SOUTH Africa must create a coherent energy policy or it will continue to struggle to rely on power utility Eskom and millions of South Africans will remain in energy poverty, World Energy Council head Christoph Frei said on Tuesday.

"South Africans have moved too slowly with respect to renewable energy projects. This country needs to create a single policy on energy. You cannot be focused on bringing energy to the poor and then also have very expensive technologies which you are experimenting with and then be building coal power stations too," Mr Frei, a key speaker at the Africa Energy Indaba, said.

South Africa slipped two places to 57 out of 93 members on the World Energy Council’s 2012 Energy Sustainability Index, weighed down by a sharp drop in energy security.

In the Council’s World Energy Trilemma report, a drop in the wholesale margin on liquid fuel and weak performance on the diversification of electricity production was reported in South Africa.

Eskom has called for average annual 16% increases in electricity over the next five years, to fund its debt while it builds coal power stations in South Africa. This has threatened the sustainability of business in South Africa. There have been calls for independent power producers and renewable energy projects. Eskom has argued that once infrastructure had been developed it would be able to transport coal at a lower cost and ultimately charge consumers less for electricity.

Brian Statham, chairman of the South African National Energy Association and the World Economic Council’s Studies Portfolio, said South Africans had been slow to create renewable energy businesses because it had been difficult to compete against low electricity prices.

"Electricity was cheap here for many years so there was not much incentive to open businesses creating power that were not coal-based. But in the last few years, the private sector has become involved in renewable energy because companies like Eskom have not been able to serve everyone," he said.

However, Mr Statham said there was still too much reluctance at a national level to extend the power grids of South Africa deeper into rural areas.

"We cannot have 25% of our population sitting in energy poverty. We have to make changes and quickly," he said.

The indaba continues until Thursday.