Energy Intensive Users Group of Southern Africa

BRIAN KANTOR: Privatising energy sector only way to empower SA’s future

2017-04-03T12:23:29+00:00 April 3rd, 2017|Uncategorized|

No other set of policies will be as important for SA’s ability to raise future incomes, output and employment and to compete globally as taking the right path for delivering energy.

However, following the tempting money trail open to a few potential beneficiaries of energy procurement, as currently practised, is much more likely to predict the future of energy production and consumption than any objective analysis.

Yet even the most objectively determined plans for energy are unlikely to be good enough for a highly unpredictable energy future. The best the government and its agencies — Eskom and the municipalities — could do would be to get out of the energy business as soon as possible and on the best possible terms.

The reason for getting out is that the future of energy is impossible to predict with any degree of confidence. Therefore the decisions made in this regard by a government monopoly would most likely be the wrong ones, from which the economy would suffer permanent damage.

The lowest-cost methods of delivering energy in the future cannot be known. The best way forward for energy production and consumption will be discovered in the global market place through constant experimentation by owners and managers with their open capital at risk.

The winners may be rewarded handsomely and losers will be punished severely. The cheapest energy may be delivered off-grid by converting sunlight into energy everywhere the sun shines and storing it in low-cost batteries or other devices.

So, creating large capital-intensive generating plants using inputs of coal, uranium or gas is obsolete.

Fifty years ago, such plants, supported by monopoly powers, were arguably the right way forward. They delivered satisfactory outcomes in the form of globally competitive electricity prices for SA until recently. But they are surely not the way forward today given the risks technology poses. And especially since Eskom itself has come close to bottom of its class in efficiency criteria, as judged by a recent study commissioned by the Intensive Electricity Users Group in SA.