Deadlocked in the dark

In 2023, South Africans endured 6,947 hours of electricity outages, nearly double the figure from the previous year. While early signs suggested 2024 would be similar, as of October, South Africa has avoided scheduled blackouts, known as ‘loadshedding’, since March. Contributing factors include a maintenance drive, the addition of an 800MW unit of coal power, and a rapid increase in rooftop solar installations, primarily by wealthy homeowners. Although the worst loadshedding – up to 11.5 hours daily – may not return, ageing coal plants will inevitably break down, as one recently did, prompting expensive and dirty diesel turbines to come to the rescue. The pause in loadshedding was also seen as a tactic to charm understandably cynical voters before the national election in May. However, those election results were disastrous for the ruling African National Congress (ANC), forcing it into an alliance with its rival, the Democratic Alliance (DA), and several smaller parties as a ‘Government of National Unity’ (GNU). Consequently, political pressure on the fragile GNU to keep the lights on will remain. Additionally, demands to decarbonise a coal-dominated electricity grid have intensified due to a Just Energy Transition Partnership (JETP), according to which the US, UK, Germany, France and the EU have promised USD 8.5 billion in global finance (naturally, with various strings attached). As a result, those overseeing the energy sector must simultaneously navigate decarbonisation, immense technical challenges, and the factors that crippled the electricity grid in the first place.

The South African case illustrates that a just energy transition is not merely a technical task, of replacing coal with renewables, but a convoluted process in which the politics of public ownership present various contradictions. Nonetheless, as pressure heightens on all sides, class compromises become more likely. The possibility of such a compromise, has been posited by retired trade unionist Dinga Sikwebu. The historic weakness of the left suggests any such compromise will be limited, yet I maintain one can and must be produced in the electricity sector. On the one hand, at least over the coming years, private investment in renewables will be required. However, the viability of such investment relies thoroughly on a state in which organised labour retains a level of structural power. From this position, it is possible to imagine a pathway that broadly retains public ownership, while kickstarting South Africa’s transition.

Eskom and the ANC

South Africa’s energy sector revolves around Eskom, the state-owned electricity utility mired in prolonged operational and financial crisis. Remarkably, loadshedding is not a case of South Africa struggling to construct a functional electricity grid; instead, it is the stunning decline of a utility that the Financial Times rated in 2001 as the best in the world. Eksom’s crises largely stem from its position as a central battleground for factions within the ANC. Understanding these factions is crucial. Broadly, the ANC consists of three tendencies: The closest to capital is an ‘economic moderate’ faction: Often vacillating toward austerity policies, this faction has controlled the finance ministry almost continuously, and recently oversaw Eskom through the Department of Public Enterprises. While the apartheid government initiated plans to restructure Eskom and the South African energy sector during the economic turmoil of the late 1980s, this faction of the ANC adopted these reforms as policy in the late 1990s and early 2000s. Thus, initial plans to restructure Eskom, despite its excellent performance, were overwhelmingly rooted in neoliberal ideology. (Restructuring in this case involved separating Eskom’s generation, transmission, and distribution divisions, and moving toward private ownership of the first.) The ‘moderate’ faction, then, has been in open conflict with the ANC’s left, which is primarily rooted in a tripartite alliance with the Congress of South Africa Trade Unions (COSATU) and the South African Communist Party (SACP). However, neoliberalism alone cannot explain today’s crisis; understanding it requires consideration of the ANC’s third faction.

