Solidarity: Electricity legislation: Government dips toes into water of free market
Press Statement dated 15 March 2024
Solidarity is cautiously optimistic that the adoption of the Electricity Regulation Amendment Bill may be a positive step in the direction of free market principles within the electricity sector.
This bill was approved by the National Assembly yesterday, and if it were to become a reality, it could mean that South Africans are granted the space to walk away from load shedding.
According to Connie Mulder, head of the Solidarity Research Institute (SRI), there is hope that within the next decade consumers will be able to choose their electricity supplier in the same way they are currently able to choose between mobile phone service providers.
“For the first time, we are now seeing a structured movement by government away from perpetual government monopolies in the energy sector. This paves the way for the private and community sectors to tackle our energy crisis.
“With this, the government is dipping its toes into the water of free markets rather than state monopolies,” Mulder said.
Nevertheless, Solidarity realises that this decision should have been taken years ago – a period in which the private sector, given the necessary space, could have come up with a solution.
The South African economy now bears the scars of this sluggishness with regard to reforming the energy sector.
According to Mulder, the delays have cost the country dearly, not only financially, but also in terms of lost opportunities for innovation and growth in this sector.
“It is indeed necessary to guard against haste with new entrants into the electricity market. The streamlining of processes and elimination of bureaucratic barriers will now be decisive factors.
“We currently need electricity in the grid – regardless of who supplies it. To suffocate potential contributors now with bureaucratic red tape will slow down everything again,” Mulder emphasised.
At the same time, he points out that the increase in generation capacity will place new demands on the transmission network.
“As we open up opportunities for more generators, the robustness and responsiveness of the transmission infrastructure will be tested. Therefore, proactive measures and future planning are essential.
“Our transmission networks must be expanded and upgraded to ensure they are able to handle the increased load a competitive market will bring.
“The private and community sectors can be involved here as well. The state’s inability to solve the crisis alone is common knowledge by now. The time has come for the government to allow the private and community sectors to solve the energy crisis in its entirety for the people of South Africa,” Mulder said.
Nevertheless, Solidarity believes it is important to give entities such as Eskom and its coal generation plants the necessary protection as the new market-oriented framework comes into being.
“South Africa will not have an energy landscape without Eskom, therefore the transition from a monopoly to competitive market participants must be smooth and well planned. It is necessary to ensure that these power generation plants are able to adapt efficiently to the new market realities,” Mulder added.
“The legislation is a step in the right direction – but South Africans must remain vigilant. We must make sure that the toes dipped into the water do not turn into a government with cold feet, but rather into a transformed and dynamic private electricity market that works,” Mulder concluded.
Spokespersons:
Connie Mulder
Head of the Solidarity Research Institute
082 731 8381
Helgard Cronjé
Deputy General Secretary: Public Industry
084 336 8561