Western Cape Energy Strategy & Approach: Office of the Premier briefing

Adhoc Committee on Energy Crisis (WCPP)

28 April 2023
Chairperson: Mr C Fry (DA)
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Meeting Summary

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The Ad Hoc Committee on the Energy Crisis met with the Premier of the Western Cape and senior officials from his administration to be briefed on the plans to mitigate loadshedding in the province. The provincial government unveiled a multi-year plan to address Eskom's ballooning energy crisis, pledging billions of rands to stem the unprecedented power cuts which were now extending to between eight and 12 hours a day.

The province had set aside R1.1bn to ramp up energy security plans and decrease its reliance on the ailing power utility, Eskom. The plan would provide project preparation funding for energy projects to get to bankable feasibility. This move would assist numerous developers, particularly the smaller and local developers who were looking to participate in energy projects. The plan would also look at retrofitting lightbulbs from incandescent lighting to compact fluorescent lighting, and would see the installation of solar water heaters, geyser blankets, heat pumps and pool timers as some options.

The Premier said the Province's R1.1 bn investment over the next three years would be complemented by a further R3.9 billion investment by the City of Cape Town. If one considers the contributions of local governments into an electricity infrastructure mitigation of risk, the public sector's investment amounted to over R7 billion. Almost R600 million had been earmarked to reduce the impact of load-shedding, to boost the green economy, to set up green energy projects, to provide support to municipalities to help them get more power onto the grid, and to identify critical transmission infrastructure upgrades.

Members raised the spectre of a total blackout, and asked if the province had enough supply to meet demand, and whether a plan of action was in place to prevent this if required. Would it be possible for the province to go totally off-grid? Would the R60 million that had been allocated for relief to indigent communities (in the form of R600 packs which would include a rechargeable light, a facility to charge a phone and a cooking bag to lessen the impact of load shedding during winter) be sufficient to benefit all those in need? A Member referred to these energy packs and the selection criteria for indigent households, and asked that the process not be politicised so close to the 2024 elections, as the Covid-19 experience had laid bare the political shenanigans with food parcels.

Meeting report

The Chairperson welcomed Members, the Premier of the Western Cape and senior administration officials to the meeting. He said the meeting was to gauge the plans of the provincial administration to mitigate the crippling effects of load-shedding on the province.

Mr C Dugmore (ANC) said that the meeting should not continue in its current form, as the Minister of Electricity was not present in the meeting. He called for a postponement.

The Chairperson said he would provide more light on the Minister's attendance after the conclusion of the meeting.

Province's multi-year energy plan

Premier Alan Winde unveiled the Western Cape Government's multi-year plan to address the ballooning energy crisis, and pledged billions of rands to stem unprecedented power cuts of between eight and 12 hours a day.

The province had set aside R1.1bn to ramp up energy security plans and decrease reliance on ailing power utility Eskom. The plan would provide project preparation funding for energy projects to get to bankable feasibility. This move would assist numerous developers, particularly the smaller and local developers looking to participate in energy projects.

The plan would also look at retrofitting lightbulbs from incandescent lighting to compact fluorescent lighting. It would also see the installation of solar water heaters, geyser blankets, heat pumps and pool timers as some options.

Almost R600 million was earmarked to reduce the impact of loadshedding, boost the green economy, set up green energy projects, support municipalities to help them get more power into the grid, and identify critical transmission infrastructure upgrades.

He said the Province's R1.1 billion investment over the next three years would be complemented by a further R3.9 billion investment by the City of Cape Town, and if one considered the contributions of local governments into an electricity infrastructure mitigation of risk, the public sector's investment amounted to over R7 billion.

Mr Alwie Lester, Special Advisor to the Premier on energy, took the Committee through the details of the province's energy plan. He described the extent of the crisis, and the capacity of the municipalities to deal with it. He pointed out that with its already diverse energy mix, it was well-positioned to meet the challenges.

He explained the impact of load-shedding on the local economy, and the costs involved in running generators to offset the lack of Eskom electricity. He said the Western Cape government's programmes had positioned the province as the hub for energy resilience.

Responses were given to the questions which had been submitted in advance by the Committee.

(See attached documents for details)

Discussion

Mr F Christians (ACDP) thanked the Department of the Premier (DotP) for the presentation, that had provided a lot of information to absorb.

He said people in the Western Cape had expressed a fear of a total blackout , especially with winter approaching. This begged the question whether the province had enough supply to meet demand and whether a plan of action was in place to prevent a total blackout, if required. He posed these questions against the backdrop of information that the province would be able to go off-grid only by 2025.

