Fuel, power prices hiked but green technology out of reach

Hard-pressed by the latest petrol price and electricity tariff hikes, most South Africans have little financial room to manoeuvre, with electric cars and renewable energy sources out of reach for millions of people, according to energy experts.

Incensed by the R17 per litre petrol and 15% electricity tariff increases amid the devastating Covid-19 pandemic and the economic slump, mineral resources and energy portfolio committee chair Sahlulelo Luzipo announced last week that he would soon summon department officials to parliament to explain the rationale behind the price surges.

To cut down on travelling expenses, some have revived lift clubs, resorted to public transport or working from home.

Wits Business School’s Energy Leadership Centre director, Dr Rod Crompton, predicted a significant switch from petrol to electric vehicles within two to three years.

Crompton warned that increases in the price of energy would have a huge knock-on effect and consequences for the delivery of goods and services.

Commenting on the petrol increase, he said: “From a policy point of view, if the country’s approach is import substitution industrialisation, which the petroleum industry has been from the ’30s, then there is a compelling case for electric vehicles.

“Instead of importing petroleum products and oil, you would use electricity made from the local sunshine, wind and coal.

“If you pursue import substitution industrialisation policy, it would make electric cars compelling. “Right now, electric cars are not competitively priced, hence they don’t sell very well.

“In two to three years’ time, they are expected to be competitively priced.

“If you buy an electric car and stick solar panels on your roof, you get sunshine for free for the rest of the ownership period of that vehicle – not buying petrol or diesel every month.

“Those who do a lot of travelling might find a switch to electric vehicles profitable.”

While a transition from Eskom-supplied energy to renewable energy sources could be a solution for most households, experts have warned that a self-sustainable move from the national power grid could come at a huge cost to consumers.

“City Power in Johannesburg is now introducing a capacity charge – the cost of being connected to their grid – payable whether you consume electricity or not,” said Crompton.

“If you are self-sufficient in your electricity supply, why wouldn’t you disconnect and go 100% off grid?

“But then, you would have no back-up on a cloudy week or when your batteries go flat.

“So, you might decide to pay that insurance capacity charge,” said Crompton.

Independent energy expert Ted Blom said it was possible for consumers to get off the Eskom grid “but to do so economically requires special background and controllers”.

“An average house can get off the grid for about R 100,000. After the change, you will be in control of your costs and it should be a winner all the way forever,” said Blom.

Crompton claimed that South Africa’s petrol price increase regime was shrouded in secrecy.

He explained: “When looking at elements of the petrol price, think of it as a multi-sliced sandwich with many slices.

“Some of those slices include industrial and social policies, which don’t come for free – things like the job-creation programme, black economic empowerment, import substitution and industrialisation.

“Our research shows that these policies cost consumers about 70c to 80c per litre.

“If we choose to use the petrol price as an instrument to deliver on these policies, then we have to pay that 70c to 80c per litre, which in a 40-litre car, works out at roughly R30 per full tank of petrol.

“The regulated accounting system, which the government uses, is not transparent at all. “It is not in the public domain,” Crompton said.