors (REDs) made up of aggregated municipalities (both rich and poor) to purchase in a wholesale market.

Question 17

After reform implementation, what was Eskom’s role in the energy sector?

Answer 17

Eskom are still a central actor. IPPs and independent generators still buy through eskom. Transmission and distribution to customers remains as is.

Question 18

Who was initially opposed to energy reforms?

Answer 18

The ANC and COSATU left due to Privatisation in the generation process, fear of job loss as efficiency increased.

Energy Intensive Users Group (EIUG) were opposed to reforms as they were getting “special” treatment and rates.

Fears among actors in the coal supply chain. Beneficiaries of the previous system wanted to maintain their advantage.

Question 19

What are the consequences of abandoning energy reforms?

Answer 19

Eskom monopoly remains in tact.

Delay in the required investment, declining energy availability and no reserve margin.

Kusile and Medupi, ANC aligned investment company. Conflict of interest, corruption etc.

Question 20

Explain the after effects of delayed reforms in energy.

Answer 20

Loss of frontline skills.
High political pressure on Eskom to not adjust.
Coal supply chain favouritism led to routine corruption.
Construction mafias with new plant
Sabotage allegations
Destruction of rail lines and conveyor belts (trucking mafias)
Coal quality (test rigging)

Question 21

Give a summary of the SA’n energy landscape.

Answer 21

Origins 1998 or earlier.

ANC indirectly implicated in the build process for Kusile and Medupi

DPE (department of public enterprises) and DMR (department of mineral resources) policy failures.

Corruption efforts thwarted by civil society but costs in delayed investment.

Debt, low capacity, increased prices and load shedding

Question 22

Explain interest groups.

Answer 22

Groups with shared goals that try to influence the policy process. The goals are either staked on their own interests (businesses, unions etc) or communal interests (rape crisis, Actionaid etc)

Insider interest groups members exert influence on the process through lobbying and personal relalationships.

Outsiders protest and campaign

Benefits of interest group activity l, awareness for issues not expressed in vote, minority upliftment etc.

Problems include their strikes (costs others) lobbying and corruption, lack of accountability.

Question 23

What is the generation mix

Answer 23

The makeup of our energy system. 80% or more is coal but international environmental considerations have capped this and are pushing for alternatives.

Other sources like diesel (carbon based and expensive)
Renewables
Nuclear (trends negative)

Question 24

Who decides the energy mix?

Answer 24

2006 Electricity regulation act empowers the minister of Energy.

Electricity regulation in 2009 then enables the Minister to formulate an integrated resource plan to be approved by cabinet which sets out the proposed mix.

The plan includes demand protections, costs, technological changes.

New generation can be allocated between Eskom, IPPs and other government entities.

Question 25

How much donSA make use of renewables?

Answer 25

They compromise less than 3% of our generation mix.

Question 26

How are renewables globally?

Answer 26

Renewables are in extreme uptrend at the moment, 72% of global power generation by 2040. Costs decreasing for solar(66%), onshore wind(47%) and inshore wind plants (71%)

Question 27

Explain SA’s stance on nuclear

Answer 27

No South African Model supports the use of nuclear energy.

The integrated resource plan for 2010 to 2030 placed artificial constraints on how much renewable energy we could use.

Models favour solar, wind and gas.

Construction delays costs etc.

Question 28

Explain Rosatom-Zuma

Answer 28

Private presidential meetings, specific nuclear agreement with Russia.
Manipulation of Models and data to favour Nuclear or renewables.

Fears if national sovereignty risk, financial concerns and corruption.

Question 29

2019 IRP

Answer 29

New capacity should include

1000MW coal

2500MW hydro

5600MW wind

8100MW solar

8100MW gas

Nuclear out.

Question 30

Explain SA’s Just Energy transition

Answer 30

Failure to achieve decarbonisation targets.

8.5 billion in funding, potential partial solution to the challenges facing SA

Question 31

Why is our JET stalled?

Answer 31

Strong pushback from the coal supply chain.

Coal lobbying is highly motivated and linked to the ANC in Mpumalanga.

Unions (national union of mine workers) fear that green jobs will be taken by non-unionised labour.

Question 32

Why is household electricity a goal fir SA’n public policy.

Answer 32

The UN’s Sustainable Development Goals include electricity access.

Decarbonisation efforts, in the sustained effort to reduce environmental impact.

Development, the rich spend more as a percentage of income, with electricity, the development of businesses (at the local level like soaza’s) is furthered and promoted.

Electricity is essential for human development, health, education etc.

Economic development, electricity can encourage local enterprises and foster economic growth.

Question 33

List some stats about electricity consumption in SA.

Answer 33

Mining and manufacturing consume 60% of our electricity and only account for 20% of the gdp.

Residential sector consumption is 23%

Question 34

How is electricity distributed to households?

Answer 34

60% eskom

• 257 municipalities earn a quarter if their total income from selling power.

People do have access to electricity, 58% in 1996 and 85% in 2019 e

Expensive