Are municipalities ready to flip
Three-day summit worked towards practical solutions to energy crisis
The current electricity supply and distribution industry does not serve as a viable option for local government and society as a whole. The electricity sector is undergoing changes worldwide and it is evident that the traditional model is not sufficient to handle this transition.
Embracing change is vital if the energy sector is to survive within South Africa and continue as a global player. This and many other notable challenges emerged during the three-day Salga Energy Summit held at the Sandton Convention Centre from March 7-9 2018.
The South African Local Government Association (Salga) summit comes on the back of the energy crisis unfolding in the country. The transitions and disruptions occurring within the energy sector have raised many alarms. The theme “Defining the Energy Future for Local Government in South Africa” served to focus the topics of discussion. Current energy landscapes were outlined as well as challenges that exist.
Government, industry experts and civil society attended the three-day summit with the aim of working towards practical solutions for all. The summit aimed to facilitate important conversations around the energy future for local governments in South Africa.
Gauteng Premier David Makhura, Minister of Co-operative Governance and Traditional Affairs Zweli Mkhize and Thandi Modise, Chairperson of the National Council of Provinces made keynote addresses, stating that national and provincial government are willing to work alongside other stakeholders and engage in the outcomes of what was discussed at the summit to ensure a smoother transition for all.
Action plan
Salga president Parks Tau said: “The expectation of the summit was that we would be able to come out of here with an action plan of what needs to be done by ourselves as local government. But also, what are the critical policy issues that require attention from national and provincial governments? Those expectations have been met.”
The summit focused on three themes that invoked lengthy discussions by energy sector leaders. The themes were: megatrends within the sector that will serve as catalysts for change; reviewing the sector’s legislative framework and policies; and lastly, the opportunities arising in the sector that may benefit everyone in the future.
“The reality is that local government and the energy sector have been going through a transition for some time. We are not talking about a sustainable energy transition, but it has been ongoing and we need to be responsive to the realities of the transition, and that transition means more decentralised distribution systems for electricity,” noted Tau.
Various breakaways sessions were held over the three days to address areas of concern, with industry experts providing their views and analysis. The Grand Political Debate served as the starting point for discussions that unfolded at the summit, with a panel comprising: Thembi Nkadimeng, executive mayor of Polokwane; Xola Pakati, executive mayor of Buffalo City, Eskom board member Jacky Molisane and Kumi Naidoo, secretary general of Amnesty International.
The South African energy sector landscape was unpacked by Nelisiwe Magubane, former director general of the department of energy and Eskom board member. Her address provided an overview of the South African energy sector landscape: the status quo, complexities, challenges and opportunities.
New opportunities
It emerged during the summit that transformation of the industry must be inclusive and drive economic growth, social development and innovation. New opportunities were highlighted, including alternative renewable energy services, power trading, the installation of smart and prepaid meters and encouraging small-scale embedded power generation in households and municipalities.
Hilton Trollip from the the Energy Research Centre at the University of Cape Town unpacked resisting or embracing energy transitions and what the implications would be for South Africa. Examining the rapid trends occurring globally as well as within South Africa, some critical implications have emerged. He explained that if South Africa decides to resist the changes and maintain the status quo, it would lose out badly. On the other hand, embracing the change could see radical new business ventures emerge.
Municipalities continue to bear the majority of the weight regarding challenges faced within the energy sector. With the introduction of renewable energy options, current operating business models will have to be remodeled to stay abreast of global trends. The traditional use of kilowatt-perhour sales will not work, and will severely
affect income generation. New ways of cost and tariff determination were eventually proposed as a solution, with a key focus on infrastructure maintenance and electricity distribution.
It emerged that constant threats to the energy supply also dampen investor confidence. Eskom, the country’s major power utility, has managed to stabilise the capacity of electricity generation through the introduction of its additional Independent Power Plant Producers as well as building two new coal plants to meet the current demand and prevent load shedding.
Sharing distribution
This has, however, created its own set of woes. Eskom has been criticised for being responsible for the majority of power generation and transmission, and not sharing distribution among municipalities. The monopoly Eskom has within the energy sector leaves many disgruntled players along the value chain, directly affecting municipalities and their ability to provide effective services.
The need to re-examine at the role of the national power utility on the value chain saw Eskom come under fire from some of those attending the summit. The need for collaboration between all stakeholders was the general consensus arrived at.
“We need to rethink the way we work. People are thinking of really innovative solutions that we can introduce that will still ensure that municipalities play their role, and that they continue to generate enough revenue for them to maintain their other responsibilities,” said Tau.
Trollip highlighted some of the global trends emerging within the energy sector. These include renewable energy, disgitisation and the use of internet technology, which will all play key roles in transforming power grids. There are also logistical changes, including how electricity is transported as the process of demand and supply occurs. Digitisation will support decentralisation and managing interactive electricity systems.
The shift from centralised generation and distribution monopolies to more distributed, user-engaged digitally integrated energy systems needs to be managed and implemented as smoothly as possible. The way in which the energy sector functions will inevitably have to change and government will have to assist on various levels. Many questioned government’s ability to do so.
Rethinking the game plan
Trollip also noted that the role of new technological advancements will have to be integrated, which changes the model of how energy is obtained, sold and distributed at large. The global competitiveness surrounding technology and its usage also emerged as a factor for South Africa to consider, as solar photovoltaic (PV) and wind
“New technological advancements will have to be integrated, which changes the model of how energy is obtained, sold and distributed”