Faced by a changing electricity supply landscape, municipalities across South Africa will have to look at alternative energy generation, demand management and infrastructure development if they want to become or remain financially sustainable.

At Enlit Africa in Cape Town on Wednesday, Department of Cooperative Governance and Traditional Affairs (CoGTA) Deputy Minister Parks Tau said municipalities have a responsibility to implement policies that promote:

• Renewable energy adoption;
• Energy efficiency;
• The phasing out of fossil fuels; and
• Driving change at the grassroots level through the Integrated Energy Resource Plans (IERPs)

“As we have observed in Mpumalanga, municipalities play a critical role in facilitating a just energy transition, ensuring that the shift to sustainable energy sources is equitable and inclusive,” said Tau.

Mpumalanga is home to 11 coal-fired power stations and numerous coal mines, contributing to a considerable share of South Africa’s greenhouse emissions.

“Energy generation and energy industries together account for more than 50% of South Africa’s greenhouse gas emissions and 85% volume of the coal used in the local market. Hence the necessity to reduce the climate change vulnerabilities and transition risks,” said Tau.

Government mulling key changes for municipalities

The Deputy Minister pointed out that Mpumalanga was identified as a pilot site and priority province for the Just Energy Transition Implementation Plan (JET-IP).

This is due to its reliance on coal and other provinces are expected to follow.

Tau listed the following as key focus areas for CoGTA:

• Demand Management: This means implementation of demand-side management  interventions which have the potential to yield substantial savings by reducing energy demand and energy losses.
• Alternative Energy Generation: This involves evaluating options and developing renewable energy projects that will provide additional capacity to municipal grids.
• Infrastructure Projects: Collaborating with municipalities to develop and roll out projects that will address electricity infrastructure backlogs, maintenance backlogs and skills shortages.

Aiming for municipalities to have energy security

Other potential interventions being considered by CoGTA include municipalities generating their own energy through gas, solar PV and battery storage systems.

However, Tau said for this to happen funding constraints and legal prescripts “need attention.”

Municipalities also need to view embedded generators or distributed small-scale generating entities as potential partners and develop “appropriate feed-in tariffs to buy excess power they generate.”

“Cost of supply studies across all municipalities are necessary to determine the actual cost pf supplying electricity, considering current scenarios such as diminishing paying customer bases, multiple embedded generators, illegal connections and high instances of theft and vandalism.”

Municipalities need new energy frameworks

Tau said implementing cost-reflective tariffs is crucial for the financial sustainability of municipalities.

Another avenue to unlock more energy sources is the implementation of wheeling frameworks.

As there are multiple projects on the go by Independent Power Producers (IPPs), Tau said a wheeling framework for municipalities would fast-track development of these projects and ensure more electricity can be wheeled across the country.

However, these developments could adversely affect municipal revenues and their financial sustainability.

Wheeling, for example, would enable third-party generators to sell energy through municipal distribution networks.

Small-scale embedded generators (SSEGs) also poses a threat to municipalities’ bottom lines.

Overall,  the JETIP holds “immense” potential to enhance service delivery and financial stability for municipalities, said Tau.

The National Council of Provinces recently adopting the Electricity Regulation Amendment (ERA) Bill which paves the way for Eskom unbundling and the liberalisation of the South African electricity market.

Once signed off by President Cyril Ramaphosa, it will among other industry changing factors providing for an open-market platform that allows for electricity trading. ESI