SenergyThe role of
SenergyThe role of municipalities in SouthAfrica’s Just Energy TransitionRapid, sustainable and inclusive economic growth is a central priority of the Government of National Unity. And low-carbon,climate-resilient development is central to achieving this inclusive growth. This presents our country with a challenge, butalso an opportunity.President Cyril Ramaphosa: Inaugural Just Energy Transition Municipal Conference, 26 August 2024EElectricity generated from fossil fuels accounts for most of SouthAfrica’s carbon emissions. Because industry is still mainly relianton power produced by Eskom’s coal-fired power stations, ourentire economy is carbon-intensive. As the world changes, ourreliance on fossil fuels to industrialise poses a significant risk. Itposes threats to our economy, society and environment if we donot drive the energy transition in ways that are appropriate tonational and local circumstances.Many of South Africa’s main trading partners are taking measuresto achieve net zero within certain timeframes. This has implicationsfor South African goods and products entering these markets. It hasimplications for our economic competitiveness.Just as we continue to oppose unilateral and coercive carbonadjustment measures by developed economies, we realise the need toreduce our reliance on carbon-intensive energy production. We seethe need to diversify our energy sources to grow our economy. Thereare great prospects ahead if the country takes advantage of theglobal energy transition to support economic growth, developmentand employment creation.As a signatory to the Paris Agreement, South Africa is committedto contributing its fair share to the global climate change effort.We must pursue this commitment in a manner that delivers justoutcomes for those affected by the energy transition. We mustpursue it in a way that contributes to inclusive economic growth,energy security and employment. And we must do so at a pace, scaleand cost that is consistent with the country’s social and economicdevelopment path.The achievement of defined JustEnergy Transition outcomes at amunicipal level requires supportivepolicies and leadership.Our Integrated Resource Plan sets out a viable energy mixover the medium and long term to achieve our decarbonisationobjectives. We have a successful Renewable Energy IndependentPower Producer Procurement Programme. This has attracted overR209-billion in investment and added much-needed capacity to ourelectricity grid. The regulatory changes we introduced in 2021 toincrease the licensing threshold for generation projects has resultedin a pipeline of over 130 confirmed projects. This amounts toapproximately 22 500MW of capacity with an estimated investmentvalue of R390-billion.Municipalities are central to our efforts to decarbonise theenergy sector. Municipalities own and operate approximately halfof South Africa’s electricity distribution grid and facilitate universalaccess to electricity. A total of 165 municipalities are electricityservice providers. Through the Integrated National ElectrificationProgramme grant, municipalities are responsible for addressing theelectrification backlog. Municipalities therefore need to be in thedriving seat when it comes to providing clean, affordable energy tocommunities, businesses and industry.18 | Service magazine
The Just Energy Transition Implementation Plan approved byCabinet in 2023 includes a dedicated municipal portfolio roadmap.There are three areas of focus:The first is providing access to affordable clean electricity.Municipalities are now able to purchase power directly fromindependent power producers and establish their own powerproducingentities. I recently signed the Electricity RegulationAmendment Act into law. The Act paves the way for a new,competitive electricity market. The reforms contained in the lawmust help to speed up decarbonisation. But more than that, theymust result in a better deal for households and businesses.The national climate change effort must not come at a higher costfor electricity users. South African households, like many around theworld, are battling with the rising cost of living, including the cost ofenergy. We must therefore ensure that the energy transition does notcontribute to energy poverty. It must not deepen inequality.The free basic electricity subsidy for indigent households is one ofthe most important policies we have implemented to tackle povertysince the advent of democracy. It will be important to sustain andexpand this support during the Just Energy Transition and ensurethat many poor households benefit from the subsidy. We will needto deal with challenging issues like electricity pricing structures andthe staggering levels of municipal debt owed to Eskom.The second area of focus is the issue of sustainable financingfor electricity infrastructure. The municipal grid system needs tobe upgraded, modernised and extended. The energy generationof the future requires systems that are fundamentally different interms of design, capability and operation. Smart metering will haveto accommodate the increased penetration of renewable energy atdifferent scales. It will need to facilitate wheeling and feed-in bysmall-scale embedded generation.Massive investment is needed to ensure optimal grid control,safety and energy storage. This investment will need to draw onboth public and private sources of capital. As government, we areworking on financing solutions, including concessional loans, forthe National Transmission Company of South Africa to expand thegrid. A system for private sector investment is in development. Weare expediting funding for investment-ready projects in all areasof the Just Energy Transition (JET). We are putting institutionalarrangements in place. National Government is rallying its teams towork with SALGA and mayors to align on the JET programme ofaction for local government.The third and final area of focus is to strengthen the capacityof municipalities to manage the transition. This requires extensivetraining and upskilling. New systems will be required to identifyhuman resource, technical capacity and other needs withinmunicipalities, and plan and budget accordingly. Municipalitieswill need to adopt best practice when it comes to the design andimplementation of programmes and projects.We want to move away from “parachuted” development, whereprojects are conceptualised at national government level and don’tconsider the realities on the ground. We need to be particularlyaware of this when it comes to the Just Energy Transition. What maywork in one locality may not be feasible in another.Municipalities are central toour efforts to decarbonise theenergy sector.Besides upgrading and expanding grid infrastructure, what otherrealities will need to be considered?How will this new infrastructure be protected from criminality?We have witnessed the challenges with so-called business forumsand mafias in the construction sector and, notably, in the coal sector.How are we going to ensure that the rollout of new energy sourcesat municipal level supports localisation and local businesses?How do we inform communities through public campaigns inaccessible and appropriate languages?These are all issues that municipalities will have to considerand address.We have said that the transition to a low-carbon, climate-resilienteconomy and society must take the needs and interests of affectedcommunities into account. This isn’t simply an issue of installingpanels or meters. We must reaffirm a just transition that incorporatesdistributive, restorative and procedural justice. We must maximisedecarbonisation and just transition investments by the privatesector arising from electricity sector reforms. We must expand ourelectricity grid capacity.A Just Energy Transition is about promoting economicdiversification, transformation and industrialisation in the renewableenergy sector that empowers workers, marginalised communitiesand black businesses. The achievement of defined Just EnergyTransition outcomes at a municipal level requires supportive policiesand leadership, good governance and a coordinated effort among allrelevant institutions. In this constrained fiscal environment, we needto make the most of existing resources.Citizens must see that the Just Energy Transition is working forthem. Electricity must be affordable, available and sustainable. Costsmust be managed. Infrastructure must be maintained. Services mustbe delivered reliably and consistently. We must leverage the financingand support that has been pledged by international partners and theprivate sector to support municipalities.As government, business, labour and civil society, let us deepenour collaboration to achieve an energy future that is secure andsustainable for all. SService magazine | 19