Should the Western Cape's plans materialise, it would supply electricity in conjunction with Eskom into the national grid. He wanted to ascertain what the earliest would be that the Western Cape would be off-grid.

Ms D Baartman (DA) thanked Mr Lester for the presentation, and recalled that he had always responded timeously and efficiently when Members used to contact him for assistance in his previous role as an Eskom employee. She thanked him for his service.

Provinces received their funding from conditional grants per the Division of Revenue Act (DORA) and the equitable share. No grants had been provided to mitigate the effects of loadshedding. This impacted the finances of provinces which had to implement mitigation policies at their own cost.

Given this state of affairs, the Member wanted to ascertain whether the Electricity Minister had been lobbied for national government support. If this had not yet been done, by when would such an action be taken?

Ms Baartman added that Eskom had announced a minimum baseline per province that would exempt loadshedding in those specific provinces that met the baseline. To secure a minimum baseline, various sectors of the economy would face electricity supply constraints. She wanted to establish which sectors

Mr Dugmore thanked the Department for the presentation and recalled that R40 million had been allocated for project preparation. He requested a detailed breakdown of expected expenditure and the procurement processes that would be followed. He also wanted to ascertain whether the R2 million allocated for the specialist in the budget had been meant as the salary for Mr Lester. R60 million had also been allocated for relief to indigent communities (in the form of R600 packs which would include a rechargeable light, a facility to charge a phone and a cooking bag to lessen the impact of load shedding during winter), and he questioned whether this would be sufficient to benefit all those in need. He also asked for a breakdown by municipality of the R40 million allocated for LED lighting.

When he looked at all of the proposed initiatives, the key question remained the estimated cost per unit to the consumers. Some metros, like Cape Town and others, had levied a surcharge on electricity purchases. Was this a standard practice authorised by the National Energy Regulator of South Africa (NERSA)?

Mr Dugmore also wanted to know the names of those who comprised the Energy Council, and whether it was representative of labour as well.

Mr A van der Westhuizen (DA) said there was a lot of potential for the private sector to assist with the enormous investment required for infrastructure, but this sector based its decisions mostly on monetary grounds. Loss of production, loss of productivity and costs were all contributing factors. Consumers would also have to be convinced that it made economic sense to switch to photo-voltaic (PV) solar and so forth. Given this state of affairs, would the R15 000 rebate be a sufficient incentive for consumers? He called on the Department to come to an agreement with Eskom, as the time was ripe for such partnerships.

Ms N Nkondlo (ANC) asked how much of the R1.1 billion earmarked for infrastructure projects would be spent in informal settlements, especially in Knysna and Overstrand. She also requested more information on whether these municipalities would be part of the electrification programme.

Concerning the emergency funding and the energy response, she wanted to establish what the province’s storage capacity was, and at what levels.

The DORA made certain grants available for energy efficiency and an integrated electricity grant. She was thus interested to know whether these grants would also be used.

Department's responses

Mr Graham Paulse, Head of Department: Local Government, said that the public should understand that the chances of a total grid collapse remained slim and that Eskom would rather go to levels 8 or 12. Should a total blackout occur in the country, another country would have to be asked to recharge the national grid. At this stage, no data were available that could possibly shine light on how the grid would perform above level 6.

In Swellendam, sub-stations had blown due to a pressure system failure.

Premier Winde added that the Western Cape used about 4 000 megawatts, and his administration planned to have enough energy available.

He stressed the point that the Western Cape would like to become energy resilient and efficient. The province would never be able to go off-grid completely and still require Eskom. Loadshedding had to be mitigated and the private sector played an important role. He emphasised that it would be crazy to go off-grid completely, as the province wanted to partner with Eskom.

The meeting with the new Minister of Electricity would essentially discuss how best to partner. Eskom was a key partner for the province, and would always be there. The Premier said that he had shared the province’s plan with the Minister, and had extended an invitation for him to be part of the Energy Council.

On an administrative level, officials would also continue to engage with one another.

Regarding the R1.1 billion and the DORA, the Premier said this was not DORA-related -- it was a provincial decision. Detailed information would come through the various reporting processes.

His administration had informed the national government that there had to be incentives for consumers in the form of less loadshedding.

Public-private partnerships (PPPs) would be further championed. If one looked at the current project to be financed by foreign partners like the Germans -- R7 billion for 60 megawatts, compared to a 5 000 megawatt project -- this showed the scale of investment needed.

