A row that is brewing amongst South African electricity generators might spill over into Eswatini with significant economic implications on electricity supply and cost to consumers.
As part of their evolution, South Africa’s National Energy Regulator (NERSA) has approved licences for 10 independent power producers (IPPs) to generate electricity. Instead of supplying Eskom, the national power generator, they are allowed to sell electricity directly to consumers.
On Tuesday NERSA went a step further, and approved a plan that allows multiple power generators to share any area; which could include a town or municipality.
However, the state electricity company, ESKOM which currently supplies a significant portion of the 71% of electricity imported by Eswatini is having none of it. Last night, a day after the NERSA decision, it launched a High Court challenge.
Eskom said the decision by the Regulator infringes upon and breaches NERSA’s own rules and the licences issued to Eskom by NERSA.
“Eskom disagrees with this decision and has instructed its attorneys to initiate legal proceedings in the High Court,” the company said last night.
The dispute has important lessons in Eswatini where electricity supply sovereignty has assumed major national priority status.
In the past few years, energy security has rapidly shifted beyond the traditional hydro electricity generation, the mainstay of the national power generator EEC (Eswatini Electricity Company), to thermal power. Here the champions are agribusiness giants in the sugar manufacture and forestry who are leveraging to extend the power of their boilers beyond extracting sugar, to also generate electricity.
Ubombo Sugar is the largest producer of raw and refined sugar in the country. They are now using that energy to also produce an annual 191 gigawatt hours (GWh) (2023). They are distantly followed by RES (Eswatini Royal Sugar) combining Mhlume and Simunye generation to produce 145 GWh. Together the new generators are closing in on the annual 373 GWh produced by EEC.
In the near-distance, is potential from Montigny who have been eying dusting the boilers from their Bhunya plant to also produce electricity from forestry waste.
The beauty of domestic power production lies in its contribution to domestic economic growth driven by national productivity that inspires national employment. Currently domestic electricity producers now generate 710 GWh, slowly inching closer to the 870 GWh imported from mostly Eskom but also from (EDM) in Mozambique who have augmented their hydro generation from Cabora Bassa with gas fired generators from their LNG fields. Both Eskom and EDM produce extremely expensive thermal power from diesel and LNG, thereby exporting inflation into the Kingdom. Electricity sales from outside the Rand Monetary Area is currently denominated in USA Dollars at often unpredictable exchange rates.
Domestic electricity generation is key during peak demand of morning hours when electricity prices are at a premium. Even during low water season, water is conserved to drive hydro stations to cushion against premium cost imported electricity.
Eswatini biomass thermal power generators are clean energy because they are produced from renewable resources.
Power generation is a lucrative market for a much-sought product. However, it is an industry that is ideal for producers, like the sugar industry who already have established generation capacity who can sell excess power to the national grid after meeting their own needs, or at lower cost, increase capacity to supply electricity for sale. Other potential electricity generators are still waiting on the side-lines, hoping for a cost reflective price for an electricity unit. That price may tend to be higher than the current price set by the Regulator, ESERA, currently based on a periodic tariff adjustment application by the public company, EEC.
The battle playing out in the neighbouring South Africa is no doubt being watched carefully in the Kingdom. In South Africa it should be seen within that country’s bigger socio-economic power dynamics where privatization of key utilities is a key factor, apparently headlined by the late former minister of state enterprises, Pravin Gordan. This was highlighted by recent efforts to privatize and sell off the national airline SAA. While this particular measure failed, appetite for state enterprises is high, in line with healthy capitalist opportunism.
The implications for Eswatini weigh in on the potential higher cost of electricity. IPP sector electricity seeping into the the Kingdom’s electricity imports might mean much higher electricity prices.
jm/today/31.10.2024
