Eskom 2.0 “Total Insanity”
19 September 2022
Free Market Foundation board member Terry Markman described energy minister Gwede Mantashe’s Eskom 2.0 ambitions as “total insanity” in a CapeTalk interview.
In a separate interview, independent energy expert Hilton Trollip also slammed Mantashe’s proposal to convert at least three of Eskom’s ageing coal-fired stations to gas power plants to kickstart Eskom 2.0.
“It’s very difficult to comment on the proposal to have an Eskom number two without using outrageous words. I mean this idea is total insanity,” Markman said. “To do this would really be reckless.”
“There’s absolutely no reason whatsoever to have another power [utility]. It’s like having another SAA. It’s just insane. I cannot think of words to describe how insane it is,” he added.
Markman strongly supports privatising South Africa’s state-owned companies and believes it is a viable solution for South Africa’s energy crisis.
“I’m totally in favour of using the private sector and privatising just about everything, but there’s another important thing to do, and that is to get rid of all the red tape and to deregulate.”
To this end, Markman refers to the relaxed 100MW limits placed upon private power generation in South Africa, which President Cyril Ramaphosa has since promised to lift.
“There’s so many solutions the private sector can come up with if allowed to do so,” he added. “We are in a terrible situation, and we have to start implementing real solutions.”
Markman used the European Union’s (EU) energy deregulation as an example, saying that prices dropped by roughly 20% as a result.
“In Vietnam, they allowed the private sector to sell back to the grid,” he added.
“There’s no one shoe fits all. We must open up the market and let the market solve the problem. In a few years, we’ll all have sufficient electricity.”
Mantashe also proposed converting Eskom’s coal-fired power stations into gas power plants to kickstart Eskom 2.0.
According to independent energy expert Hilton Trollip, the plan is impractical and just a “pipe dream”.
“They [the Department of Mineral Resources and Energy] are not doing what they’re supposed to do, and they’re dreaming of doing things, in my understanding of the Electricity Regulation Act, that they aren’t required to do,” Trollip said.
“What they’re going to do… if they follow this plan, they’re going to continue with the lack of success they had over this past 5 to 6 years.”
Mantashe proposed that at least three of Eskom’s ageing coal-fired power stations — namely Hendrina, Grootvlei and Camden — be repurposed into gas-burning generation stations.
Hendrina power station in Mpumalanga is one of the coal-fired power stations that Mantashe wants to convert to gas-burning generation stations
However, Trollip believes that the plan will likely face various legal hurdles.
“Hiring people and raising the finance to buy new gas turbines to go into those power stations are on a completely different scale in terms of legal frameworks,” he said.
He added that raising the funds needed to convert the power stations is almost impossible.
“If they bid for other technologies which have been shown by independent analyses and modelling to not be economically viable, namely new gas turbines, that are not used for peaking, they won’t get finance,” Trollip explained.
At a South African Communist Party Conference in July 2022, Ramaphosa said that Mantashe tabled the idea of a second state-owned power utility. Ramaphosa believes it is a good idea.
He said he agreed with energy minister Mantashe’s idea that a second state-owned power utility could solve South Africa’s energy crisis.
“That is why when comrade Gwede [Mantashe] flighted the idea of ‘why not a second one which can be owned by the government’, I said ‘that’s not a bad idea’.”