00:00Businesses in South Africa are taking advantage of market reforms and investing billions of rands in renewable energy.
00:08They're doing this to protect against blackouts and steep price increases that have exposed the risks of relying solely on
00:15state-owned power utility, ESCOM, and deteriorating municipal distribution networks.
00:21For more on this story, our chief Africa correspondent Jennifer Saposadja joins us now from Johannesburg.
00:28Jen, good to have you on.
00:30Just how much easier is it for South African companies to get reliable and affordable power today than it was
00:37in the past?
00:40Yeah, Bir, good morning to you.
00:42It is significantly easier.
00:44And we have to remember that South Africans for decades had been relying on this monopoly, state-owned monopoly, which
00:52you were mentioning, ESCOM.
00:54That led to, as we've reported for years, blackouts, rolling blackouts for a number of companies and private individuals, which
01:03really hampered any sort of economic growth.
01:06And a number of economists have pointed to that as being sort of really the detriment to this economy.
01:11And so now what we have been seeing, what you were just mentioning there, we're seeing more and more companies
01:17and private individuals relying on a more liberalized market.
01:21It's become more liberalized after some of these reforms were introduced back in 2021.
01:26And so not only is it easier to access some of these power sources, it's also more cost-effective.
01:34Just to give you a few numbers there, we've seen ESCOM's prices actually climb nearly 900% since 2008.
01:42If you compare that to solar power, we've seen solar power, which can cost between 50 to 60 cents per
01:49kilowatt hour, and so significantly cheaper for a number of these companies.
01:54It also then provides businesses with a lot more flexibility.
01:58They're not necessarily relying on just one state-owned power utility to tell them when they will and won't have
02:05power.
02:06And maybe most critically, it's provided a bit of an inflation hedge and price certainty for a number of these
02:12companies.
02:13So really, this transition to renewables has been a bit of a game-changer for South Africa.
02:19And Jen, just how has ESCOM responded to this challenge, this competition from private renewables?
02:29It has been a challenge. The company has acknowledged that, Abeer, especially in some of the reporting and as we've
02:35reached out to them.
02:36It's really eroded demand, and potentially it has opened up then opportunities for them to at least make demand in
02:45their own offerings a bit more consistent than we've seen in the past.
02:48But because it's eroded some of their demand, they've seen declining revenue, and what the company is actually describing now
02:57is what they say a death spiral.
02:59And so they have actually launched what they call ESCOM Green, which, from their perspective, it's a utility-scale renewable
03:06energy developer meant to adapt to the competitive market.
03:09They say, potentially, it offers an alternative to what we're seeing.
03:14They have ambitions to have 6,000 megawatts of capacity by the end of the decade.
03:18But as we've just been speaking about, a number of companies and private individuals are turning to their own sources.
03:23So it's unclear what that competition is going to look like over the next few years.
03:28I can just tell you anecdotally, South Africans, though, are much more pleased that they actually have power to turn
03:35to, and reliable power to turn to, when they wake up every day.
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