Monday, 21 May 2012

Government has become big business and has lost its way


Government has become big business and has lost its way


Many governments of the world are reducing Feed In Tariffs (FITs) as fast as possible as they see their electricity revenue streams possibly diminishing, or maybe as they start running out of money. However, this is a myopic view and those countries that keep FITs going will reap the rewards as their economies grow and their tax base increases. Note that South Africa doesn't need FITs as we have already reached Grid Parity, i.e. the price where consumers can make electricity at the same price that we can buy it. Only two things are missing in South Africa: deregulation and Net Metering. With Net Metering, the consumer gets paid the same price for electricity we sell to the grid as for electricity we buy from the grid. With deregulation, protectionist laws are removed and the paying field is leveled.

The governments of the world are removing themselves from the mainstream 21st Century technologies on a daily basis.

The reason is simple: government has become big business.

Government used to be able to provide goods and services cheaper than the individual homeowner, but those days are over. Just as the railways had to adapt when cars arrived, and just as the shipping industry had to adapt when it moved from coal to oil 100 years ago (started by a UK government official named Winston Churchill when he was Lord of the Admiralty), so the governments of the world will have to adapt.

Winston Churchill was heavily opposed by the thousands of stevedores who moved the coal around in the bottom of the ships and on land - as, with oil, one flicked a switch or moved a lever and oil flowed - but Lord Churchill's vision was the huge growth that oil would enable - and now we need a leader with this vision to enable Renewable Energy (RE) growth - the main leader the world had died last year. His name was Dr Hermann Scheer and he introduced FITs in Germany in 1991.

The RE growth is the enabler for the economy. Electricity is not the economy. Just like labour and resources are not the economy. It is the putting together of the enabling "levers" where government should be playing a role in the modern economy.

Dr Scheer looked 25 years into the future and saw massive constraints in the coal and oil industries. These constraints would cause huge price increases, environmental destruction, water scarcity, and potentially the world's biggest war, and Dr Scheer knew that an incentive program was required to get industry and research and development institutions working towards an alternative. His vision has seen a 90% reduction in Solar Photovoltaic (PV) prices over the past 20 years. In the past 5 years in South Africa, prices have dropped 80% and at the same time our electricity prices have increased 150%.

If we carry on on our current path, we will run out of coal and oil by 2050, but the sun will continue shining for billions of years.

The abolition of slave trade in Britain in the early 1800's led to the establishment of the railway industry. Would governments rather that we have slavery? Actually the modern electrical system is a form of slavery where people pay exorbitant prices for their electricity. The same with water, rates, roads that are being tolled, etc.

The main thing in my eyes is that governments have forgotten their role.

Government's role should be an enabler to get business going, and thereby employment, education, medicine, etc, could be paid by the employee rather than by the overweight state.

Humans, as opposed to slaves, need cheap, reliable, environmentally friendly, resource provision, to enable the economy to grow cheaply, affordably and sustainably. Governments, as big business, can either fall over and cry and create self protectionist "laws" which will eventually lead to civil wars, and thereby be left behind, or they can fulfill their ancient mandate.

Ke nako,
David Lipschitz

Saturday, 19 May 2012