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It is becoming increasingly apparent that 2010 will prove a pivotal year for securing South Africa's future energy supplies. We believe that four items need to be top of the agenda of Minister of Energy Dipuo Peters. These are: firstly, the restructuring of the electricity sector; secondly, making real inroads into diversifying sources of generation; thirdly, radically improving energy efficiency; and fourthly, creating the space for rapid growth of the biofuels and other renewable energy sources sector in South Africa.

The generation and distribution of electricity will once again feature prominently within the larger debate on economic growth in South Africa. Next week's NERSA hearings on the proposed 35% electricity tariff hike is the first round in this debate, although it will centre primarily on the role of Eskom and cost-mitigation opportunities. Up until the present, however, very little has been done by the ANC government to conceptualise and implement a broad long-term energy framework, which would open up space for increased participation in the sector. With a likely series of electricity hikes rapidly approaching, there is added importance in addressing wider issues of energy security in our country, and we would like to see from Minister Peters an energy plan that prioritises these four key areas in 2010:

(1) Restructuring the electricity sector

In 2010 we can make real progress in restructuring South Africa's electricity sector, but only if we face up to the fact that Eskom's designation as the single-buyer of electricity needs to be revoked, and that electricity transmission needs to be unbundled from generation, in order to create equal access to the national grid.

On the first point, while provision is currently made for Independent Power Producers (IPPs) to generate up to 30% of South Africa's total electricity output, the electricity generated must, under current energy laws, be sold to Eskom. This represents a severe impediment to attracting investment on the generation side; it reflects why South Africa faces the severe shortage of generation capacity that it does, and it is a matter that needs to be addressed - but urgently. Likewise, conditions that open up equal access to the transmission system for regulated third parties, such as foreign and domestic IPPs, must be created. Opening up real opportunities for sustainable investment must be front and centre of our approach to restructuring the energy sector in 2010.

(2) Generation

Coal is responsible for the production of more than 80% of South Africa's electricity, and is going to remain a large component of energy generation for many decades to come. However, the ANC government's focus on large-scale energy production mainly from coal has resulted in the neglect of renewable technology. This is despite the benefits it offers in improving energy security, decentralising production and mitigating climate change.

South Africa has significant proven resources of renewable energy, such as solar energy, wind energy, wave energy and biomass production. Harnessing this energy is critical for the realisation of a low carbon economy, and far greater progress needs to be made this year in developing a strategy for renewable sources of energy production.

The development of renewable energy is at the stage where a significant amount of capital is required to enable financially feasible products and services. Due to the scope and risk characteristics of alternative energy technology development, it is still largely within the realm of venture capital. As such, the best way to facilitate a faster growth for such technologies would be to make more money available for investment through either the IDC or the Department of Trade and Industry.

(3) Energy Efficiency

Increased energy efficiency, which will defer the need for new generation capacity, must be made a national priority. A significant portion of the carbon abatement potential of the country will be at a negative cost to society, meaning that we would earn a positive economic return derived mainly from savings in energy costs. Energy efficiency initiatives fall into this category and must therefore be at the forefront of our strategy to mitigate climate change. A number of steps can be taken to improve energy efficiency, and one option that needs to be particularly seriously considered is a cut in sales tax on household items that are energy efficient.

(4) Biofuels and Renewable Energy Sources

The usage of conventional agricultural produce for the generation of biofuel is an area that continues to provide new innovations and promises rapid implementation for micro-scale energy production. Investing in biofuel vegetation and research would be the best way to stimulate this resource. We need to see the kind of conditions fostered that allow for a thriving biofuels industry in South Africa - one that is appropriately regulated but without unnecessary red-tape, and which allows for long-term investment by private sector players that will stimulate a market for feedstock production.

In 2010, we need real, sector-wide reform of the energy market in South Africa. Looming increased household and business costs associated with Eskom tariff hikes make these reforms all the more urgent, and we will continue to engage with the minister, via the portfolio committee on energy, to see progress made in the key areas addressed above.