Mr Lester responded on the issue of storage capacity, and said the 180-megawatt Steenbras Hydro Pump Station (SHPS) consisted of four turbines that were used to generate electricity. Close by was the Palmiet Pumped Storage Scheme, which was a hydropower station which had a nominal generating capacity of 400 MW produced from two 200 MW Francis-type vertical turbine generator sets. The Ankerlig Power Station was one of five gas turbine power plants in South Africa, and had the capacity to produce 1 338 megawatts.

Mr Lester said that the estimated costs per unit depended on the technology used. At the moment, the tariff sits at 1.83 cents. The transaction advisers worked according to a formula to determine the unit price. The price of solar varied from 98 cents to 115 cents per kilowatt hour. This solar power went straight into the network, as it had no battery storage capacity.

Dr Harry Malila, Director General (DG), Western Cape Government, said that Knysna and Overstrand were not part of these particular project expansions. The slide that the Member had referred to captured the ten largest energy projects, excluding the City of Cape Town. R330 million had been allocated for this purpose.

The R2 million for specialists was not the salary for Mr Lester. Mr Lester was an employee of the Department of the Premier. The R2 million referred to funds earmarked for the Western Cape Department of Local Government. The Department had looked at the beneficiaries, and it was correct that the amount would not cover all the indigent households.

The Department was looking at business partnerships, as 147 000 people were on the indigent register. This was quite high. The administration would see how best to make the rollout equitable. The City of Cape Town had also been engaged in dealing with potential overruns.

The R40 million allocation had been set aside for the poorest of the poor, to assist with installing solar panels. Rebates or tax incentives would also be instituted as an incentive, just as the City had done during the water crisis. The Department had also championed using blankets to wrap around geezers, but conceded that these were not nearly enough. Every little bit helped, however, and the province’s initiatives would greatly assist the Department in going far with energy resilience.

Any licence holder, whether it be Eskom, metros or any other government sphere, had to request authorisation from the NERSA for any electricity tariff hike. The same applied to surcharges.

He was unsure whether the Public Finance Management Act (PFMA) allowed for surcharges. On storage capacity, the meeting was informed that the Western Cape stored it in the form of hydroelectric power. There were very few battery facilities in the province. Escom had operated a battery facility, but it was not in operation. The challenge with solar panels and adequate storage capacity required a solution, and was being looked at. At the moment, solar could provide power only during the day. The province had almost no wind storage facility, but did have a gas storage facility.

The energy resilience programme also targeted schools, and the impact of constraints would be limited for schools.

Page 181 of the Budget Book tabled in 2023 contained a write-up on what the province wanted to achieve with the energy resilience programme. Over the medium term expenditure framework (MTEF), the amount of support required for the projects had also been listed. The new Department of Infrastructure money would have funding available.

The members of the Energy Council comprised the Premier as the chairperson, relevant Members of the Executive Council (MECs), and some municipalities. Institutional meetings were continuing, as well as the Premier’s digicons. Everyone was welcome to attend these online platforms.

Dr Malila invited MrDugmore to furnish the details of the civil constituents he would like to invite to these digicons, adding that energy efficiency directed what the province did,

Follow-up questions

Mr G Brinkhuis (Al-Jama-ah) asked what was being done to curb the rising incidence of cable theft and vandalism of electricity infrastructure. Scrapyards bought the copper for exorbitant amounts and should be homed in on for special attention.

Ms Nkondlo wanted to ascertain whether the province was not aware of three Eskom battery storage projects in the Western Cape. These were situated in Vredendal, the Breede Valley, and Cederberg. With the energy crisis raging in the country, battery storage facilities were urgently required. The biggest problem was with solar, as experienced by Atlantis residents. Solar panels had been placed on the roofs of houses and could power only during the day. With no storage capacity, this effectively left the residents with white elephants and diminished investments.

She took issue with the responses provided on the need for more battery storage capacity. She said that it seemed the administration had no interest in this, or did not see battery capacity as an urgent requirement.

She also requested information on the wheeling framework (which provides a mechanism for municipalities to recover the cost of maintaining the electricity network and administrative functions).

On the R600 energy packs, she recalled the DG's comments about the selection criteria for indigent households. She asked that the process not be politicised so close to the 2024 elections. The Covid-19 experience had laid bare the political shenanigans with food parcels.

Ms Baartman referred to a study on liquefied natural gas (LNG) importation that Eskom had conducted with an American company. There had been a commitment to upgrade the infrastructure. If Saldanha was chosen, then Ankerlig would be an ideal choice. She asked for clarity on these developments.

