Municipal Electricity Generation a Step in the Right Direction

The City of Cape Town’s drive to procure or generate their own electricity is one of the first steps in solving South Africa’s energy crisis, according to a new study by the International Institute for Sustainable Development (IISD). 

In Power by All: Alternatives to a privately owned future for renewable energy in South Africa, researchers look at how different business models might increase the share of renewable energy in South Africa’s electricity sector. The report analyses four successful international case studies, identifying potential opportunities and challenges in applying these models in South Africa.

“The study clearly shows that allowing municipalities to procure or generate their own electricity will reduce pressure on the strained South African electricity system, diversify the country’s energy mix, and lessen fiscal pressure. It is a step in the right direction and needs to be given the opportunity to succeed,” says Richard Bridle, a lead author of the study.

Locally, the City of Cape Town has been trying to obtain the right to procure their own renewable energy through years of court cases. In October 2020, Minister of Mineral Resources and Energy Gwede Mantashe amended the electricity regulations to allow municipalities to develop or procure their own power. This is a pivotal stride toward increasing renewable energy in the country while also retaining public ownership of the energy sector.

One of the case studies looks at the successes of German municipalities since evolving into providers of a range of public goods such as electricity, water, gas, basic infrastructure, and services.

“Looking at Germany, we see that municipal ownership of renewable energy can allow public entities at the subnational level to tap into existing customer, legislative, and infrastructural networks to create regional webs of renewable energy projects,” says Bridle.

This model is not without its flaws and South African municipalities are obviously different from those in Germany. However, researchers say the pursuit of municipal ownership is still a critical step toward a just transition. 

In Germany, the electricity sector was liberalized in 1998, creating a favourable environment for municipalities to take control of their electricity supply and for consumers to freely choose their electricity supplier. Municipal investments in renewables proliferated and installed renewable electricity increased 143% in five years.

The IISD study shows that municipalities, given a supportive and enabling context, have the potential to play a key role in the electricity system by delivering a distributed model of publicly owned electricity generation. It also shows that South Africa does not face a binary choice between public ownership through Eskom and private ownership through Independent Power Producers—instead, the country will need an all hands on deck approach to transform its electricity system.