SA needs to engage on energy future

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Delivering the department's Budget Vote on Monday, 21 July, the minister said given that energy is a catalyst for economic growth and transformation, the challenges in the energy space must be addressed. These, she said, include the complex environmental and climate change issues.

"These uncertainties and how we respond remind us as a nation that South Africa needs to engage in a national dialogue about our energy future. How do we meet the imperative of ensuring sustained and secure supply of energy, especially cleaner energy?" the minister said.

She said while her department is determined to deliver on its goals, existing infrastructure constraints make it difficult to do so.

"Declining budgets, rating downgrades and the shortage of skills in the energy sector all contribute to rising electricity costs and volatile oil prices, which contribute to the critical energy situation," said Minister Joemat-Pettersson.

However, since its establishment in 2010, the department has made strides such as revising the regulatory framework for the introduction of new generation capacity through independent power producers (IPPs).

This culminated in reaching financial close and commencing with the construction of 1,000MW of open cycle gas turbines at Avon in KwaZulu-Natal and Coega in the Eastern Cape, as well as 3,900MW of renewable energy plants based on solar, biomass, hydro, wind and landfill gas.

"It gives me pleasure to indicate that out of 28 IPPs approved during Window 1, a total of 14 generation plants have been completed, producing over 600MW of green power into the national grid," said the minister.

Household electrification strategy

In June 2013, a new household electrification strategy was approved by Cabinet to address electrification backlogs and to ensure universal access by 2025. This will be done by means of using grid extension, but also by means of non-grid PV solar systems.

The electrification target for the 2013/14 financial year was to grid electrify 260,000 households, with the department having achieved a total of 292,714. In addition, 14,059 non-grid connections were also completed.

In the past financial year, a total of 306,773 households received access to electricity for the first time, which is 46,773 connections above target. This was mainly due to the good cooperation and support from electricity parastatal Eskom and some municipalities and metros.

Petroleum sector

The department has also implemented the regulatory accounting system for the petroleum sector, which is used to determine appropriate margins for petrol at wholesale, retail, secondary storage and secondary distribution level.

It also seeks to introduce transparency into the market, as well as root out inefficiencies, cross subsidisation and uncontrolled costs.

However, the rollout of the system has not been as smooth as the department would have expected.

Minister Joemat-Pettersson said the power relations between oil companies and retail companies continue to be a challenge.

"We intend to engage with this matter urgently," she said.

Development of gas resources

The minister also touched on issues of the development of gas resources, which include regional gas opportunities in neighbouring countries as well as shale gas resources.

Currently, a draft of the Gas Utilisation Master Plan is being finalised, and will be taken through Cabinet processes before starting with stakeholder consultations.

A road map for the implementation of the nuclear procurement programme is progressing well, the minister said, with the department currently working with its sister department and entities to finalise work in this regard.