PETER ATTARD MONTALTO: Running out of road

The road beyond the status quo appears to be unacceptably daunting for far too many people.

The dawning reality is that things are not quite as they seemed and that risks previously assumed to be way out in the tail or able to be brushed under the carpet are now looming large.

A lack of succession planning or explanation of what comes after, and why, has left markets and investors scratching their heads. Whatever comes next within the ANC could be worse, perhaps even dramatically so.

Fear compounds the downside risks — even if the baseline is that President Cyril Ramaphosa will continue for now — which is of little use  when sentiment is already so weak.

Similarly, the rush by some in business to praise the potential continuity of other options belies considered and objective analysis. The most interesting thing about Paul Mashatile is precisely that he is not continuity.

The current emotional state harks back to 2017, though back then there was no other option.

SA knows its problems and it knows the answer. The blockages are ultimately political. SA needs a fundamental political realignment of its broad body politic — politicians and electorate as well as media and the rest of the ecosystem — and that includes the ANC internally and its outside relationships.

The “blow up everything now” view in 2017 was that a Nkosazana Dlamini-Zuma presidency would have forced a realignment so much quicker than the two steps forward and one-and-a-half steps back that was to result. We can consider what will minimise inequality and unemployment over the next five years, or we can ponder what will sustainably solve such crises over the next 30 years. Until the country has gone through the political and economic “bottom” there will not be salvation. Neither of those has been reached yet.

Looking back, things undoubtedly would have been worse under alternatives to the status quo. Yet the status quo can prevent the emergence of solutions required as people are lulled into a false sense of security. This is what lingered after the initial Ramaphoria died towards the end of 2018 — and only dissipated more recently amid the metro coalition dramas and cash-in-sofa-gate.

The realignment of the body politic is something that many minds, including business, seems to assume is a distant externality that happens of its own accord. That is quite wrong. It is a product of so many internal forces (not just load-shedding but also the lack of service delivery and poor recovery from crises), and has active participation from individuals across all parts of society.

The components of the realignment are probably not even fully in view yet, and they don’t necessarily disregard the ANC or necessarily imply the current opposition. The aim of this realignment must be to allow the space within which political leadership can emerge that marshals solutions to the country’s complex and intertwined problems.

The recent failure of all bids for wind power in the Renewable Independent Power Producer Programme (REIPPP) bid window 6 process is a timely reminder that the end of power cuts — let alone navigating a successful Just Energy Transition — is still a long way off.

Having 3.2GW of unallocated slots for wind wasn’t expected, but what we are seeing is expected themes and blockages play out on steroids. Put simply, there was no grid to connect these projects (in the Eastern Cape and the Western Cape) because spare grid capacity that was shown by Eskom at the time of bidding in the two provinces (about 3.8GW) had subsequently (legally and by the rules) been taken instead by private off-taker projects that could reserve the grid space faster than the cumbersome REIPPP bids.

A lot of questions emerge about the system for grid access and the readiness of private projects to connect in a reasonable time. However, the core problem is that the urgent need for transmission grid expansion — which Eskom and the private sector have been saying with increasing alarm — has simply never been taken by the scruff of the neck and driven forward. As such, the Northern, Western and Eastern Cape are now full and, given the current pace of transition, will remain so until well into 2027 or beyond.

How then do we move forward with bid windows 6.5 and 7 and the 6GW of renewables and 1GW of batteries that the country needs to procure every year? Institutions such as a properly independent National Transmission Company are still not there to support and fund the investment needed in the grid.

Deep change is clearly needed, including political and leadership change at the departments of mineral resources & energy and public enterprises, and in the broader politics that can see these challenges and the need for solutions as central to the country’s needs and not as a peripheral debate.

This is but one problem that demonstrates the risks when the road runs out: there is now no more grid access in key areas for the foreseeable future. The implication is more load-shedding for longer than previously assumed. Ironically, that might force a faster pace of political realignment.

The new year will be especially interesting because all the components to solve the problems will be on the table and whoever is in power (before more dramatic upsets in 2024?) will have a brief and narrow window to bed down a few limited changes. The choices — such as the new Electricity Regulation Act Amendment Bill, which will support solving the transmission problems — will be crucial.

Yet the complex web of electricity reforms required highlights this issue: neither blindly hanging on to the political status quo or assuming that what comes next is more of the same will solve the problem when you have run out of road.

 Attard Montalto leads on markets, political economy and the just energy transition at Intellidex, an SA research-led consulting company. This article first appeared in Business Day.