Cape Town taking control of its energy future 

2 November 2016

Mayor of Halifax and World Energy Cities Partnership (WECP) President, Mike Savage

Mayor of Houston and Secretary-General of the WECP, Sylvester Turner

Mayor of Stavanger, Christine Sagen Helgø

My fellow WECP mayors

Executive Deputy Mayor of Cape Town, Alderman Ian Neilson

Members of the City of Cape Town Mayoral Committee

WECP delegates

Members of the media

Ladies and gentleman

Good morning.

It is fast being recognised that cities as opposed to nation-states are the important drivers of economic growth in the world.

The future economic trajectory of the world will largely be determined by cities and the development paths that they choose.

I therefore firmly believe that more power needs to be devolved down to a local level and that cities need to have access to all the levers necessary to drive growth and development in their region. 

The increasing role of cities in driving economic growth is also happening against the backdrop of a rapidly evolving global energy sector.

These changes in the energy sector are in turn disrupting the old institutional models of energy generation and distribution and in many cases making the utility model redundant.

Last year we also saw the hugely destructive energy crisis grip our country, which plunged many parts of our productive economy into turmoil as the national monopoly utility, Eskom, was unable to secure supply. 

The City of Cape Town was able to mitigate the effects of that crisis to some extent by drawing on some of our own storage units during load-shedding incidents, but we never want to be put into that situation again. 

Cape Town needs to gain greater control of its energy future and our reliance on the national energy utility, Eskom simply must be reduced.

In order for this to happen though, the national regulatory environment must be reformed, which currently does not permit our city to buy electricity from independent power producers. 

At the same time, our customer base is starting to take control of their own energy future by moving to embedded generation technologies such as solar PV. 

As a progressive city committed to growing our status as the green economy hub of Africa, this is certainly something we want to promote.

However, our role as simply being a distributor for our national utility’s electricity has to urgently change.

In our current restructuring process in the City, it is our intention to move away from just being an electricity distributor to also generating our own energy. 

In this regard we will transfer our Electricity Services Department out of the Utility Services Directorate into a newly created directorate for energy and electricity. 

This marks an important shift in our thinking around energy, as we are gearing up the City to play a vastly different role in this space.

We would like to see a market for energy open up in Cape Town, where both the City and our residents can have greater choice over how they purchase and consume energy. 

We will also turn to our WECP colleagues to assist in this mission.

I have written to the National Minister of Energy on a number of occasions over the last year asking for her permission to begin purchasing electricity directly from independent power producers (IPPs). 

We have asked for what is termed a Section 34 determination in New Generation Capacity Regulations in the Electricity Generation Act to allow us to procure solar and wind energy from IPPs.

In terms of the law, the Minister must, in consultation with the National Energy Regulator of South Africa (NERSA), make a decision and up until now she has failed to do so. 

I seek no favours from this Minister. It is about time that she does her job and performs her Constitutional functions.

Frankly I have gotten tired of asking and I am now in the process of instituting court proceedings against her.

I must emphasise though that I am not doing this simply for the sake of Cape Town and the energy future of our country.

The City of Cape Town is doing this because we believe that our National Government is locked into an old mind-set that simply refuses to accept that the energy lansdscape has fundamentally changed and that our institutional regime needs to change with it.

We can no longer afford to be in this fatal embrace with our national energy monopoly, Eskom, which is acting purely in its own self-interest and holding back a more progressive energy future for our country.

We are also doing this because if we are allowed to procure renewable energy, we can reduce the long-term electricity costs for our residents and provide a greater measure of protection against energy insecurity and Eskom’s blackouts.

Eskom simply refuses to tolerate any meaningful competition and uses its monopoly control of the energy system to squeeze out private producers, even in defiance of our own national energy policy. 

Eskom also continues to favour large utility-scale solutions which it can own and control such as the nuclear build programme – regardless of the long-term costs to our economy. 

Thankfully, however, there is an alternative and Cape Town wants to be part of building it.

The future lies in greater decentralisation of energy generation with complementary technologies like gas and renewables providing lower cost and cleaner solutions. 

Cape Town is determined to build a more secure, cleaner and affordable energy future and we know that the technological solutions already exist to enable us to do this.

We simply need to change the institutional regime.

A new progressive model, with greater decentralisation, will also allow this City to take greater control over its effiorts to mitigate climate change. 

Under the Eskom monopoly model we are forced to buy electricity from whatever sources form part of the Eskom generation mix.

In South Africa that mix is overwhelmingly coal-based.

A decentralised model with increased diversification and local choice, including greater roles for wind and solar, will allow the City of Cape Town to increase its ambition in reducing emissions.

The National Government has had 18 years to implement this vision which was contained in the Energy White Paper of 1998.

Both parliament and the executive have patently failed the country on this score.

It is now time to start an energy revolution from below, with cities such as Cape Town taking the lead.

In this way Cape Town will truly be able to live up to its status as a World Energy City.

To all my WECP mayor colleagues, I have not spoken like this before but I am taking comfort in the fact that I am speaking to you, my fellow mayors who understand what it means to only give the best to the residents of our cities.

I thank you. 

Issued by Zara Nicholson, Spokesperson for the Executive Mayor Patricia de Lille, 2 November 2016