The Massive Potential of Small-Scale Renewable Energy
Renewable energy technologies have introduced a diversity of energy sources that work at a variety of scales. Individuals and businesses are plugging in to renewable technologies that are disrupting highly centralised energy generation and distribution networks. This could promote equity and greener economic activity in diverse cities, towns, and villages.
From South Africa, we are watching a new wave of energy innovation carry other developing (and developed) countries forward without us. In cities around the world, small-scale renewable energy is decreasing energy costs for households and businesses, reducing carbon emissions, and improving energy access where it has been non-existent or very compromised.
Like coal or nuclear energy, renewable energy – including wind power or solar photovoltaic (PV) systems – can be large (utility scale), each plant producing enough electricity to power hundreds of households and businesses. But renewables can also be scaled down to, for example, rooftop solar panels on homes or commercial buildings. These systems can produce part or all of the energy that families, neighbourhoods or businesses need, reducing their dependence on centrally generated energy that we buy from municipalities or from Eskom.
These small-scale systems have become much more widely used in recent years because technologies have rapidly improved and costs have decreased. In cities or neighbourhoods, these systems have tremendous benefit: affordability, cleaner energy, and being adaptable to local energy needs. In many countries, small-scale renewables are now seen as a critical part of our global transition to a greener energy future.
South Africa’s response to energy innovation
The question for us is whether South Africa will join this transition, and whether we will reap its social, economic, and environmental benefits. With all eyes on the Minister of Energy, Tina Joemat-Pettersson, the Department of Energy (DoE), Eskom and President Zuma, an intelligent and ambitious conversation about our energy future is being lost in a din of nuclear chaos, state capture, and corruption.
South Africa’s response to small-scale PV has been sporadic and unclear. As Eskom’s prices and decisions spiral, municipalities’ efforts to get energy to low-income households are becoming ever more expensive. Renewable energy offers a different way to deliver this service, for all households.
Despite being heralded as a potential game changer at home and abroad, the potential for PV to contribute to equity is not being realised. Since 2011, small-scale PV has been officially included in our national energy policy. But energy is a highly regulated and technical sector, and to make that a reality, municipalities need clear guidance from national Treasury, NERSA and the DoE. Over the past three years, this has not materialised.
Some municipalities like the City of Cape Town and Nelson Mandela Bay are developing local regulations for their residents to encourage the use of small-scale PV. This allows for legal installation and grid connection, but it is not enough to ensure wide-spread, fair and equitable benefit for all.
Deepening inequality: energy and equity
The arrival of PV is a mixed blessing for municipalities, most of which are deeply dependent on an energy system in which they have relatively little power. Most municipalities act as electricity distributers, reselling Eskom’s electricity. This revenue finances direct service delivery, and the maintenance of infrastructure for shared benefit, such as the energy grid. It is also used to cross-subsidise basic service delivery for low-income households.
With the energy system configured as it is, the broad uptake of small-scale renewables, means less income for these critical municipal functions. The first households to install PV will be relatively wealthier. They typically consume more electricity at higher prices. Decreasing their energy consumption means they buy less electricity. Because consumption levels are used as a proxy for income in city-level progressive electricity pricing, buying less means buying at a cheaper level.
Decentralising energy is a threat to a powerful mechanism that municipalities use to redistribute resources to address the deep inequality within our cities and towns. It is not difficult to understand why, without clear direction from National Treasury, municipalities are not enthusiastically promoting and subsidising PV.
As wealthier households and businesses consume less energy, the cost of financing Eskom will fall to those without the money for self-generation. Some better capacitated metros may be able to deal with this by investing directly in energy infrastructure and the progressive use of grid fees, tariffs, and subsidies to promote equity in and through the PV market. However, an adverse outcome of such uncoordinated municipal responses would be deepening inequity between historically wealthier and poorer cities and towns.
The Next Steps for South Africa
For South Africa to harness the social, economic and environmental benefit of small-scale renewable energy, we need a clear directive from Treasury, and fundamental changes to the municipal revenue model. The ability of municipal governments to mitigate unequal access to service delivery is critical, and should shape whatever reforms are undertaken.
Thinking we can block the uptake of small-scale PV when the business case for household and commercial investment is only getting stronger is unrealistic. Instead, what is needed is a plan for a collective future in which municipalities play a very different role in the energy system. A decisive and coherent national framework for action and investment is most certainly necessary and worryingly absent.
We need to see a different kind of leadership from our senior political leaders and civil servants, from the Ministry and DoE too, in facilitating a coherent and widely supported national energy plan. The first step might be releasing the updated IRP, which will, no doubt lead to a torrent of comments and public input. The second and most critical requirement is undoing nuclear energy’s controversial re-entry into national energy planning.
This would just be a start, but a necessary one for ensuring that PV is a force for good, allowing us to keep the lights on for everyone and not just those that can afford it.