Four years since rolling blackouts hit South Africa, Eskom has learned from the way Brazil handled its worst energy crisis – by putting several measures in place. But the worrying question is: does the South African government have the political will that Brazil had in tackling its power problem, should blackouts return?
The concern is real, as South Africa will continue to face the threat of power cuts for the next two years until the Medupi Power Station and a number of independent power producers (IPPs) come online.
Eskom and power experts point out that this country could have averted the damaging rolling blackouts of 2008 had it adopted a power rationing system, as Brazil did during its energy crisis of 2001–2002.
Brazil’s 2001 electricity crisis was sparked by a number of record dry years in a country dependent on over 90% of its electricity needs from hydroelectricity. There were also delays in commissioning new power stations.
The Brazilian government, however, was quick to respond and, in May 2001, it introduced electricity rationing, which ran until February 2002.
In June 2001, the government created the Crisis Management Board (CGE), chaired by President Fernando Henrique Cardoso – the same man who had solved the country’s inflation in the 1990s when he served as finance minister.
His board had special powers, among which were the authority to set up special tariffs, implement compulsory rationing and blackouts, and bypass normal tender procedures when buying new plant equipment.
The government applied quotas for all consumers. Those who made savings below a prescribed level were given cash bonuses. Those who consumed above their thresholds were penalised, while large users were allowed to trade their quotas among one another.
In the end, the Brazilian government met its target of lowering electricity usage by 20% over eight months – through the help of over US$200 million in bonuses paid to customers.
However, economic growth suffered, falling from 4.4% in 2000 to 1.5% the following year. Some workers were laid off. The government was also forced to hike tariffs to cover operators’ losses, which led to an electricity price rise of 140% between 1995 and 2002. And, despite all the measures it had introduced, the government was still criticised for not playing a strong enough role in the crisis while Cardoso’s anointed successor, José Serra, lost the election in 2002 over the handling of the crisis.
Brazil’s Court of Accounts later estimated that the crisis cost the country US$45.2 billion (R340bn). Most of this was paid for by taxpayers. South Africa’s electricity crisis, which was caused by critical infrastructure and coal supply problems, cost the economy about R50bn.
Yet César Endrigo Alves Bardelin, of the University of São Paulo Polytechnic School’s department of engineering and energy, argues that rationing taught Brazilians to save energy and many companies adopted energy-efficiency devices following the crisis. But how much has South Africa learned from Brazil’s crisis?
Following the onset of rolling blackouts in 2008, Eskom sent a team to Brazil. The team then suggested the introduction of an energy conservation scheme in July 2008 that would target the utility’s 250 top energy users.
The scheme was one of many that Eskom adopted to cut electricity usage – others included a buy-back initiative, an energy-efficiency initiative, a solar-water geyser programme, the replacement of incandescent light bulbs with compact fluorescent bulbs in homes and the 49M energy-saving campaign.
The idea behind the energy conservation scheme was that top electricity users would register their baseline electricity usage and then voluntarily set a reduction target. Most of the top energy users have the necessary systems in place to measure and monitor their energy usage. So far, 133 of the top energy users have registered to take part in the scheme, according to Eskom.
Mike Rossouw, chairman of the Energy Intensive Users Group (EIUG) that represents 70% of the country’s top energy users – or over 30% of electricity usage in the country – stressed that the scheme had to be introduced in phases.
Rossouw, who is also executive director of Xstrata Alloys, said it hadn’t been necessary to implement an energy rationing system as the threat of any further immediate crisis subsided when the 2008 global financial crisis set in later that year.
Allowances have also been made for the top energy users eventually to move to an electricity trading system. This would allow those that made savings – of electricity recorded below their respective baseline – to sell this excess power to users among the top energy users. However, this has not yet been introduced.
Corrie Visagie who headed the team, pointed out that in the Brazilian crisis an electricity trading system, backed by penalties and incentives, helped stave off an additional 1% decrease in the South American country’s GDP.
However, Visagie believes that unless the Department of Energy makes energy conservation mandatory for all major energy users, it won’t have any major effect on reducing electricity consumption. If such a system had been introduced four years ago, it would have cost Eskom an extra R15 million to develop, he said, but would have taken nine months to get it up and running.
However, the lack of political will to address the power shortage quickly is still the biggest challenge that the country would face if another energy crisis were to unfold.
Visagie said his team, which was set up in January 2008, had recommended that the government form a top-level council to handle a power crisis.
But, instead, the government created a National Electricity Response Team (Nert) to advise it on responses to the energy crisis. Nert was a technical team set up under the Department of Minerals and Energy. It was disbanded in 2009 and replaced by a ministerial structure, before responsibility soon returned to the same department.
Visagie also complained of the large number of stakeholders and forums that his team had to hear from – sometimes 120 groups in one discussion. This kind of engagement made it difficult to make quick decisions.
He surmised that one reason why many residents and businesses in Brazil got behind the government’s measures to cut power was because they could physically see that the dam levels were low.
Rossouw said when it came to pursuing mandatory energy rationing from top energy users in 2008, there had been no interest from the Presidency – where the deputy president at the time, Phumzile Mlambo-Ngcuka, was due to head up a stakeholders advisory council – and lukewarm interest from the Department of Minerals and Energy.
Eskom has since set up a recovery team to handle the threat of electricity shortage over the next two years at least. The team reports to the Minister of Public Enterprises Malusi Gigaba and to the Minister of Energy Dipuo Peters.
Kannan Lakmeeharan, Eskom’s divisional executive in the office of the chief executive, said the decision on whether to move to a mandatory energy conservation scheme would have to come from Peters.
Lakmeeharan believes a mandatory conservation scheme is necessary if the country is to reduce electricity consumption by 10%. Presently, the top users have been able to cut back by about 5%.
Business Unity SA, however, was opposed to a mandatory scheme when the idea was first mooted in 2008. The concern related to the cost of the scheme, how it would affect small businesses and the implication of tariffs that may be involved if a mandatory scheme came online. But he stressed that, in the case of an emergency situation where a blackout was imminent, Eskom could force its large customers to cut back on usage: “What we can say to them is that you better do it or we will cut.”
At the end of it all, it seems South Africans are still in the dark about what steps will really be taken when the lights go out next time.