Western Cape Municipalities: Energy Infrastructure Plans for 2023/24

Meeting report

The Chairperson said that the meeting was convened to understand loadshedding matters at the municipalities. After introductions, he said the Department of Local Government would start with a briefing on the guidance provided to municipalities and projected plans for energy infrastructure allocations, including emergency funding. He handed over to Mr Paulse and his team. An apology from the Western Cape Local Government MEC was noted.

Western Cape Department of Local Government on Municipal Energy Support
Mr Graham Paulse, DLG Head of Department, said that there are a number of departments that assist the municipalities. DLG is the leading department in the four projects that support municipalities. This support role is played alongside other departments, such as the Department of Infrastructure which is facilitating to get support for transaction advisors. DLG also works with the Department of Environmental Affairs on development planning and economic development. DLG is taking the lead in the project on the Electricity Master Plan and Solar PV to pilot renewable energy solutions in municipalities. The third project the Department is supporting is the generators, and the fourth project is aimed at additional dedicated capacity to expedite the energy programmes.

The first project is a medium-term immediate solution for municipalities that started late last year. There were significant hours of loadshedding which led to challenges in municipalities in providing water and waste-water treatment during loadshedding. DLG was inundated with requests for a solution. DLG has assisted with technical assistance, deployed engineers to some municipalities on a semi-permanent basis and based on support requests, DLG has also employed engineers to undertake an assessment of where a municipality requires assistance and to help with the impact of loadshedding. The intention is to get generators so that during loadshedding municipalities are able to pump and purify water. There is extensive engagement with municipalities to determine what their critical infrastructure is in both water and wastewater treatment works. This was in line with DLG’s approach to demand management and supply management, as well as management strategies to help municipalities. DLG has facilitated at the height of the challenges, generators between the Department of Water and Sanitation and certain municipalities who have excess capacity in generators, and moved these around to where the challenge has been the highest at the time in the province.

Mr Paulse said that Western Cape Minister Bredell took a submission to the Provincial Minister of Finance and this was taken to Cabinet and approved. DLG has been given almost R89 million support for municipalities to acquire generators based on the work that the engineers have done in the Department.

Mr Paulse went over the funding distributed to municipalities in the province to help with the impact of loadshedding based on their critical infrastructure. He emphasised that DLG has focused on critical infrastructure so it does not imply there has been accommodation for all infrastructure treatment works. The allocations have been approved and transferred to municipalities. The municipalities were required to go through a valid recruitment process to procure these generators. Given that the funding could not be provided to all the wastewater treatment works, DLG has given funding to district municipalities so that they can procure mobile generators in the event that a municipality within the district is faced with a challenge of a smaller scale, they could get assistance from the mobile generators. This means that local and district municipalities have received funding for the generators. There has been a due diligence process for agreements between DLG and local municipalities and between the local municipalities and districts to assist.

DLG is regularly taking submissions to the Cabinet and the Energy Council to indicate the progress in this project. About ten municipalities have fully spent their allocation as of 30 June. Their generators have been installed and are operational. Seven municipalities have gone through the procurement process and are waiting for the deliver of the generators. Four municipalities are still in the supply chain management (SCM) process, with one of which the price came out higher. DLG is in the process of determining if they can increase the allocation to that municipality in this current year for the purchase of that generator. DLG is also waiting for approval from the Treasury to confirm it can get the proceeds of roll-overs. That funding will then be spent in this current financial year for municipalities. The Minister and the Premier have undertaken to visit some sites to assess the functionality and the operation of the generators that have been delivered and installed in municipalities.

The second project, for which DLG has had funding for in the current year and over the MTEF is Electrical Master Planning. They support municipalities with Electrical Master Plans and assist them with their planning particularly for electricity infrastructure, the potential growth of the town and their current and potential needs so that the municipalities can ensure they have enough supply. DLG has supported municipalities since 2014/15 with drafting and reviewing their Electrical Master Plans and in the last couple of years, they have also assisted through the Municipal Energy Resilience Project. DLG has increased its baseline to support municipalities and where it was necessary to review and amend the Electrical Master Plans. DLG has drafted a submission and requested provincial finance approval of the gazette so it can transfer the funding to municipalities.

The solar photovoltaic cell systems with battery energy storage system is a pilot project that DLG is currently running. A submission has been presented to Cabinet and the intention is to roll out this project to various pre-determined municipalities in the province. Cabinet has endorsed the six municipalities, but this is based on further work that DLG is required to do with the energy team. Some of the municipalities identified are: Hessequa, Swartland, Cape Agulhas, Swellendam and Prince Albert. A request for information (RFI) was published and closed on 28 July. DLG is in the process of processing the information that was captured from this. The aim was to test the market to see what the cost implications would be for the project, specifically the cost per unit per month. Currently, the aim is to have this on a lease option of three years, but this can be extended. DLG and the Department of the Premier have received funding for this project. They are set to brief the Energy Council about the outcome of the RFI.

Mr Paulse explained that they are also assisting the municipalities with the Environmental Impact Assessment (EIA) process and keeping it under 20 MWs in each of the municipalities and towns implies a scoping EIA and not a full EIA. The intention is to make a municipality (or part thereof) loadshedding resilient. The area can be a combination of business and residential areas to ensure the continuation of work and production. Funding was received from the MTEF to assist municipalities with the work on loadshedding resilience. DLG will appoint a number of chief electrical engineers, as well as engineers and technicians in the department who will be fundamentally available for the entire province and its municipalities. Alongside this, DLG will appoint project managers to assist municipalities with this project.

The Department of Infrastructure has also received allocation over the MTEF to help with transaction advisors and in a meeting on 31 July, the Department established the progress in the appointment of transaction advisors for municipalities. In consultation with municipalities, there was a request to appoint the transaction advisors in the province, but that they be deployed to municipalities where there are certain requests.

The Department is constantly in liaison with the municipalities and the Premier has requested that the district municipalities join in the Energy Council going forward.

Discussion
Ms D Baartman (DA) asked for the names of the municipalities that are still in the SCM process of procuring the generators. She asked for the criteria used to determine which municipalities would be selected for the Solar PV project. Lastly, she inquired about the expertise or skills that were sought for the energy team and transaction advisors, in order to assist municipalities with sourcing these individuals. She noted that many municipalities are under-resourced when it comes to experts in technical matters.