Also in conflict with the economic moderate faction is a loose coalition under the banner of Radical Economic Transformation (RET), where radical transformation principally means increased rent-seeking through state procurement, justified as post-apartheid redress. When in power, this faction has made various overtures to the owners of South Africa’s coal mines. These mines were once dominated by international conglomerates; today, they are increasingly controlled by domestic players that have benefitted most from the Broad-Based Black Economic Empowerment (B-BBEE) framework, from whom Eskom purchases the bulk of its coal. The (literal) fortunes of coal mine owners are thus intricately tied to Eskom and the future of the power sector. President Cyril Ramaphosa, firmly within the economic-orthodoxy faction, is the arch-nemesis of RET, which is symbolised by former President Zuma, who recently made a stunning electoral comeback with the new uMkhonto weSizwe Party (MK), winning 14.6% of the vote. Ramaphosa’s relationship with the ANC’s left, where he began his political career, and which still supports him, had been strained even before he was forced into coalition with the Democratic Alliance (DA) in order to keep RET and Zuma out. Early indications concerning the GNU have been quite positive; nonetheless, the DA’s positions against organised labour and state ownership may still push the government to the brink. The fragility of Ramaphosa’s coalition and factional infighting map onto Eskom, where credible reports of sabotage illustrate the intensity of these struggles. Consequently, the threat of RET makes anti-austerity politics on their own insufficient to tackle the crises at Eskom. Yet the left cannot abandon public ownership, which now also serves to address the ongoing climate crisis.

Decarbonisation and the public approach

In 2017, Trade Unions for Energy Democracy (TUED) published a report, ‘Preparing a Public Pathway’, that sounded a dire warning. Despite dramatic declines in production costs, investment in renewables was flatlining. The authors argued that, under capitalism, investment depends primarily on profit, not price. Amid claims that the transition was inevitable because renewables are ‘just so cheap’, the profit motive had been largely overlooked. This conflation of production costs, price, and profit is a central subject of Brett Christophers’s book, The Price is Wrong (2024). Analysing electricity sectors in countries around the world, Christophers concludes, seven years after TUED’s report, that investment in renewables and progress toward emissions targets are still ‘utterly failing’. TUED proposed an obvious alternative: the transition must be driven by unprecedented public investment, free from the necessity of profit, under a publicly owned energy system. This thesis is further supported by Christophers’s book, which reveals that the market-led transition relies on markets that are far from free.

Electricity, unlike most commodities, requires a constant balance of supply and consumption, with limited storage options. Intermittent renewables present additional challenges, but, even without these, competitive electricity markets have historically depended on state rules and regulations. As Christophers states, private electricity generation is ‘stuck on support’. Additionally, evidence suggests restructuring has failed to deliver on its promise, with consumers in restructured sectors now paying more for electricity. Thus, advocating for a public pathway involves removing the influence of capital through class struggle, rather than merely reinserting the state. However, while markets have caused blackouts elsewhere (such as in Texas, USA), South Africa’s unprecedented blackouts occur under state control. The greater priority is not removing the marginal influence of the market from electricity provision, but repairing the state that oversees it. This logic also extends to collapsing state water and sanitation infrastructures, which are both vulnerable to and required for the mitigation of recurring droughts and storms, intensified by climate change.

Nine wasted years

When Ramaphosa came to power, he lamented the ‘nine wasted years’ under his predecessor Jacob Zuma. The description was charitable, if anything. Zuma assumed office in May 2007, shortly after South Africa’s first experience with loadshedding. At that time, construction had begun on a new coal-fired power station, Medupi, which was expected to restore Eskom’s reputation for building world-class power plants. Medupi, with its supercritical boilers, was slated to supply 4,800MW of power by 2015. In 2008, work began on an even larger plant, Kusile, set to be fully operational by 2017. However, by 2015, only one of Medupi’s six units was operational, and, unsurprisingly, loadshedding returned with force. The final unit only began generating power in late 2021, but Unit 4 exploded under mysterious circumstances a week later. Kusile’s Unit 5 has recently provided some respite from loadshedding (the 800MW mentioned at the beginning of this article), but, at the time of writing, its sixth unit is still incomplete. The combined budget for the two plants was around US$8.75 billion, but final costs are nearing triple that amount. For South Africans, it became clear: something was very wrong at Eskom, and RET was at the heart of it.

