KwaDukuza faces challenges in shift to renewable energy sources

To meet future cost-effective and stable energy demands, the KwaDukuza municipality’s draft energy policy suggests integrating renewable energy resources.

It acknowledges the lack of a diversified energy mix which is likely to impact financial sustainability.

Currently, KwaDukuza imports almost all its power from Eskom and according to the draft policy document, increasing costs and loadshedding are causing uncertainty for businesses and residents.

The cost of purchasing power from Eskom is higher today than to generate or purchase it from private renewable independent power producers (IPPs).

It was also pointed out that the gradual loss of consumers due to households and businesses opting to go off-grid means declining revenue for the municipality.

The iLembe business sector has welcomed the draft policy as a much needed future economic driver and said buy-in to small scale energy producers holds many benefits.

In response, the iLembe Chamber of Commerce agreed that reliance on Eskom’s generation and transmission capacity would be futile.

“KDM has an opportunity to benefit from the local investment in renewable energy sources, specifically solar-photovoltaic systems, by introducing feed-in tariffs as a policy tool.

“Feed-in tariffs will enable KDM to buy excess energy from small-scale producers such as residential households, commercial and industrial consumers, as well as SSEG and MSEG [small- and medium-scale embedded generation] customers.”

However, the Chamber said more work needs to be done to refine any policy before implementation.

Small and medium-scale embedded generation refers to power generation up to 1MW peak output capacity for SSEGs and above 1MW and up to 10MW peak output capacity for MSEGs.

According to the draft policy, KwaDukuza will consider applications for grid connection onto the municipal distribution network but no connections would be allowed without written consent.

Tariffs will only be implemented after NERSA approval.

The Chamber suggests the KDM policy should incorporate the introduction of incentives such as tax breaks, rebates and attractive tariff structures to fast-track the installation of rooftop solar PV systems and other SSEG and MSEG solutions.

It also called for a sensitive approach to mitigate impact on businesses already carrying the crippling cost burden of loadshedding.

“The biggest risk to KDM’s electrical retail revenue generation model is not the ‘gradual loss of consumers due to households and businesses opting to go off-grid’, but non-technical energy losses/non-revenue electricity amounting to 25% of all electricity purchased by KDM from Eskom in 2022/23, a total of 172-million kilowatt hours of power, equaling a loss of R262 -million.

“The national target for non-technical losses is between 8 and 12%,” the Chamber said.

“It is recommended that the Mayor’s proposed Energy Loss Strategy, rather than the Energy Policy, would be more effective in dealing with the concerns around this impact on the municipality’s financial viability.

“It is recommended that processes associated with small and medium-scale embedded generation be incorporated in a separate procedures manual, rather than this higher-level and strategic energy policy.”

Sharing the same sentiments on the economic impact of loadshedding, Pick n Pay Ballito Junction owner Michael Lafferty stressed how retailers with significant refrigeration requirements suffer the most.

He stressed generators run on an estimated diesel price of R1 800 per hour and higher stages mean generators must run for longer.

“You end up with an Eskom bill that is the same as the generator bill, paying the same expenses twice,” he said.

”This seems a sensible policy that will help businesses, but what one says and what one does are two different things, of course. Only time will tell.”

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