Mr A van der Westhuizen (DA) thanked Mr Paulse and the province for the welcomed approach to assisting in the energy crisis. He asked if the province assisted the SCM for municipalities with the specification for the bids? Do the tenders include the work to provide a concrete slab or the linking of the generators to the existing wiring and even the security? To his understanding, it was not just a generator that would need to be purchased. He asked if the funding allocations were enough to cover all the costs for procurement and installation of the generators. What were the lessons the Department of Local Government learnt from this process? Had DLG cooperated and shared practices with municipalities?

Mr C Dugmore (ANC) asked for clarity on when the expenditure was completed in the energy resilience project, as it had already been established in 2014. He asked for an indication of the unit cost of electricity in the different municipalities as opposed to the unit cost provided by Eskom. Eskom is the major supplier to municipalities. He asked what the research says about the majority of municipalities procuring power from Eskom, placing a surcharge on it, and then generating their own funding from this. A concern is that if this no longer the case in certain municipalities, how does this impact the switch to alternative energy sources, more so how would this impact municipalities that rely quite heavily on the funding they generate from their surcharges.

Ms N Nkondlo (ANC) queried the rollovers, specifically the amount and which projects would be affected by the rollovers. Are there municipalities which have completed their Electricity Master Plans? What has this indicated, particularly around the infrastructure? Eskom has mentioned the challenge of distribution infrastructure, so how does this affect the municipalities who have completed these plans? What is the rationale for the decision to appoint transaction advisors for municipalities? Is it because there is no capacity within the municipalities to appoint transaction advisors on their own? Municipalities are typically treated independently so she wanted to understand the strategic choice to have transaction advisors appointed at a provincial level for municipalities instead of having the municipalities appoint their own transaction advisors.

Mr F Christians (ACDP) asked how the selected municipalities testing the energy resilience project will determine which residential areas in their municipalities will be loadshedding-free. Big businesses have their own solar panels to generate electricity but many small businesses cannot afford to do the same. He asked if the six municipalities and DLG will establish a relationship with the business hubs to see if bigger businesses are able to assist smaller businesses who cannot afford to rely on alternative energy resources. The Department should explain how it and municipalities intend on assisting smaller businesses.

DLG response
Mr Paulse replied that the municipality that requested additional assistance with the slightly higher price of generators is the Laingsburg municipality. DLG is assessing how they can assist the Laingsburg municipality based on their existing funding. The DLG energy team has developed criteria in consultation with the municipalities and the Department of the Premier engineering team.

The idea with the energy resilience programme was that those municipalities are in a pioneering stage and thus they will be excluded from the battery solar option. These municipalities are Saldanha Bay, Stellenbosch, Drakensberg, George, Mossel Bay and City of Cape Town. This has been driven by the Department of Economic Development. One of the criteria is to exclude these municipalities. Another criteria was to consider the economic and employment impact on the town. To ensure that the principle of equity is applied across the province, only one stable municipality per district was selected. The aim was to select municipalities that have capacity and good governance practices. A key factor to this decision was that the required maximum demand should be less than 20 MWs. As soon as the 20MW threshold is exceeded, they would need to go through the full EIA process and this would imply that the EIA is, on average, in excess of 300 days. Another important criteria was that the municipality has land available that was not dedicated for other purposes. The initial estimation was that the municipalities would require 1.8 hectares per MW. The land should also be located near the town’s municipal electrical network in order to be injected in the municipal grid. The municipality must demonstrate its own commitment and available funds because there are some parts that the municipality would need to fund on its own. The municipality must also have the required technical capacity to run this project, with a functional electrical department.

The municipalities have requested support for the electrical engineers and technicians. The idea is to help the municipalities with this, but the Department is struggling to get these skills employed in the province. DLG typically has to source these critical and scarce skills from a number of recruitments. In reply to Mr Van der Westhuizen’s question, DLG has worked very closely with the municipalities. Provincial Treasury SCM unit has worked with DLG and so it includes the installation of the Solar PV systems, and if necessary, the funds will cover the cost of installing concrete slabs. The cost of security, cameras and decommissioning the system after the leases have been included in the RFI.

DLG has allocated about R30 million over the MTEF and the Department of the Premier has budgeted similarly. On the lessons learnt, the Department has met with departments from other provinces to compare their initiatives and what they have learnt through their own experiences.

Municipalities have raised the surcharge issue. There are two initiatives at the moment: 1) the Department has been tasked to determine which municipalities will be ideal for the energy mix and the revenue generation that can be utilised by these municipalities; 2) the Premier’s department energy team is developing an integrated resource plan to do this energy mix and the cost of supply studies. This will determine what the tariffs will look like, what Eskom will be required to do, what the surcharge and the individual tariffs will be, and what will be charged to business citizens. All these details will be revealed in the cost of supply studies.

DLG has received a number of requests for support with transaction advisors and programme managers. Mr Paulse and Head of Infrastructure, Ms Jackie Goods, have met with various municipalities to determine if this is a need, and if so, how the Department can go about accommodating this. A meeting was held with the municipalities and their directors, and the request was that they needed that assistance from the province. It would be ideal if the Western Cape Government procured this so that these can be deployed throughout the province.

DLG has worked with municipalities and based on the criteria, certain towns have been identified – but it depends on the MWs. If a municipality is 6.5MW and requires solar panels to the extent of 19.5MW, then it implies that they can make that entire town, residential and business hubs, loadshedding resilient. In some towns, the notified max demand is higher which implies that the municipality will have to decide which parts of the town will be loadshedding resilient. The intention is to make the entire town loadshedding free, as much as possible.

There has been an idea to assist small scale businesses and how the Department can incentivise them with alternative energy in the form of solar batteries. Discussions were held about how they can go about this.

Mr G Brinkhuis (Al Jama-Ah) asked if the fight against cable theft is being won across the province. Is this still a challenge for municipalities?

Mr P Marais (FF+) noted that national government has appointed three ministers to solve this problem, but it seems only the Western Cape is involved in solving the problems. He asked if any of the suggestions it is implementing have the backing of the national Minister of Energy. How many of the projects that the Department is assisting municipalities with, has the full backing and knowledge of the national Ministers?