Reforms to restructure Eskom initiated the crisis, but they were largely abandoned after the infamous Polokwane conference in 2007. At Polokwane, the ANC launched a developmental turn, with Zuma, supported by the left, expected to oversee it. In reality, Zuma’s tenure and the rise of RET were anything but developmental. By the time Zuma was removed by his own party, Eskom’s procurement budget had tripled, its debt had quadrupled, yet it was generating less electricity. As Andrew Bowman describes in an paper for African Affairs, Eskom was at the centre of ‘economy-wide, industrial decline… alongside massive parastatal investment increases’. While Ramaphosa and his allies have made statements supporting industrial policy, their ‘renewal’ project has primarily focused on restoring good governance after Zuma’s period of ‘state capture’, with relatively little effect. Regarding Eskom, Ramaphosa’s administration has aimed to complete the promised reforms: restructuring Eskom towards privatisation in generation, largely in renewables. However, the deadlock has continued. South Africa’s first private renewables generators began operations in 2013; when Ramaphosa became President in 2018, they accounted for just under 7% of power capacity. Six years later, their share increased to just 13%. As things stand, there are many reasons to doubt a significant renewables rollout will happen anytime soon.

This May, Eskom announced plans to extend the operation of its coal-fired power plants beyond their scheduled retirement dates. From a climate perspective this is grim, but promises of reliable electricity often outweigh environmental concerns, as well as any geopolitical pressures like the Just Energy Transition Partnership. Part of South Africa’s significance as a case study lies in the challenge of balancing decarbonisation with a reliable and affordable power supply. Unfortunately, in South Africa and much of the world, climate change is a low priority for the population. This doesn’t mean renewables can’t play a crucial role in alleviating the power crisis, especially given how quickly they can be built. While discussing the specific challenges renewables bring to electricity sectors is beyond the scope of this article, it’s worth noting that those technical challenges generally only become significant when renewables account for at least 20% of capacity. This chimes with arguments made by renewables advocates, who cite political interference and entrenched coal interests as the only barriers to the rollout of renewables. (A recent commentary on additions to an energy regulation bill suggests that such interference remains significant.) Sadly, the problem is not so simple, and removing barriers is only one part of the solution.

South Africa is not unique in what drives private investment. For both international and domestic investors, the profit motive reigns supreme. Hence, removing ‘red tape’ or interference will not prove sufficient for the rollout of renewables. The first Independent Power Producers (IPPs) of 2013 required substantial subsidies from Eskom and the South African public through long-term price guarantees. Investors in these projects enjoyed returns above 17%. However, South Africa cannot escape Christophers’s thesis: the price is no longer right. As one financial advisor recently lamented, under a competitive market structure the current expected returns are ‘a far cry’ from previous levels. Even with various measures to ‘squeeze additional returns’, the sector will not ‘satisfy international equity return requirements’. This implies that if private renewables are to play a meaningful role in South Africa’s energy mix, the state will need to provide significant support. This raises the question: if the state is going to bankroll renewables for profit, why not build them itself? That would involve immense challenges, but any hope of ending loadshedding while catalysing the transition will require the state every step of the way.

Letting the market in

Given Eskom’s condition, there remain enormous obstacles to the utility’s viability as leader of South Africa’s transition. Financially, Eskom’s latest report put its debt at almost US$23 billion, a figure which would be significantly higher without past government support. Unless vast concessionary funding is made available, Eskom will be unable to finance the construction of renewables. And the levels of mismanagement and corruption that have plagued the utility make such funding now hard to come by. The disasters of Medupi and Kusile make objections to any Eskom-led renewables build-out difficult to dismiss. Certainly, the billions promised through the much-hyped JETP agreement are conditional on Eskom ceding its position in generation. Nonetheless, the political costs of loadshedding have forced the ANC to shelter the utility from outright looting. And while its coalition with parties like the DA will foreclose a push for Eskom to lead a build-out, state managers will have additional cover to restore the utility and drive out RET. It is for this reason, I contend, that that the only viable public pathway is a medium-term strategy that, instead of agonising over letting the market in, considers on what terms. The costs of obsessing over the former are already apparent.

