The industrial base of a country depends on a reliable supply of electricity and steel. Hence in the 1930s, South Africa developed both Eskom and Iscor, since then the economy has diversified considerably.
While the industrial and mining base of the country remains dependent on reliable supplies of these primary products, the manufacturing industries, the secondary and mining sectors, in particular, also need to be developed through efficient labour and technical training.
Business investment needs certainty about energy sources and future potential growth. As a developing economy, South Africa needs both to fulfil its key objectives.
Energy growth and certainty of supply
Economic growth depends on energy growth and certainty of supply. The NDP GDP economic growth objective of 5% per annum requires increasing electricity supply at approximately 4% per annum.
Facts and science prove that this cannot be achieved by using renewables, particularly wind and solar.
Furthermore, it has been shown that wind and large scale solar are environmentally damaging and costly. They require 100% back up and cause major chaos in supplies due to their variability and generally unpredictable supply.
Again, nobody disputes that pollution and damage to the environment from energy sources must be reduced. I cannot go into all the detail on the subject, but the following facts should be noted and followed up.
Carbon dioxide is proven not to be harmful or environmentally damaging. Decision-makers must also watch the film directed by Michael Moore ‘Planet of the Humans’. They should also read some of the latest science and update themselves on the facts and reality of the destruction of the environment and reduction in economic activity.
Increases in energy poverty have been noted in countries where high penetration of solar and wind exists including Australia, South Australia in particular, Germany, Canada, and California.
The only energy sources available in South Africa capable of providing certainty of supply and economic growth at competitive prices are nuclear and HELE (High Efficiency Low Emission) coal supported by limited gas and domestic solar.
IPPs critical to energy security
Both reduce South Africa’s carbon footprint while nuclear is carbon emissions-free. The steps necessary to foster investor investment and restore faith in South Africa’s future economic growth are as follows.
Independent Power Producers (IPPs) are absolutely necessary for providing longer-term new electricity generation to support supply from Eskom. They are, however, currently focussed on highly variable and unreliable wind and solar. They should concentrate on nuclear and coal which supply secure, reliable power at low cost.
No future purchases should be made of electricity providing electricity sourced by IPP’s from wind-farms or solar installations unless they cater for all the additional costs associated with variable intermittent power.
Apart from being unreliable, they cause major supply problems. They are, in fact, heavily subsidised. Their costs should include all backup costs and economic costs of downtime arising from the inadequate supply, the inefficiency and other substantial additional costs they cause.
Independent companies buying electricity from IPPs must provide their backup electricity. Should it be expected that Eskom delivers the power, it must be at the full cost of back up power which includes a lengthy list of additional charges for having such resources available.
Municipalities should not be allowed to buy electricity from IPPs. The grid should be the sole provider of power to municipalities, ownership of which should remain with the state or Eskom.
Where IPPs have already been built, electricity should be charged at a price that includes the full cost of backup power which consists of a lengthy list of additional expenses for the inefficiencies they cause and having such resources available.
HELE coal and nuclear power
The government needs to announce a programme whereby at this stage all future base-load power will be based on HELE coal and nuclear power.
An immediate announcement should be made of new coal-fired HELE Power Station inland and a nuclear power station at Thyspunt. Thyspunt is selected as this will guarantee reliable power for the Eastern Cape and maximise alleviation of poverty in the area.
The government should announce a programme to reinstate the Pebble Bed Modular Reactor (PBMR) project. The PBMR remains a real opportunity to support its nuclear 
programme.
An impact study on the PBMR prepared and written in 2009 found that this was an ideal project for South Africa to undertake. This report should be released and reviewed by the government.
This is a brief review of the steps that are necessary for South Africa to return to a long-term economic growth path and achieve its primary objectives of reducing poverty, unemployment and inequity.
Rob Jeffrey | Independent Economic Risk Consultant | Contributing Author | Free Market Foundation | mail me |