Mr Paulse explained that extensive discussions about cable theft take place in other Committees, led by the South African Police Service. It appears that the police are successful in apprehending the cable thieves, and they have shown this in various illustrations where they have recovered the cables over time. There is a committee assigned to this issue.

Cabinet has put R1.1 billion to help with various energy projects. Minister of Electricity Ramokgopa and his advisors were in attendance at the Energy Council last week and indicated what they are doing to resolve the challenges around loadshedding. The Minister requested that at the next session, he would like to have an indication of what DLG has done in the province to assist with the local problems related to loadshedding. Perhaps this may be a question that can be directed to the Premier. There are further meetings taking place with the Minister’s advisors.

Ms Nkondlo reiterated her question about the rollovers. She asked if this Department was involved in the energy starter kits for disadvantaged families, and if so, which municipalities have started to roll out these kits.

Mr Paulse replied that there is general support for the projects undertaken in the province. He asked that this question be directed to the Premier. As for the energy kits, DLG identifies and liaises with municipalities. This information is available on the database. The energy packs are still in the supply chain process, and it should conclude in due course, which will indicate how the Premier’s Department will proceed with the kits to municipalities.

Ms Eda Barnard, DLG Chief Director: Municipal Performance Monitoring and Support, replied that the four municipalities that are still busy with the supply chain processes are Prince Albert, Laingsburg, Witzenberg and Cape Winelands District. All four municipalities have already gone through one round of supply chain and did not find responsive bids and had to repeat the process. All, except Laingsburg, have started the second round. Laingsburg has requested additional funding. DLG is providing technical support to these municipalities.

As for the rollovers, what happens is that at the end of the financial year for municipalities, they have to ask for a rollover to continue with spending in the next financial year. Provincial Treasury created a special opportunity to do the rollover slightly earlier so that the municipalities can apply for this. DLG is consulted on if it approves the rollover applications and its support is then premised at the end of their interaction with the municipality. There needs to be an understanding of full commitment from the municipality’s side.

DLG has received an application for roughly 60% of the full amount with a number of projects in the municipalities. At least seven of those municipalities have already placed orders for their generators and are waiting for the rollovers to be approved. The engineers are monitoring this very closely.

The Chairperson asked why the Laingsburg generator is so expensive.

Mr Paulse replied that based on the initial assessment, it allocated R60 000 for the generator. It has been in discussions and the pricing that has come back is higher. It appears that the initial calculations were underestimated.

Ms Baartman noted that Mr Paulse’s response implies that there is no generator in the Western Cape that can be procured in that price range for the Laingsburg municipality. She asked if her understanding was true.

Mr Paulse replied that the costing and the size of the generator was underestimated. The municipality requires a much bigger generator in Laingsburg.

Mr Marais asked if there was any way that the environmental people would agree that one can make use of that shale gas in the Karoo. There is a lot of shale gas available which is being used in Mossel Bay already. He asked if special consideration was made to lobby to use the shale gas to generate electricity.

Mr Paulse replied that he was not capacitated to answer this question, but he will based on the premises of the broader Integrated Resource Plan (IRP), that the gas in the Karoo area will be considered as an option.

The Chairperson thanked Mr Paulse and his team.

West Coast District Municipality Energy Resilience presentation
Mr Roelof Strydom, Mayor: West Coast District Municipality, thanked the Department for the R1.9 million allocation for the procurement of generators. The municipality managed to procure two generators from both their own funding and that of DLG. The wastewater treatment works was also delivered for permanent installation. He also thanked Saldanha Bay Municipality for assisting with the 450-kilowatt generators during high loadshedding periods. They have two new generators permanently working in Withoogte which will be mobile on trailers where they will be taken where necessary. The Withoogte project is also underway, and the intention is to have a 1.2MW solar plant which is phased as follows: phase 1 will generate 161-kilowatt power with their own funding, which started in June. Phase 2 will have the generation of 338-kilowatt power with battery backup solutions, which will cost R14 million through own funding and partnerships. Phase 2 is set to take place in December 2023. Phase 3 will be 851-kilowatt power with battery backup solutions which will cost R18 million. This will take place in April 2024.

WCDM is currently in discussions with Matzikama Local Municipality and the Development Bank of Southern Africa (DBSA) following feasibility and environmental studies on land already procured in Matzikama. He explained the table of recommendations for grid assessments to determine the state of municipal and Eskom infrastructure. He noted that municipalities can collectively give effect to Section 84 of the Municipal Systems Act which states that the district has the power to bulk supply electricity, which includes for the purpose of supply and transmission distribution and applicable generation of electricity.

Discussion
Mr G Pretorius (DA) asked about WCDM's intention with the 20MW that will be partly funded by DBSA. Does it intend distribute the energy to other districts and municipalities as it seemed like a lot of electricity for a municipality of Matzikama's size.

Ms Nkondlo asked if WCDM already received funding for its mobile generator. She also asked if it has completed its Electricity Master Plan, considering that WCDM has a huge industry, particularly in Saldanha. This Master Plan would help to understand what WCDM’s current and future electricity demands would be.

Mr Marais noted that the West Coast’s three-phase plan to generate 1.2MW of electricity may seem like a lot, but according to his understanding it would not cover many residences. He asked what the municipality is doing about people who run pool pumps for an entire day instead of regulating it to only a few hours per day. Were there plans to prohibit pool owners from running their pumps all day because this consumes quite a lot of electricity?

Mr David Joubert, WCDM Municipal Manager, replied that the usage of energy in Matzikama will be for sewage and water treatment works. Any excess energy will be made accessible to industries so that there is no wastage of electricity. They have also identified a mining site but there is still more work that needs to be done within the feasibility and bankability studies.

WCDM has received all the funding for the mobile generator. In fact, they have added an additional R200 000 which will be used to fund the building of mobile trailers to mobilise the generators. This cost and the cost of maintenance and safeguarding will be covered by the municipality. He hoped that this would alleviate the challenges that water works experiences during higher stages of loadshedding.

As for the Electricity Master Plan, they have tabled a list of recommendations for a district-wide Master Plan to understand what is in the municipal grid and the Eskom grid, as well as the constraints leading from that. Some local municipalities already have these plans and there is a good assessment, so the plan is to do a district desktop study and determine where the gaps in information lie. This will then assist when they need to identify and address capacity constraints and what needs to be considered going forward with infrastructure implementation. Hopefully this plan will indicate where WCDM needs to put its focus and support.

