The recent Eskom electricity price hike of 9,4% has resulted in an outcry from South Africans – but Relight Energy director Tristão Abro is calling for more, punitive increases.
He argues that higher electricity price increases will force the country to find ways of being more energy conscious, and therefore be more efficient and productive both as individuals and as businesses.
“Higher electricity prices will force a focus on energy efficiency and secondly, allow Eskom to have funding for future investment in energy generation capacity in the country which will result in increased productivity, growth, and GDP for South Africa,” Abro says.
He adds that South Africa’s tariffs are already low compared to global rates, citing lifecycle costs developed by the US Energy Information Administration (EIA) in June 2015 which indicate that the prevailing underlying cost of coal produced energy is 9,5 US cents/kWh. At current exchange rates and applying the approved 9,4% increase, South Africa’s tariff will be 7,5 US cents/kWh.
“What is clear is that we are not even covering costs at this rate,” Abro states. “This shortage of generation capacity is negatively affecting our GDP, growth, and productivity.
“Furthermore, if we have to compare the tariff last year to the soon to be increased tariff, our tariff will actually have declined in US dollar terms. Since most of our costs are US dollar-based – from commodities to equipment – we can’t avoid the exchange rate impact. The only way to improve our exchange rate is to improve our economy through productivity. This will translate into real growth and GDP.”
Abro adds that South Africa lags behind the rest of the world in energy efficiency. “Our energy used to be so cheap that little attention was paid to efficiency in use and design, in industry, buildings and home.
“The crux of the matter is that by increasing our energy efficiency, we can improve our productivity across the economy.”
Just by focussing on lighting, companies could make a big difference in energy efficiency, he adds.