Renewables Will Soon Be Cheaper Than Eskom Power

Without decisive intervention, Eskom’s unsustainable debt levels will plunge the entire economy into darkness. But the rising prominence of renewable energy is providing hope.

- Denene Erasmus

Despite a more than 500% increase in tariffs since 2007, Eskom is not generating enough cash to service principle and interest payments on its massive debt burden, which has increased to around R440 billion this year.

Speaking at a renewable energy event hosted by Absa in Paarl recently, Anton Eberhard, professor emeritus at the University of Cape Town, who serves on a government task force charged with advising on a rescue plan for Eskom, said the utility was effectively insolvent and would post a record loss of about R25 billion for the 2019 financial year.

Some of the main causes for the perilous financial position Eskom found itself in were “massive time and cost overruns at new mega coal power stations, Medupi and Kusile, ballooning coal contracting and payroll costs, and municipal electricity debt arrears”. According to Eberhard, this now amounted to more than R36 billion and was increasing by as much R1 billion per month.

FROM BAD TO WORSE