Mr Joubert explained that the 1.2MW plan is not intended for residential usage. The Withoogte treatment works outside of Morreesburg which has a 70-megaliter plant capacity and supplies water to the entirety of Saldanha, parts of Swartland and parts of the Bergrivier Municipal area. The energy being generated is to ensure that the water treatment works are being optimally used in a 24-hour cycle. Currently more water is being pumped than what is in use. Therefore, this plant will be used for the water treatment works and any excess will be distributed accordingly.

Ms Nkondlo asked if the Master Plan that Mr Joubert mentioned is still in progress and if the Committee could receive updates on it. Given that Matzikama received a wind farm, what would be the lessons learnt that can be taken to the next phase in what the province and municipalities are doing so that pilot projects are not repeated.

Mr Van der Westhuizen welcomed all additional capacity being generated and asked that DLG and local government keep the Committee informed about the progress with this initiative.

Mr Dugmore said that the economic participation of communities in the generation of power is something that he has heard is neglected in these projects. He mentioned the community cooperatives in Nelson Mandela Bay, which supplements the household income in these areas. Is there any thinking about the involvement of local businesses and community participation in cooperatives in the generation of power?

The Chairperson suggested that this be a recommendation to be sent to Mr Paulse so that he can respond to the Committee as he had already left the meeting.

In response to Ms Nkondlo, Mr Joubert explained that all the municipalities have an Electricity Master Plan which takes care of their own infrastructure. DLG is in the process of rolling out a district-wide Energy Master Plan in order to identify the gaps in infrastructure and the capacity constraints in the grids. As part of the desktop study, this will also highlight the municipal and industry usage, how they can cater for this, which energy sources are closer to that geographical area, and how they can plan for this going forward. Currently, this plan does not exist, but it is being tabled in order for it to be presented to the DCF.

On lessons learnt, Mr Lionel Phillips, Acting Municipal Manager: Matzikama Municipality, explained that the municipality has two renewable energy generators: the Sere wind farm which is a 100MW generator which is 100% Eskom-owned and a 20MW solar farm owned by a partnership between Old Mutual and a French company. When this project started, they hoped to use this project to develop the Matzikama economy but unfortunately the municipality itself does not benefit from this because the energy comes from the national grid which is controlled by Eskom. Despite the fact that these are renewable energy plants, when Eskom turns the power off for loadshedding, the plants are also switched off. Matzikama municipality has asked for Eskom to keep these plants on because of the sewage works challenge, but Eskom has not complied. A 20MW storage plant being built on the Sere wind farm which should take approximately six months to complete will hopefully be of benefit to Matzikama municipality during loadshedding.

They have also learnt that wind farms do not generate much electricity or employment for the local community. The construction of the windfarm creates job opportunities, but as for the maintenance and managing of the wind farm, this requires high-tech skills which usually are not sourced locally. The solar farms require more low-skill maintenance after the construction period because they need to be kept clean to get optimal sun exposure. He hoped that with the building of the storage plant, it will attract businesses and benefit the Matzikama economy.

Mr Joubert said that community cooperatives have not been considered yet, but it is definitely something to think about in the future. What they have considered is enterprise and supply development for the solar farm and the treatment works and particularly for post-construction phase, the cleaning and security of the solar panels. He hoped this would become part of the project.

Mr Paulse replied that from a departmental perspective, there is no thinking about cooperatives at this time. There are extensive discussions where businesses came forward with providing rooftop solar and the businesses have entered discussions with local governments to sell the energy back to the municipalities.

Mr Marais pointed out that wealthier households are able to buy generators and inverters which in any case require electricity from the grid. Eskom encourages the use of generators and invertors, but this is limited only to households that can afford these. This then results in poorer households having to face extended loadshedding purely because the higher-income households use a lot of the electricity to charge their devices. Is there a plan to tackle this?

Mr Dugmore asked if a cost benefit analysis has been done with standard schools that are equipped with solar power. Looking at the school’s needs during a particular month, would solar panels be able to meet the demand that these schools faced? He asked if this would be sustainable but highlighted that this could also pose a potential problem because many municipalities relied on the income generated from schools paying their electricity bills.

Mr Paulse explained that the spikes Eskom refers to is when the power comes on as many people then put their generators and invertors on charge because they have obviously run flat. The idea is that people put solar panels on their roof which would then save electricity and avoid using current from the Eskom grid.

He said that the Education Head of Department, Mr Brent Walters, is taking the lead in the initiative to make some schools loadshedding-free but also not reliant on energy. Extensive work has been done, but Mr Paulse is unsure if a cost benefit analysis was conducted. He suggested that at the next session of the Committee, they call Mr Walters to provide an update on the progress.

Mr Phillips replied that while a cost benefit analysis was not done, Matzikama municipality did fit all classrooms with air conditioners and solar panels in Quintile 2 schools. This could possibly be duplicated at other schools because most schools only require electricity during daylight hours.

The Chairperson thanked WCDM for the presentation.

Swartland Local Municipality Energy Resilience presentation
Mr Louis Zikmann, Director: Civil Engineering Services, Swartland Municipality, said that the Municipality noticed that the bulk of its wastewater treatment and sewage water infrastructure was suffering with the extended loadshedding last year. They started to engage with municipalities on a technical level for its loadshedding response initiative. This information was shared with DLG where they had to identify critical pump stations and sewer treatment works that were suffering with loadshedding. They drafted a business plan which was submitted to DLG on 20 February 2023 and concurrently identified the designs to go ahead with this project. The Department informed them of their allocation of R10.945 million which was for the installation of back up generators at four critical bulk pump stations, two critical wastewater stations and two critical sewer pump stations. The Council then adjusted the budget on 30 March 2023. The budget was amended to receive the R10.945 million and allocation from its own funds was R3.7 million.

Tenders were invited on 22 March for the supply chain process, which closed on 30 April. The tenders were awarded on 18 May with a 35-week contract period for the supply and installation of the generators, the enclosure and security measures and the upgrading of the pump starters and the switchgear. Swartland Municipality is also submitting monthly reports to DLG which is required as part of the allocation. The rollover application was submitted on 14 July 2023 and the expenditure to date has been R3.352 million.

Discussion
Ms A Cassiem (EFF) asked if Swartland Municipality could inform the Committee which companies were given these tenders and what their BBEE-status is.

