South Africa Shows How Cheap Renewable Energy Can Transform the Relationship Between Cities and National Governments

Joseph Dana

AFP photo: Gianluigi Guercia

South Africa’s national government has struggled badly over the Covid-19 pandemic. This has prompted provincial leaders to enact their own plans. The pandemic has thus widened divisions at the heart of the nation, with these chasms raising fresh concerns about the country fracturing. Yet, the fears are directed at the wrong possible cause of national disintegration. For all its ineptitude, a central government remains necessary to coordinate pandemic response. Instead, what truly threatens to break up the country is the inadequacy of access to electric power, upon which rests the entire edifice of modern life.

Due to years of mismanagement and corruption, South Africa’s national electric utility, Eskom, now faces a crisis of monumental proportion. The company operates a fleet of ageing coal power plants that haven’t been serviced properly because of insufficient funds and inept management. The result has been rolling power cuts. Eskom’s total installed capacity is 44,000MW, but it forecasts roughly 16,000MW of lost power-generating capacity over the next two months.

To call the situation dire would be an understatement. The country has endured 12 years of rolling blackouts. According to the South African Centre for Scientific and Industrial Research, 2019 was the worst year and cost the economy $3 billion-$8 billion. The total price tag for a decade of mismanagement is close to $22 billion in lost economic potential. Quite simply, power-supply woes have thrown the South African manufacturing sector into a tailspin, making plans for future growth difficult to contemplate.

With no viable plan from the central government to reform Eskom or the political will to root out the corruption at the center of the problem, provincial and municipal leaders have taken matters into their own hands.

Cape Town, the country’s second-largest city and its prime tourism hub, has been aggressively looking for alternatives to Eskom for years. Now, the rapidly declining cost of renewable energy has given the city a chance to break free, and this in turn is presenting the country with a constitutional crisis.

The cost of renewable energy from solar and of battery storage has fallen dramatically over the last decade. According to the United Nations’ International Renewable Energy Agency, electricity costs from utility-scale solar power fell 13 percent in 2019, for an average of 6.8 US cents per kilowatt-hour. Since 2010, utility-scale power has fallen a whopping 82 percent. By contrast, the cost of coal energy per kilowatt-hour is 3.2 US cents. Solar thus is now competitive against coal. And given the unreliability of Eskom’s coal-supplied power, the gap could be altogether bridged by economic opportunity gains from uninterrupted supply.

And it’ll get better. As solar technology continues to improve, costs will maintain their remarkable decline. While the installation cost of solar-power infrastructure can be high, it pays for itself in the long run. Given Cape Town’s global prestige as a tourism mecca, finding partners to build a viable renewable power grid is much less difficult than depending on Eskom for power that doesn’t materialize.

There’s just one problem: the national government is trying to stop the city’s plans.

In August last year, Cape Town lost a critical constitutional battle over the legality of its efforts to establish its own electricity infrastructure. It’s important to note that the Western Cape province, where Cape Town is located, has a small and vocal secessionist movement, which has steadily gained popularity in recent years. Some in the national government are concerned that Cape Town’s attempt to supply its own electricity could be a meaningful step toward establishing independence. They have a reason to be concerned.

Durban, South Africa’s third-largest city, is following in Cape Town’s footsteps and is attempting to build its own renewable infrastructure. In December, the city released a 30-year plan to wean itself off Eskom and replace its power supply with renewable energy. In line with Durban’s commitment to the Paris climate agreement, the plan calls for the city to receive 40 percent of its power from sources other than Eskom’s fossil-fuel plants. By 2050, the city aims to be completely reliant on renewable energy.

It’s a bold target but what’s clear is that cheap renewable energy is enabling cities to take control of their own affairs and the battle against climate change in unpredictable ways. These trends will only accelerate as the technology gets better and cheaper. More than half of humanity lives in cities, and urban populations are forecast to rise over the coming decades.

Pretoria has a choice: Commit to cleaning up Eskom and, by implication, cleaning up its capacity structure, or face an existential crisis. Covid-19 is a health emergency. So is not having electricity to power a ventilator. South Africa’s leaders should wake up to this fact.

Joseph Dana, based between South Africa and the Middle East, is editor-in-chief of emerge85, a lab that explores change in emerging markets and its global impact.