While renewables at utility scale, the kind that South Africa and the world require, are ‘stuck on state support’, the parallel development of distributed solar (mainly on rooftops), is much less constrained. It is quite staggering that in just a few years, such solar installations in South Africa have reached almost the same capacity as utility-scale solar. Despite the fanfare, the implications of this development are dire, as I argued when the new regulations were published. The costs offset by distributed solar do not nearly cover Eskom’s fixed costs of running and maintaining the national grid. Distributed solar users still need to access this grid for most of the day. Either distributed solar users pay for these costs, or they are passed on to Eskom, further driving its ‘utility death spiral’. To prevent this, Eskom will attempt to pass these costs on in turn, in the form of increased rates for those who don’t have distributed solar, overwhelmingly the poor. If their electricity prices go up, many South Africans will have no such recourse to adequate roofs, let alone advanced solar systems. At least utility-scale renewables would stay within Eskom’s orbit, benefit from economies of scale, and could be better regulated. They could also, under different political conditions, be nationalised. Despite its malaise, Eskom is not going anywhere, and its debt must be dealt with in one way or another. So long as the utility is progressively restored, allowing IPPs to continue to build renewables in the medium term is by no means an abandonment of a public approach.

Unlike the market ideologues in the business press and think tanks, investors support competitive markets primarily because, and insofar as, those markets enable them to grow their profits. However, the power of Christophers’s analysis is to show that, concerning electricity, open markets do no such thing. Price stability, through existing long-term PPAs, is a far more effective carrot. Given the cost overruns at Eskom and the current difficulties in raising capital, such price subsidisation may be better for Eskom’s finances than boldly embarking on its own build-out. What is crucial here is that, if investors are drawn in through such means, rather than through the promise of a ‘competitive electricity market’ and all the uncertainties that come with it, there is no need to unbundle Eskom. Instead, as Eskom is revived, another parallel process can begin, of the utility commissioning its own renewables projects. Once IPPs have delivered utility-scale solar, the South African government can either buy out private generators (as its Mexican counterpart did to Iberdrola last year) or wait out the PPAs. Allowing limited private generation would be a small price to pay for reviving Eskom while retaining its central position in generation and control of transmission. Transforming Eskom and resolving the contradictions of such a public pathway in this manner would not amount to a defeatist concession, but an immense challenge. Who might be up for it?

Qualifying community ownership

Advocates for public ownership and energy democracy often champion ‘communities’. The focus on communities is usually justified by the perception of their members as the most marginalised or impacted by matters relating to energy. Certainly, there is no shortage of communities in those predicaments (consider the health crises many communities around South Africa’s coal plants face). However, some discourses on communities flatten highly varied contexts and interests. When it comes to policy, communities could be anything from rural subsistence farmers, members of vast urban townships and slums, or even residents of wealthy enclosed estates. Wealthy communities have adopted distributed solar throughout the world, and would need to be deliberately excluded if capacity is to be taken up elsewhere. Defining a community, and therefore ownership, is essential. In the context of South Africa’s urban communities, characterised by dense population, informal housing, and land struggles, there is also the question of where renewables infrastructure will be built. Even with the benefits of scale, Bhadla Solar Park in India, the largest in the world, requires 56km2 of land to provide half the capacity of Medupi. There is greater potential for poor rural communities, but similar challenges remain.

In the context of rural poverty in South Africa, community ownership of renewables will be even more reliant on state support, especially if such undertakings must compete with a ruthless private sector. Even in a fully public model, these poor communities would have almost none of the capital or expertise needed to build and run significant solar operations. Even if these challenges were surmounted, without leading to undesirably high electricity prices, the costs of Eskom purchasing surplus energy from community generators would need to be offset somewhere else. Unless covered by a new tax on the wealthy, passing these costs onto Eskom or the fiscus would be regressive. The economic reality of electricity provision is made clear in another TUED report titled ‘The Rise and Fall of Community Energy in Europe’. The authors point out that the community-ownership model continues to rest on the faulty assumption that, in the absence of state support, localised power-generation resources will be able to ‘provide us not only with affordable electricity but with revenues as well’. Especially in the context of an impoverished population (and decarbonisation targets), energy provision is a costly endeavour. Democratic control toward equitable ends does not alter this.