Ms Nkondlo asked if there had been any discussions that aligned with the Atlantis Special Economic Zone (SEZ) given the municipality’s proximity to the SEZ.

Mr Van der Westhuizen pointed out that it had always seemed as if Swartland Municipality was one of the more financially stable municipalities and they received a lot of support, as per Mr Paulse’s presentation. He asked if Swartland could provide insight as to how their applications have been so successful in the hopes that this could assist other municipalities.

Secondly, he noted that he had learnt from Swartland Municipality Executive Mayor Tijmen van Essen that spikes in Eskom and municipal charges were due to the maximum current being drawn from the Eskom grid after loadshedding ends. Many municipalities have gone into discussion with Eskom about this. He asked if Swartland could explain how it has handled this and provide insight to other municipalities on how to combat this too.

Mr Joggie Scholtz, Municipal Manager: Swartland Municipality, replied that the tender bid selected, BE Electrical, was done according to the supply chain process. This company originates from the Western Cape, but he was unsure of its BBEE status at the current time. He was also unsure of any engagements with the Atlantis SEZ. As for the success with its applications, he explained that it was merely a matter of providing the correct information and submitting the applications on time.

Mr Thys Moller, Director: Electrical Infrastructure, Swartland Municipality, explained that last year they discovered an increase in the maximum demand of electricity on the accounts. They engaged with Eskom and upon Eskom’s review of the peak loads after loadshedding periods, it gave the municipality a discount. However, this practice has come to an end. The municipality is no longer successful about this discount. Eskom claimed that it was an instruction from National not to allow these discounts any further.

Swartland awarded a tender to Darling Green Utility (DGU) last year. They are the major shareholders of the Darling Green Estate, and they plan to supply electricity to the entire estate. Any excess electricity will be bought by the municipality at a discounted rate when compared to Eskom’s rate. The contract lasts for three years, and the discount decreases from 15% for the first year, to 12% in the second and 10% in the third year. At the end of the period, the municipality will assess if it wants to extend the contract. The development of the estate is going well. DGU has indicated that it intend to extend the plant that will be provided to Eskom or made available for wheeling to other customers.

Swartland is in the process of doing an environmental impact assessment of the land and the land use application for the Solar VP project. As indicated, it will learn from the RFI that was issued what the next steps should be.

The municipal council has approved making available about 130 hectares of land just outside of Malmesbury. The idea would be for the municipality to go out on an RFP and make the land available for leasing for potential developers of energy plants. They are not yet sure the size of the plant that could be developed, but it should be around 10 MW. The plant will not belong to the municipality; the municipality only wants to buy electricity from the plant at a discounted rate. This would assist with the environmental impact as well.

The Swartland Municipality has implemented small-scale generation within the municipality. The council has approved the amendment of the electricity by-law which makes provision for small-scale generation. It encourages customers to register existing and new systems that they want to put up in the municipality. Up to 2000 kVA SSEG has been approved, which equates to about 3 MW in the municipality.

Through negotiations with Eskom, they have put Sasko Mill on the Load Curtailment programme which means they are not subject to loadshedding. When load curtailment is called for, they need to reduce their load by 10-20% during specified hours. There are some customers linked to this company that also benefit from no loadshedding. The Voelvlei Dam has also been exempt from loadshedding, but this comes to an end in January 2024.

Discussion
Ms Nkondlo asked for clarification on the SSEG tariff approved by the council.

Mr Moller replied that the export tariff which is accredited to their customers is about 88.72 cents per hour for the energy that they export to the municipal grid. This is lower than the rate purchased from Eskom in the off-peak period. This rate was not approved by NERSA because it said that it was not within its authority to approve SSEG tariffs.

The Chairperson thanked the Swartland Municipality for the presentation.

Matzikama Local Municipality presentation
Mr Lionel Pillay, Acting Municipal Manager: Matzikama Municipality, said the municipality was able to procure five high-power generators in the area. There is one generator that supplies to two pumping stations in Vredendal. The other sites include the Ebenezer fresh water treatment plant, the Lutzville fresh water treatment plant and the Canal pump station, which is notably the most important. The total project value is R1.8 million, with their own funding being R756 000 and DLG portion being R1.05 million. The Canal Pump station still needs to be delivered. They filed applications to Eskom for exclusion from loadshedding, but this was denied up until the sixth application. This application starts as of this week.

Possible projects in 2023/24 would be generator procurement for the Klawer fresh water treatment works and the Vanrhyns and the Vredendal North wastewater treatment works. There is also an alternative energy support programme which resulted in a visit from the Department of Tourism to identify projects where they would like to install solar and battery backups to assist SMMEs with loadshedding challenges.

Discussion
Ms Nkondlo asked for clarity on what the SMME support programme project entails.

The Chairperson asked if there are roofs for the generators. He asked when the budget for future projects will be available, and what they can expect these to be.

Mr Pillay replied that the site visits were done this morning because the SMMEs are fairly new projects. The idea is to assist smaller businesses with back up electricity during loadshedding so that they can still function when there is no power.

As for the roofs, the existing generators do not have roofs but there is a plan to do so. They will look at installing infrastructure around the generators to protect them from sand and dust.

Mr Van der Westhuizen asked what made the sixth application so special that it was approved after the previous applications were denied.

Mr Pillay responded that nothing had changed, except that the Canal pump station generator had not yet been delivered. He is not sure if this may have made a change.

The Chairperson thanked the Matzikama Municipality for the presentation.

Cederberg Local Municipality presentation
Mr Gerrit Matthyse, Municipal Manager: Cederberg Municipality, apologised for the delay due to connectivity issues. He presented figures on the challenges the municipality faced due to loadshedding, specifically the amounts spent on repairs. The municipality spent nearly R1 million for the hiring of generators. This impacted the budget leading the municipality to budget R1.8 million for fuel for generators. It received R1.6 million for emergency funding from the Western Cape Government for seven generators. It followed the SCM process, applied to provincial government for the rollover of funds and it is awaiting Provincial Treasury to grant approval of the funds that will be used for generators.