Mr Dugmore said that he really welcomed the appointment of Mr Lester, as the government could do with all the knowledge available to deal with the challenge. His question on remuneration had nothing to do with Mr Lester's appointment - he had only wanted to track expenditure on consultants. He asked how much money had been spent on consultants.

The programme offered real opportunities for solar power at schools, so he wanted to ascertain what solutions were being offered to the government in this instance. There were several benefits to schools becoming energy resilient. 

He asked whether the City had received approvals, and what the financial revenue model was for selling electricity. How would these influence municipalities' bottom line? The sustainability of local government funding would also come into play.

Mr P Marais (FF+) asked whether he could pose a question, as he had just been reconnected after loadshedding. He asked whether old windmills could not be used to irrigate farms. This would surely help with energy efficiency.

Department's responses

Dr Malila replied that a response had been provided on special advisers, and more information could be provided. Current legislation allows for special advisers. The Department normally sends a submission to the national government, which would approve the appointments with the required salary scales. This was not a provincial competency.

He thanked Member Marais for the relevant proposal about windmills, and said he would definitely raise it at their next meeting.

He said that a full list of solutions would be provided to schools. The Department of Education had various mechanisms that assisted schools. 

The current energy plan had two initiatives, one of which was centred on solar PV panels.These would also be rolled out to health facilities at a later stage. Generators had also been provided to local governments, but even these had been stolen.

The DG said he took the point about the distribution of energy packs so close to the general elections. The administration wanted to prevent any challenges and risks with this rollout. The indigent register was a national programme and could not be tampered with. The administration had looked at budgets, integrated development plans (IDPs), and Statistics SA for information. The rollout would be devoid of political influence, as the province would appoint a private contractor to oversee the process. Municipal officials would assist the contractor in the rollout. The province could not guarantee that politics would not influence the process, though it remained committed to a clean process. He vowed that the administration would do its best to ensure that those who qualified really were the ones who got the energy packs, adding that during Covid-19, the Department had followed a transparent process.

Premier Winde said that everything was being done to look at how the crisis could be mitigated. Municipalities were being invited to present their safety plans on vandalism and copper theft and such like.

Safety was not part of the R1.1 billion referred to in the meeting.

The Premier said that he was aware of the battery storage projects, and that he had been invited to open the Hex Valley battery storage facility slated for 4 April. This event had been cancelled though, and his office was informed on 24 March.

The province had received further funding for gas, and the Department of Economic Development had done a lot of work in this sector. Ankerlig would receive special attention. The question remained about how to expand that plant. Work was also looking at upgrades. This was relevant for both Saldanha and Mossel Bay. Funding was available.

Premier Winde replied to Mr Dugmore that municipalities had expressed their fears with Treasury, and the Department of Local Government was already looking into the impact a total blackout would have on revenue. The province did not want to go off-grid completely, and was working on a funding and revenue-sharing model.

Mr Lester said he had only made an example of what a wheeling framework would cover. Say, for instance, there was excess energy that had to be sold to another municipality, what would the wheeling capacity be? The wheeling framework would cover all of that.

The Chairperson thanked the Premier and officials for their inputs, and excused them from the meeting.

Resolutions and actions

The Chairperson referred to the non-attendance by the Minister of Electricity, and informed the Committee that the Minister’s office had given 24 May as a date for the meeting. The acting chief executive officer (CEO) of Eskom and the Minister of Energy would attend. The Chairperson had reached out to the South African Local Government Association (SALGA) for their attendance, and would extend invitations to the 30 municipalities and the 13 provincial government departments.

He also reminded Members of the oversight visit to Ankerlig and Koeberg.

Ms Baartman said that she supported the Chairperson's proposal, as it would be very important to get an update on these facilities’ maintenance plans and other important information.

She recalled that the Department of Mineral Resources and Energy (DMRE) had several wind farm projects that fed small amounts of electricity into the grid, although they produced only a certain amount. She proposed that the Committee engage with them to see whether they would be able to sell their excess electricity, and how they operated.

Mr Van der Westhuizen recalled the impact that Covid-19 had had on public service delivery, and asked that the province provide information on the impact of its services to the public. He also cautioned against full-scale implementation of solar, as this would affect livelihoods in the sector.

Ms Nkondlo said that she supported the suggestions that had been made, and recalled the Karoo gas project. She asked that the Committee engage with the DMRE about how that project was going. She supported Mr Dugmore’s comments that the province should see the national government as a partner, as the province was part of South Africa. Everyone was working towards a common goal.

The Chairperson thanked Members for their attendance, and adjourned the meeting.

 

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