Launching on the 23rd of July, 2020

Eskom Transformed:
Achieving a Just Transition for South Africa

We are proud to announce that on the 23rd of July, 2020 we, along with a number of our partner organisations will be releasing a land mark research report on the crisis at Eskom and possible solutions. The report titled "Eskom Transformed: Achieving a Just Transition for South Africa", offers an extensive background into the origins of the myriad of problems that have plagued the parastatal. Beyond merely outlining the failures the report presents a vision for a transformed Eskom that is a vertically integrated, public utility. Importantly, the report shows that far from being a panacea, privately owned renewables actually stand in the way of a transition away from coal to the sustainable and affordable renewable energy needed to avert the climate crisis.

Working closely with the trade unions involved in organising workers at Eskom – the National Union of Mineworkers (NUM) and the National Union of Metalworkers of South Africa (NUMSA), the report has been drafted by the Alternative Information and Development Centre (AIDC) in Cape Town, Trade Unions for Energy Democracy (TUED) in New York, and the Transnational Institute (TNI) in Amsterdam with support from the  Friedrich-Ebert-Stiftung South Africa Office.

This Newsletter includes some text, audio and video resources that breakdown some of the key aspects of what is needed to build a truly Transformed Eskom.

Press Alert:

Eskom Transformed: Achieving A Just Energy Transition for South Africa

On the 23rd of July, a new report on Eskom will be released, which presents a compelling case for a modern national power utility – a “Transformed Eskom” that is vertically integrated and publicly owned – while drawing attention to serious problems in the current “unbundling” approach. 

The report is titled “Eskom Transformed: Achieving A Just Energy Transition for South Africa” 

Working closely with the trade unions involved in organising workers at Eskom – the National Union of Mineworkers (NUM) and the National Union of Metalworkers of South Africa (NUMSA), the report has been drafted by the Alternative Information and Development Centre (AIDC) in Cape Town, Trade Unions for Energy Democracy (TUED) in New York, and the Transnational Institute (TNI) in Amsterdam. 

In the past few months, we have seen the formation of a mainstream consensus in the South African energy debate. Here the words “Eskom”, “publicly owned”, and “energy monopoly” have become expletives in their own right. At the same time, the push towards unbundling and privately-owned renewable energy has been uncritically praised as a “common sense” way forward for solving the Eskom and electricity crises. 

Before Covid-19 replaced Eskom’s crisis as the central issue facing South Africa, it was only unions and their very close allies that held a consistent line both against both this proposed “unbundling” of the utility, as well as the consequent incursions of the independent power producers (IPPs). Many believe that this opposition merely reflects the desire on the part of trade unions to protect coal sector jobs and to do so in a way that is oblivious to the economic, social and ecological problems that come from the continued use of coal. 

Similarly, union opposition to the IPP system – including the Renewable Energy IPP program known as “REI4P” – has in some quarters been seen as an opposition to renewable energy and economy-wide decarbonisation more generally. 

The Eskom Transformed report sets the record straight. The position of the unions is not simply about protecting jobs in coal, or about preserving Eskom as it currently operates. The unions generally support a move towards both clean energy and economy-wide decarbonisation, but the problem is that the current “unbundling + IPPs” approach will achieve neither. The research contained in the Eskom Transformed report shows why this is the case, and why this approach threatens to seriously compromise the country’s energy sovereignty by making it dependent on technologies and supply chains that are almost invariably located in Asia and Europe. 

The report also shows how the current discourse on energy transition in South Africa has, for some years, become distorted by a number of damaging misconceptions. Three misconceptions stand out in particular and are confronted head-on in the report. 

READ MORE

Eskom Transformed Explainer:
Can Private Power Avert the Climate Crisis?

The necessity of transitioning to renewable sources of energy, away from fossil fuels, has become abundantly clear. The climate crisis threatens the lives and livelihoods of most of the world’s population. In South Africa, we have seen one of the worst droughts on record – a result of changing weather patterns due to climate change. Our reliance on big polluting coal plants only makes this worse, but, as renewable energy only generates around 9% of South Africa’s power, moving away from coal will be no small task. 

In the debate around Eskom, it is assumed that opening up the energy sector for private investment will naturally drive this investment – that investors are ready and waiting for Eskom to open the door so that they may rush in and set up wind and solar farms. It is also assumed that private competition will make sure that this power is affordable – even cheaper than coal. Unbundling and energy privatization is thus seen as a win-win, resulting in cheap and clean electricity.

However, the Eskom Transformed research report shows that this argument is built on unstable ground.

At the heart of the pro-private argument for renewables is the idea that the trend of private investment and interest in renewable energy in the past two decades will only continue to grow. What this ignores is the fact that continued investment relies on the promise of continued profit. In the past, many countries paid big subsidies to private renewable power producers for their electricity, ensuring big profits for investors; this is a large part of what caused the surge in investment in the 2000s. 

This open subsidy system proved to be too expensive, and many countries – including South Africa – instead moved to a competitive bidding system. This worked as intended, driving the price of renewable power down considerably. However, a drop in price also translates into a drop in profit, and a drop in profit makes investors raise their eyebrows. 

READ MORE

Additional Resources:

Unbundling is Code for Privatisation Op-Ed by Sean Sweeney (TNI)
Cancel Eskoms Debt to the World Bank Op-Ed by Jonathan Cannard (AIDC)
A Different Eskom Op-Ed by Sandra van Niekerk (AIDC)
Building a new Eskom: Fully Public and Serving the People  podcast by Amandla Media
The Role of Public Utilities in Transforming the Energy Sector and a Just Transition  Recording of Conference proceedings hosted by the AIDC, TUED, TNI, and FES-SA.

For more information about the launch of the "Eskom Transformed" please contact Rekang Jankie at rekang@aidc.org.za