A lot has been written about the escalating electricity prices in South Africa. 278% price increases in the past ten years and a request for 15% price increase per year in the coming 3 years are astonishing.
Multiple analysts have pointed to partial explanations. The rapid growth of the workforce without a growth in output. Wages outpacing inflation. And of course, all the negative implications of State Capture.
Sources: Eskom Tariffs & Charges 2018/2019 and Eskom Tariff History
In this article in Business Day Gavin Keeton points to another root cause. A cause that is much harder to fix than the factors mentioned before. He explains how the cheap prices of the past were built on power plants constructed right next to high quality, easily accessed coal reserves. The resulting low input costs drove low prices, but those coal deposits are now depleted. Which means that whatever Eskom management will do to cut its operational costs, it will be stuck with lower quality coal at much higher costs.
That structural problem cannot be managed away, making coal a structurally more expensive source of power. Businesses depend on cheap power and have to look for cheaper alternatives, preferably those available from renewable energy sources.
It is exactly why Sosimple Energy provides such a cheaper, cleaner, no investment, no hassle alternative.