Eskom Transformed: Achieving a Just Energy Transition for South Africa

This report presents the case for a modern national power utility - a New Eskom. Unfortunately, in the public discourse around energy in South Africa, the word ‘Eskom' has become an expletive. To suggest that a reformed publicly utility can and must play a new and perhaps expanded role in shaping the country’s energy future as it transitions away from coal sounds ludicrous. But this is exactly what the situation demands, and this report explains why.

The contents of the report reflect the work of three research organisations – the Alternative Information and Development Centre (AIDC) in Cape Town, Trade Unions for Energy Democracy (TUED) in New York and the Transnational Institute (TNI) in Amsterdam. These research organisations have worked closely with the trade unions involved in organising workers at Eskom – the National Union of Mineworkers (NUM) and the National Union of Metalworkers of South Africa (NUMSA).

Before Covid-19 replaced Eskom’s crisis as the central issue facing the country, it was only unions and their very close allies that held a consistent line both against the proposed ‘unbundling’ of the utility and against the incursions of the independent power producers (IPPs). Many believe that this opposition merely reflects the desire on the part of trade unions to protect coal sector jobs, and to do so in a way that is oblivious to the economic, social and ecological problems that come from the continued use of coal. Similarly, union opposition to the IPP system – including the Renewable Energy IPP program known as ‘REI4P’ – has in some quarters been seen as an opposition to renewable energy itself and economy-wide decarbonisation more generally.

This report should put the record straight. As will become clear, the position of the unions participating in the development of this report is not simply about protecting jobs in coal, or about preserving Eskom as it currently operates. These unions support a move towards both clean energy and economy-wide decarbonisation. But the current unbundling + IPPs approach (read privatisation) will achieve neither. In the pages that follow, we show why this is the case, and why this approach threatens to seriously compromise the country’s energy sovereignty by making it de- pendent on technologies and supply chains that are almost invariably situated in Asia and Europe.

The report was written before both the onset of Covid-19 and the economic contraction that will surely take place as a result of the lockdown. But Covid-19 gives us an opportunity to look at both South Africa’s energy crisis and its impending transition in an entirely new light. This, we will argue, is not a time to further undermine and sell off vital public services. Private sector interest in South Africa’s energy system was already limited before Covid-19, and if it were not for the introduction of lucrative power purchase agreements (PPAs), private companies would have no interest at all. With a major contraction in energy demand, the only way forward is a public one. Notwithstanding the profit-maximising market, people need electricity, as does the economy. Now is the time to engage in a robust process of detailed reflection regarding our country’s economic and social priorities and how energy can be generated and used to meet them.