Nonetheless, community-ownership initiatives continue elsewhere in the world. Where the state has failed in delivering electricity, or where communities face violent repression, the benefits of electricity autonomy are obvious. It also cannot be discounted that powerful rural movements, in Latin America and elsewhere, might eventually develop a model that overcomes the challenges described above. For South Africa, however, without a strong presence of such movements, it is difficult to see where such initiatives might emerge at the scale we need in economically devastated regions. Utility-scale renewables are required urgently, and I have suggested that a level of private capital can be accepted in the process of transforming Eskom. It is Eskom, as an existing public entity, that can best balance an array of power resources to absorb and distribute the costs and revenues the electricity system produces. Such a scenario need not prevent a significant role for communities. Large utilities have historically overspent on unnecessary capacity and side-lined efficiency measures, but a degree of overcapacity is required for a resilient grid and can be a tenet of progressive industrial policy and long-term planning. A more forceful role for public engagement in energy-related decisions can help to guide public utilities along this path. But transforming Eskom must remain the priority, and South Africa’s labour movement, battered but not broken, remains the social force best placed to do so.

Organised labour in South Africa – the force that brought the apartheid state to its knees – is a shadow of its former power. Much of its malaise tracks with the global decline of labour, but most alarming in the South African case is the nascent alignment with the RET faction. Where, as many have asked, was organised labour when Eskom was plundered? The leader of one of South Africa’s largest unions, NUMSA, openly supports a disgraced former Eskom CEO who forced the sale of a coal mine to a family with political connections to Zuma. There have been similar developments elsewhere, but these alignments cannot be separated from the genuine threat that unmitigated unbundling poses to workers’ interests. It is not even entirely irrational to side with the looters, who would maintain a favourable status quo versus the unimpeded unbundling that would lead to Eskom’s relegation. This calculus speaks to the wider problem of why Eskom workers, and their comrades in the coal-mining sector, would ever champion a transition from coal. A labour-led transition would be an immense challenge.

However, key labour leaders, including these in federation of COSATU, who once backed Zuma, did eventually become some of his most vocal opponents, playing a critical role in his removal. NUMSA has in the past adopted impressive climate resolutions, and COSATU has also recognised the urgency for change at Eskom, at one time taking up a promising proposal offered by the Alternative Information and Development Centre to resolve Eskom’s financial woes. Finally, the attachment to coal is overwhelmingly the result of the economic considerations. Given that Eskom and coal workers both stand to be greatly impacted by environmental harms, there is reason to believe they might abandon coal for a credible clean alternative – whether this be renewables or other sources of low-carbon power – if the new source could afford them the same wages and benefits, or if workers who would lose their jobs were offered free tertiary education or supported into retirement. The essential point is that the alignment of organised labour with the RET faction is the result of consent, or even resignation, rather than active support. The power of trade unions in South Africa is not what it once, was but in terms of structural power it remains unmatched by the other social forces of the South African left. The unions must now force a compromise.

The new GNU, by integrating the DA into the executive (including on energy matters), poses a threat to organised labour. However, COSATU remains a key ally to Ramaphosa within a divided ANC, while the DA faces pressure to maintain the GNU to keep RET out. During a recent, highly charged cabinet negotiation over the department responsible for trade and industry, the DA eventually relented. According to the Financial Times, it was COSATU that put its foot down with the ANC, suggesting that it will be difficult to ignore going forward. If compromises are the politics of the day, it’s up to organised labour to ensure that the working class is part of the equation. This paper has tried to outline what such a class compromise for Eskom could look like, where the current necessity of private investment does not alter profitability’s dependence on Eskom and the state. For its part, COSATU and other labour organisations can demand enforcement of labour standards on IPPs, while ensuring other mechanisms exist to maintain their political power in the energy sector and over the future transition. Nonetheless, the scale of what is required, at Eskom and beyond, still entails stepping into the unknown. On its own, organised labour may still refrain from taking the initiative. Indeed, the government has now announced the unbundling of Eskom’s transmission division, to seemingly little union resistance. Here, the patchy but radical politics of various communities and movements across South Africa can give organised labour a push. Certainly, in the context of utility-scale renewables in rural areas, alliances between communities and trade unions could be powerful indeed. But all of this will be wishful thinking without sober consideration of both the multifaceted interests involved, and the technical constraints of electricity provision. Only by carefully navigating these dynamics can South Africa break out of its own power crisis, while beginning to address the crisis of the global climate at the same time.