The municipality has spent nearly R1 million of their own funds to procure three stand-by generators to supplement the seven generators that will be procured with Provincial’s funding. This will ensure continuous supply of business services to the communities. Other major electricity related projects that will/are taking place is the Clanwilliam 66/11kV substation project which aims to construct a 66kV overhead line to Graafwater by the end of October 2023. INEP funding was also secured for the building of additional electricity supply capacity in Clanwilliam which includes the construction of the overhead line between Graafwater and Clanwilliam, a distance of 30km. Construction of the new substation is scheduled to commence in August 2023. The total project is planned to be completed in 2024. Both projects total R95 million that was secured from INEP.

A battery energy storage system (BESS) is scheduled to start in the Graafwater and Paleisheuwel area. Eskom will install a BESS by the Graafwater substation, of which the total cost is unknown, but estimated to be R600 million. This project will pump electricity into the entire West Coast grid.

Cederberg municipality has already advertised an RFP for renewable energy. Between 14 to 16 potential bidders took part in the tender which has already closed. It has identified 90 hectares of municipal land for this in Clanwilliam and Lambert’s Bay. It is in the process of processing the independent power producers (IPPs) for wind and solar energy in the Cederberg region.

The Small-Scale Embedded Generation (SSEG) and Solar PV policies are being implemented on the demand side. Cederberg municipality is currently in negotiations with the Department of Water and Sanitation about hydroelectricity generation as part of the Clanwilliam Dam Wall Project. It also rolling out smart meters in communities. Further, many communities were severely affected by the floods, making the towns inaccessible which directly impacted energy security. The South African National Defence Force and the police assisted the municipality with connectivity during this time.

The unstable and unreliable Eskom feeders is one of the factors impacting energy security in the municipality. This can lead to towns not having electricity for hours on end if there is a storm.

Discussion
Mr Van der Westhuizen said that the Committee recently received a presentation from the Department of Water and Sanitation saying it has settled a dispute with a company that has been providing Clanwilliam with electricity for a number of decades. He asked for an update on the situation and if the municipality is still able to receive electricity. Secondly, in terms of the feeder into Clanwilliam, how long will these issues persist?

Ms Nkondlo asked for clarity on the term “aging infrastructure” in the context of Cederberg, and which areas are affected by the aging infrastructure. What are the plans to address this? She asked what caused the month-delay in the bid adjudication committee (BAC) process that triggered the rollover of the project.

Mr Dugmore questioned what percentage of Cederberg’s revenue comes from the sale of electricity. He asked if the power generation provided by private service providers would compromise the financial position of the municipality going forward.

The Chairperson asked the amount of the rollover and the reason for the project delay.

Cederberg response
Mr Matthyse replied that the Graafwater line should be finished by the end of this year and then the substation construction should finish by December 2024 which means that they can switch on the Graafwater line in 2025. This project will cost R95 million and will hopefully stick to the December 2024 schedule.

Without mentioning names, the municipality is currently in dispute with the company involved in hydroelectricity generation. To his knowledge, DWS has agreed not to duplicate costs in Cederberg and the two departments will work together in terms of the service provider who is in breach of contract and non-compliant. Neither the municipality nor DWS are in business with this service provider.

The delay in the BAC process can be attributed to the fact that there was a period where Cederberg had no directors, when there must be at least three directors to establish a formal BAC committee. Cederberg approached neighbouring municipalities to second their directors to participate in the BAC and this caused a delay in the adjudication process.

As for the aging infrastructure, that was purely the impact that the replacement and upgrading of the infrastructure had. The municipality spent on average 5% of the capital replacement reserve (CRR) on repairs and maintenance of infrastructure. The “aging infrastructure” referred to the general aging of the physical infrastructure and the municipality’s need to keep up with the growth of its towns within the municipality and the demand that needs be met. Cederberg is continually addressing older infrastructure together with the growth in the towns.

The electricity surcharge as a percentage of income for the municipality is about 5%.

In response to Mr Dugmore on private service providers and the effect it would have on the municipality’s income, Mr Matthyse said that this would definitely impact the municipality’s finances. They have an agreement with NERSA which allows them to procure electricity at a 20% discounted rate. Typically, the municipality negotiates with IPPs to purchase at a discounted rate too. This is the existing baseline going forward.

As for community cooperatives, the idea was to obtain a licence from DWS to have these coops with the community. The municipality has held many other coops with fishermen in Lamberts Bay so they will use this as a potential vehicle for community engagement. However, this is all still in negotiations with DWS. This cooperative engagement is envisaged in the municipality.

In response to Mr Dugmore, 5% of the municipal budget is spent on repair and maintenance of infrastructure and that the other figures will be submitted in writing.

The Chairperson thanked the Cederberg Municipality for their contribution.

Bergrivier Local Municipality Energy Crisis Project Plan
Adv Hanlie Linde, Municipal Manager: Bergrivier Municipality, drew the Committee’s attention to the last slide which was a presentation made to the South African Local Government Association (SALGA). It showed the percentage that municipalities can make from Eskom electricity sales. The financial model of municipalities as designed from 2000 onwards was based on a 40% electricity sale profit margin. In 2011/12 the Bergrivier municipality was set to obtain a profit of 35% but this is a drastic change compared to 2021/22 where the municipality only made 18% electricity sale profit. This percentage is even lower now and suggested that it would be beneficial to enquire from other Western Cape municipalities to determine what their profit percentage change was. She asked if the Committee could assist municipalities in holding Eskom accountable for the 'cold starts' that are directly due to Eskom, yet the municipalities are the ones faced with being charged large amounts every year for these 'cold starts'.

Mr Denwin van Turha, Director: Technical Services, Bergrivier Municipality, explained that the municipality developed a loadshedding plan in July 2022 which was reviewed in September 2022, with the latest review being in June 2023. The municipality completed loadshedding projects to the value of R900 000 which came from the municipality’s own funds. Due to vandalism, the municipality had to consider the security of the assets, which they had to spend R699 000 from their own funding to do so. To date, they have spent R2.93 million of the R3.6 million Emergency Loadshedding Relief Grant on two generators at the Piketberg water treatment works and the boost pump station for water security in Piketberg. A 500 kilowatt and 300 kilowatt generator was bought for Piketberg and the booster station. The remaining R900 000 will be utilised to procure a generator for the Dwarskersbos booster pump station.

