Slow state must get sparky over power generation by miners

When it is so critical for every megawatt of potential new energy to be on grid as fast as possible, we need to ensure new generation projects have a smooth path. So I listened with interest to plans by the mining industry to invest huge amounts in new plants, and the obstacles some miners are facing in delivering projects.

The Minerals Council SA reports that its members have 3.9GW of renewable energy projects lined up. For context, Eskom’s installed capacity is about 48GW, though more than 35% of that has been out of commission recently. That means mining companies alone intend to add 13% to SA’s operating generating capacity.

This is a time when the government should be doing all it can to accelerate new generation, but the council outlined challenges the miners face in getting all of that capacity built swiftly. The longer it takes to resolve these issues the longer it will be for the new electricity to come on stream and ease the pressure on Eskom.

Policymakers and regulators need to take the council’s information seriously and look to unlock the obstacles they have identified. Good work has already been done, particularly in the new 100MW licensing exemption. For this to pay off in a vast expansion of electricity production, remaining blockages should be cleared.

Environmental impact assessments take 18 months. Surely that can be expedited, especially when the developments are renewable projects that will be displacing carbon-intensive production? A lack of clarity on various other issues is holding things up, including the use of Eskom’s transmission to send power from the new plants to mines if they are separately located, and the sale of excess power into the national grid or to other users.

Many such issues can only be resolved by the government. The council s chief economist, Henk Langenhoven, said: You have to go through so many steps at different levels of government and different institutions of government. And they all take their time and they all have different acts they have to apply It just takes a lot of time.”

Minerals Council CEO Roger Baxter recommended emergency tax incentives to support the rapid rollout of projects. A one-stop shop where all approvals are processed is another option.

The planned energy projects from mines will not only add a significant supply of power but also bring in investment and create jobs. The Minerals Council estimates they amount to

R60bn. Short-term jobs will be created to build these new power plants, and long-term jobs to operate them. This is the kind of economic stimulus the country needs.

The importance of enabling mining and other companies to generate their own power cannot be overemphasised. Each time the electricity supply is disrupted by load-shedding, they have to shut up shop, with expensive generators needed to maintain essential operations. That increases their cost base while lowering productivity, an alarming situation for any business but particularly so when there is nothing the company can do about it. It also makes it much less likely that companies will expand production.

It is a major undertaking for companies to build their own power plants to wean themselves off Eskom, but they believe the long-term benefits outweigh the shortterm costs and they are prepared to commit substantial capital expenditure in doing so, which would boost the entire economy.

President Cyril Ramaphosa surprised the nation in June by lifting the threshold for companies to produce their own electricity without a licence to 100MW. It was a bold move that was seen as a strong signal that the reforms in the Economic Reconstruction & Recovery Plan would be delivered. The plan states that businesses should be able to generate power for their own use and wheel it across the grid. The variable was how much.

Mineral resources & energy minister Gwede Mantashe had tabled a 10MW cap, and business was hoping for 50MW. By making it 100MW, Ramaphosa materially changed the electricity outlook.

With the restructuring of Eskom and the resumed Renewable Energy Independent Power Producer Programme, he created the potential for a fundamentally different future for our electricity system.

Much of the potential generated by those moves is being frustrated by a lack of policy clarity, and by a lack of any sense of urgency. Business has shown it is willing and ready to commit vast amounts towards selfgeneration projects and more companies will do so should government act to remove red tape and accelerate approval processes. It is an easy win for the economy.