MMC for Environment and Infrastructure Services, Cllr Michael Sun
CEO of City Power, Ms Tshifularo Mashava
Members of the Media
Residents of Joburg
Over the last 15 years, South Africa has faced an energy emergency, which has continued to plague South Africans and Joburg’s residents, owing to Eskom’s ageing generation fleet, plant breakdowns, and poor planning and politics.
Between 2020 and 2023 loadshedding reached a crescendo where we experienced unprecedented levels when Stage 6 became a lived reality; and this year the City and country has been victim to loadshedding everyday of 2023. Driving this point home, over the weekend Eskom announced that at the bare minimum Stage 2 and 3 loadshedding will be a daily occurrence for at least the next 18-months; but given the unreliability of Eskom’s network, at a moment’s notice we could go to higher Stages. Despite this recent, and even confident announcement, as we sit today, the country, as of 05:00 this morning, has been plunged into Stage 5 loadshedding.
The impact of loadshedding has been devastating to the GDP growth of South Africa, with businesses scaling down or shutting their doors completely, leading to job losses. Daily newspaper, Sowetan, produced an impactful front page on Monday, 16 January 2023 that listed small businesses that have had to shut their doors permanently, and lay off staff, due to the ongoing energy emergency. These are but a few businesses, with similar stories of distress coming forward daily; and as a City that makes up 16% of South Africa’s GDP, and 40% of Gauteng’s GDP, we are equally facing an economic emergency as a result.
Last week’s Financial Mail, spoke of the “The Great Semigration”, which mostly cited the move that residents of Gauteng are making to the Western Cape, which has made advanced strides in mitigating loadshedding and the economic impact thereof. Unfortunately, when residents and businesses leave the Joburg and the Province, they take their spending power with them, meaning that we are rapidly losing ratepayers, who to a large extent fund service delivery. According to the Financial Mail, at the current pace of semigration from Gauteng, the Western Cape could take the prime position in so far as GDP per capita is concerned by 2030, if not sooner.
Joburg cannot afford to be without power for hours on end; and we are not willing to give up our status as the economic capital of the country.
Members of the Media,
With 205 days of loadshedding in 2022, City Power, despite its best efforts was hard hit, resulting in losses ranging from sales and revenue; employee costs in the form of overtime; equipment failure and damage; and crime related incidents of theft and vandalism. Not only does City Power lose revenue when the lights go out, but the Entity is also forced to spend more money as a result.
For the period between the 1 July 2021 to 11 November 2022, City Power experienced 122 days of loadshedding with 2,175 incidents of theft and vandalism. The local power Entity raised alarm bells this week when it announced that over the last year it has spent R200-million on 390 mini-substations due to theft and vandalism, which generally happens during loadshedding. We are losing on average two mini-substations per day.
This is not the work of amateur criminals, but it is criminality committed by highly armed and resourced syndicates. Therefore, my Office is again writing to the Gauteng Police Commissioner, Lieutenant-General Elias Mawela to dedicate resources to this attack on Joburg. Last year, we had a similar meeting with the SAPS leadership made up of the Hawks, Crime Intelligence and Organised Crime, which resulted in a slowdown in the theft and vandalism of critical infrastructure. We wish to see SAPS once again bolstering the crime prevention work of the Joburg Metro Police Department.
When we talk about a loss of revenue and an increase in spending, for the period under review from 1 July 2021 to 30 June 2022, City Power experienced losses of 386 GWh, resulting in a net revenue loss of approximately R284-million. Furthermore, City Power incurred costs amounting to R155-million on overtime costs as a result of loadshedding, and R35-million in insurance costs for the period under review. This translates to a total loss of R474-million for the period under review.
We are also losing customers and revenue due to customers going semi or completely off-grid by investing in alternative sources of energy such as standby and distributed generation, rooftop solar systems, and battery energy storage systems, amongst others.
WHAT IS JOBURG DOING TO ADDRESS THE ENERGY EMERGENCY?
Despite the threat of being removed from office, we are soldiering on, because it is not about a legacy project that will be left behind by the Multi-Party Government, but it is about ensuring that there is a Joburg that we can be inherited by generations to come. Without sustainable, affordable, and reliable energy, there will be no City left. Regardless of who leads Joburg, this City needs energy to survive.
We are rolling out City Power’s Sustainable Energy Strategy, which is in full alignment with its business plan, and articulates clear intentions, namely:
Energy Equality – which speaks to access for all
Energy Independence – which speaks to reducing our reliance on Eskom
Energy Security – which speaks to an Energy Mix
Energy Supply – which speaks to the stability of the network and minimal outages
Following the May 2022 two-day Joburg Energy Indaba, which set us on a path towards reducing our reliance on Eskom, City Power put out Requests for Proposals for Short-Term Power Purchase Agreements, which is a programme by City Power to secure energy from independent power producers for up to 36-months. This first round of RFPs went out in November 2022, with the closing date being 10 February 2023.
Parallel to the Short-Term Power Purchase Agreements, the City is currently undergoing an approval process for Ministerial Determination to procure power on a longer-term basis from Independent Power Producers (IPPs).
By going out into the market now, City Power seeks to secure extra capacity from diversified energy sources, including solar, gas, battery storage, waste-to-energy, as well as the dispatchable option of gas-to-power.
Ultimately, we are working towards procuring an additional 500MW of electricity, which means off-setting up to Stage 5 loadshedding.
WHAT CAN BE DONE NOW?
City Power has costed a R401-million budget for a plan that could in the short- to-medium-term avert up to Stage 3 loadshedding:
At R20-million, we can recommission the two exsiting Open Cycle Gas Turbine Stations. This would of course require the City to procure and burn diesel. We are already sitting with 1,2-million litres of diesel for these sites. This would add 74MW to the network, when needed.
At R85-million for a Ripple Relay Systems, City Power will be able to remotely regulate high-energy use products such as geysers, swimming pool motors and the like. This would save 80MW, when needed.
At R175-million we will procure and distribute Smart Metres and communication that will enable City Power to be able to limit the amount of power distributed to homes, so instead of completely turning the power off, we will be able to supply homes with enough energy to power essential needs. This will save an additional 322MW, when needed. This will not be done on a whim but will be communicated to customers, when the needed. The communication system will require R28-million.
This requires an Energy Management System upgrade, costing R120-million that will enable City Power to better monitor, control, and optimise the performance of its transmission system.
Unfortunately, as the City, we are not sitting with R400-million that can be easily shifted towards this programme, we are therefore exploring the establishment of an infrastructure fund, and we will be approaching development finance institutions (DFIs), the private sector, the Provincial and National Governments to fund this project, where we will be leveraging our status as the economic hub of the country and the good governance practices of the Multi-Party Government.
City Power has expressed that if they were to get the money today, it would take up to 6-months to get this mitigation plan active given that much of the infrastructure is already in place.
We are not sitting on our hands or burying our heads in the sand, as we fully comprehend the scale of this emergency and the urgency required to address it.
We want our residents to proudly call Joburg home. We want our visitors to come back again. We want those doing business in the City to keep their doors open, grow, and employ more people.
Thank you. Ke a leboga.
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