As per the loadshedding plan, there is an estimated cost for technical services to ensure the water pump stations operate during loadshedding. The estimated cost to maintain the pump stations during Stage 6 loadshedding is R26 million. Stage 8 the cost is estimated to be an additional R2.8 million and in blackouts there will be a need for an additional R8.5 million. To render financial services in Stage 6, the municipality will require R500 000. Administrative services focus solely on securing data and running basic services. In total, the municipality will require R44 million to function during loadshedding.

For 2023/24 projects, Bergrivier Municipality has R2.3 million which will be used to operate fixed and mobile generators. R500 000 will be allocated to the security of assets.

Discussion
Mr Van der Westhuizen noted that most municipalities raise their tariffs in line with Eskom’s, some even higher than others. He asked the reason Bergrivier was not increasing its tariffs, because this would surely lead to increased profit on its behalf. He pointed out that Eskom now provides electricity, particularly in rural communities, directly to the big consumers and sometimes even smaller rural towns. He asked how Bergrivier’s tariffs differ here compared to Eskom’s.

Ms Baartman referred to the statement that the municipality pays significantly more for higher demand during Eskom spikes. She asked for the figure it had to pay in 2022/23 due to the high demand.

Mr Dugmore made reference to the media reports on electricity theft by one or more of the municipal officials in the Bergrivier municipality. He asked for an update on this and if there had been consequences for the official/s involved in this. He asked what the contribution of sales was to the Bergrivier municipality’s overall revenue looked like. Does the municipality recover arrears from a household's other accounts if it moves to a prepaid meter?

The Chairperson asked if there were opportunities for community coops in electricity generation in the municipality?

Ms Linde explained that the electricity theft by municipal officials involved prepaid electricity vouchers that were handed out to community members illegally by one employee. The Special Investigation Unit conducted an investigation and this case is currently in court. The next court appearance will take place on 22 August. The person pleaded guilty,and the sanction will now be negotiated and then given. The request is that the person will face time in jail, so this will hopefully run its course soon.

The municipality has increased its tariffs as allowed by NERSA, but municipalities are capped by NERSA on the amount that they may give through to the public. Eskom is not capped by NERSA on the amounts it may charge municipalities which has led to the extinguishment of the gap that used to exist from what a municipality received for electricity and what it paid Eskom for electricity.

Ms Linde said that the exact amount it paid in 2022/23 due to high demand is R1.62 million.

On tariffs, Mr Van Turha added that the municipality has raised the profit margin to 15% but it actually needs 18%. The municipality is currently busy with a tariff study which will provide a better indication of the figures.

Mr Van Turha replied that there is an existing recovery policy in place to recover outstanding debt from users.

The municipality is not currently using any coops, but they are working towards an RFI for its energy security plan which it will be doing in the coming weeks.

Mr Dugmore asked if the Committee can receive a copy of the municipality’s recovery policy from user accounts in arrears. He asked if the policy applies to everyone indiscriminately such people categorised as indigent grant recipients.

Ms Linde explained that Bergrivier municipality has an income percentage of 96% for money received from the public so there are not many people in arrears. They do use the prepaid voucher system and all this information is included in the policies that are reviewed annually by the municipal council. Bergrivier municipality has 2000 families registered as indigent recipients and they get free basic services up to a certain amount. If they use more than this amount, they are subject to the same policy.

The Chairperson thanked Bergrivier municipality.

Saldanha Bay Local Municipality presentation on Energy Resilience
Mr Andre Truter, Saldanha Bay Mayor, said that the municipality has had negotiations with various departments, the Premier’s Department, and Infrastructure South Africa (ISA) for the last 14 months and in these negotiations, it determined that an energy mix would be the best option for Saldanha. The municipal manager has driven this process. They initially tried to get a transactional advisor, but this process proved to take too long.

The municipality opted for a macro-approach because of the available approved EIAs in the area. As Mr Dugmore pointed out about community cooperatives, Saldanha realises that if the municipality is placed in a unique position due to processes being up and running, it will be able to supply electricity on a macro scale which will attract more industrial enterprise which will then supply well-paying permanent jobs and smaller-generation opportunities.

He implored the Committee to engage Eskom on the spike which was discussed at the Provincial Members Assembly in July 2023 in Hermanus. Eskom no longer refunds municipalities for the spikes which it is the cause of which is unconscionable given that the Western Cape has some of the few municipalities that actually pay their accounts. He did engage Eskom at the SALGA provincial meeting but it fell on deaf ears. The municipality is placed under added pressure because they turn their electricity on and off and this adds additional pressure to their hours of loadshedding. This directly affects service delivery on items like streetlights.

Mr Heinrich Mettler, Municipal Manager: Saldanha Bay Municipality, said that the municipality received R2.95 million for the Municipal Emergency Loadshedding Relief Grant which was used to purchase two 275 kW generators and two 110 kW generators, which have already been delivered and two of which have already been installed. Three will be used for sewage and one will be used for water. No other funds were specifically allocated to Saldanha Bay but it has budgeted about R3 million for generators to procure another five smaller generators. The municipality has also written a formal request about the Electricity Demand Side Management (EDSM) Grant to use some of the grant funding (R4 million) for LED streetlights with solar settings due to the high levels of electricity vandalism.

As for demand management, the municipality has come to an agreement with Eskom to do load curtailment for Sea Harvest which provides 4000 jobs to Saldanha Bay locals. It is because of this that Eskom has agreed to allow Saldanha to switch the power off and on itself. The municipality has experienced a 3% decrease in the units sold but the peaks have increased due to the cold starts. Saldanha is part of the Provincial Municipal Energy Resilience (MER) workgroup where it received R689 000 for the Electricity Master Plan which has been completed and will be tabled to Council in September 2023. The municipality is also part of the Pool Buying Process run by the MER. The mayor is busy with a tender process to procure baseload or dispatchable energy to provide Saldanha Bay with its electricity needs.

There are also solar and wind power projects that have been approved. The solar project will be there to assist ArcelorMittal with the 1500 MW approved gas-to-power EIA. At this stage, the municipality feels that Saldanha Bay is perfectly situated for gas and so this will become the base load for energy and make it the standard going forward.

The municipality has been in discussions and there seems to be wheeling capacity in the area,but this is not confirmed due to the fact that they are battling to get an energy constraint report from Eskom.

The municipality has brought in private specialists to assist as the plan is to go for baseload energy. They have already drafted a power-purchase agreement which has been widely consulted on. The Council has approved the creation of a position for engineer of sustainable energy and generation and they are currently busy with this job design. The municipality has once again requested the assistance of a transaction advisor from the Department of Infrastructure.

