Rethinking SA's energy model

“IPPs are going to become bigger and they will claim a larger portion of the South African market. Our energy world will change fundamentally as a result, says Brian Statham, chairperson of the SA National Energy Association (SANEA).

Brian Statham

The new energy era will require a restructured set of competencies and negotiation skills with role players, such as lawyers involved in energy contracts. “We will have to look at things differently. Eskom’s performance will then be measured against independent, objective measures, let’s give it the benefit of the doubt, it may even do well.”

Power transmission

With regard to power transmission, Statham points out that the shape of the grid is changing. The participation of IPPs will assure that areas not previously served by Eskom, will now have access to electricity. “Sizing may be a problem. The transmitter system was designed with certain power flow assumptions and we could now face congestion. The system will be much more complex to manage from a grid management point of view.”

At the same time, power distribution would be under severe pressure, as it “is falling apart, and with municipalities struggling for funding, this may become a major issue in future against the backdrop of unrest about service delivery.”

Opportunities for micro-grids

Security of supply and pricing concerns may lead to grid defections, Statham believes. People who opt to go off grid will not contribute to the distribution system but because the system is still there, the consumer who is still using it will have to pay more. It will also be difficult to fund subsidies for people who can’t afford electricity or people who do not have any connection.

Statham points out that about 20% of South Africans are still without electricity. “The problem is that, to extend the system for 50-100km to service a mere 50 to 100 units, will not work. But this presents opportunities for micro- and mini-grids and scope for entrepreneurs, especially in the renewals market.

What the future looks like

As far as the future is concerned, Statham believes that South Africa needs to prioritise energy “equity” rather energy “sustainability”. He also believes that service delivery will be an issue of general dissatisfaction. Instability and lack of policy clarity will deter private and foreign investment and all sectors will be vulnerable.

“South Africa’s transport system, both road and rail, is vulnerable to liquid fuel sector problems and gas is a long way off. Grid defections are going to increase the problems. Many people favour the idea of going off the grid, as a community or as a business. The question is how sustainable this is if the rest of the value chain collapses. It will not help you to produce of the grid when there is no diesel to transport your product to the market.”

He warns that South Africa faces some very difficult policy decisions about energy. “There is no clear direction or strategy. We will have to look at what the future role of coal is going to be in our energy mix. What is going to be the source of our liquid fuels? Are we going to upgrade our refineries or are we going to totally rely on imports? Are we going to promote natural gas and develop the required infrastructure? Are we going to have blending energy systems?”

South Africa will have to find ways to involve the private sector and there is a need for serious engagement with government. We will also have to find environmental pathways, he concludes.