The Energy Generation Plan tender has been completed and is being vetted by attorneys. Saldanha municipality is also in discussion with ArcelorMittal and other landowners about land availability, which would avoid the tedious EIA process. They are also busy discussing the legal aspects related to current need versus excess energy. The discussion is that it would be too expensive to generate 400 MW base energy so there are approvals for 300 MW instead which will be more affordable per unit.

As for the Solar VP project, the municipality is in the process of identifying land parcels and preparation readiness will then follow.

Discussion
Ms Baartman asked if Eskom had provided Saldanha municipality with a reason it would not provide them with the energy constraint report.

Mr Van der Westhuizen referred to the Regional Electricity Distributors (REDs) who had fought hard for municipalities to be the distributing entity within a specific area because of the economic income that municipalities gained from the sales. He accepted that big consumers like the old Saldanha Steel and ArcelorMittal plant would get electricity directly from Eskom. However, does the same apply to the residential areas in the Saldanha Bay municipality such as Langebaan? He asked if there was a comparison available between the tariffs that Saldanha municipality charged and the tariffs charged by Eskom.

Mr Dugmore asked if there are any coal reserves along the Saldanha Steel line because realistically speaking, coal will still form a large part of our electricity production for a very long time. A coal-fired power station could potentially meet all Saldanha’s needs on its own.

Ms Baartman asked if the R4 million for LED streetlights would cover all streets in the municipality or only some areas.

Saldanha Bay response
Mr Truter replied that there are no coal reserves. The cost of gas per kilowatt is slightly higher than what solar would be but the advantage of gas and coal is that it provides continuous electricity. Due to Saldanha’s position with Sunrise Energy, which is an import of LPG, they are best positioned to do a macro-import of gas and then supplement this with wind and solar energy. This results in the “energy mix” in Saldanha. The main focus is to supply Saldanha, and then their IPPs can supply to other areas such as Cape Town and even Eskom.

Mr Mettler clarified that Eskom had never responded to the municipality’s questions on why it had not provided the energy constraints form. This constraints form will be hugely beneficial in determining how much energy can be generated in Saldanha and how big the generation plant should be for it to be wheeled over Eskom’s line.

As for the solar streetlights, upon writing a business plan to EDSM, R4 million will go to the streetlights to change them to LEDs and solar because of the electricity vandalism in the area. Some solar lights have been installed in some areas. As part of the safety plan, there are cameras going up which will be monitored by a control room and the municipality has instituted a tactical response unit to look after their assets.

The Saldanha Bay municipal tariffs are slightly more affordable than Eskom tariffs and the municipality also responds a lot quicker to grid issues as opposed to Eskom that typically takes two to three working days to resolve.

Ms Baartman said that despite the fact that the constraint report is an Eskom internal document, it will assist the Committee and municipalities in understanding what is available on the grid. It will assist with how much can be generated, how big it needs to be and if it will have to run over an Eskom distribution line. She asked if this is true. Is it true that the municipality does not want to have to run its own distribution line because it would be more expensive?

Mr Mettler clarified that they cannot claim that Eskom does not want to provide the municipality with the energy constraints report, all he can say is that Eskom has given them no response.

Mr Truter added that the municipality has spoken to people who have an appetite to generate in the area and it is not impossible to place parallel distribution lines in, for example, Cape Town because Cape Town has a big appetite for baseline electricity, which would then make it profitable to take it to Atlantis and join up with their distribution network. This is something the municipality is looking into in the event that Eskom blocks them.

Mr Van der Westhuizen said that hopefully Saldanha would appreciate that the Western Cape Government is pushing for a gas pipeline from Saldanha Bay harbour right down first to Atlantis and from there to Montague Gardens and other industrial areas in Cape Town. He agrees that Saldanha will likely become a hub for gas pipelines.

Mr Mettler asked that the Province request the energy constraints report from Cabinet as this would greatly assist the municipality.

The Chairperson thanked Mr Truter and Mr Mettler for the presentation and answers.

Mr Truter thanked the Chairperson and the Committee for the work they do.

Committee resolutions
Ms Baartman asked that the municipalities submit how much they have been paying in the last financial year for that spike in loadshedding, especially when the area is on high demand because usually Eskom refunds them but now, they are no longer being refunded.

She asked that Eskom or the Department of Local Government can be engaged to obtain the energy constraints report.

Mr Van der Westhuizen suggested that the Committee support the principle that the distribution of electricity be done by entities that politically account to the electorate and that more of the distribution network should be handed over to local government. Most municipalities in the Western Cape have a good record of paying their accounts and thus should be entrusted with their distribution network. He also noted the disparity between the tariffs allowed for Eskom and that for the municipalities and the severe implications it has had on their economies.

Mr Dugmore contested Mr Van der Westhuizen’s first resolution, claiming that it was premature. Given that very few municipalities have indicated a clear establishment towards community energy cooperatives, the Committee should invite the Saltuba Cooperative in the Nelson Mandela Municipality to share its experience with the Committee on establishing community cooperatives.

Mr Van der Westhuizen commented that he hopes Mr Dugmore can agree that government entities should be in charge of network distribution in communities to which they are held accountable. He believes that the principle of devolution to local government is a sound one because it is the municipal council which is held accountable every five years. Further, R88 million was budgeted to ensure that the wastewater treatment plants were not interrupted during loadshedding. Western Cape local government should be acknowledged for handling the severest effects of loadshedding. It also appears as if the province has assisted municipalities with drafting the specifications that could be used by SCM units in the municipalities to procure generators of sufficient quality and size. These are all wonderful initiatives that deserve credit.

Ms Baartman supported Mr Van der Westhuizen’s resolutions on distribution networks. She agreed that the services in general should be closest to the people and, where possible, such services should be devolved to capable local governments. What information would be required to make distribution at local government level possible?

The Chairperson asked Members to email any further resolutions.

The Chairperson announced that after various attempts to contact the Office of the Minister of Electricity, the Minister has finally informed the Committee that he will be available to address it at 14:00 on 29 August.

The Committee adopted the minutes of the previous meeting.

The Chairperson thanked the Committee for attending the lengthy but vitally important meeting.

The meeting was adjourned.