HomeRegional NewsAfricaDon’t be caught off guard by unsettling market conditions

Don’t be caught off guard by unsettling market conditions

Be prepared for an increase in power failures on national grids – in their current format – and the stretching of utility resources as demand for electricity continues to climb in a market reluctantly being reshaped by fourth industrial revolution drivers, says Morné Bosch, general manager at ArmCoil, speaking with ESI Africa.

This article first appeared in ESI-Africa Edition 5, 2018. You can read the magazine’s articles here or subscribe here to receive a print copy.

Operating in a highly-regulated market has worked thus far for national electricity grids; however, the stability that this afforded to the generation of energy and the supply and demand management of power can no longer be relied on – and the market finds itself ill-prepared for an influx of innovation challenging the status quo.

Now competing with independent power producers (IPPs) and the demands made by a growing prosumer customer universe, national grid operators and utility service providers such as municipalities, metros and counties find themselves outmanoeuvred.

Even in regions where IPP tenders are not allocated, developers are building micro-solar farms and installing backup generation solutions. The prospect of an intensive prosumer group manifesting whereby solar farms are procured at a set price, for a specified MWh output, and delivered with a maintenance plan for the facility is not a far-fetch idea and already exists in some places. Imagine the possibilities that this trend can deliver on an entrepreneurial level.

The return on investments on these facilities will be outstanding, says Bosch, adding: “An aggressive shift towards large power users – and the residential market – going off-grid is about to happen, which no amount of regulation will be able to hold back for much longer.” He is steadfast in his conviction that the fourth industrial revolution is changing the world as we know it: “Instead of paying a state-owned power utility (such as Eskom) or municipal bill, in the near future consumers are going to connect to small or large privately-owned solar farms in their immediate vicinity and pay the micro-IPP directly.”

The private consumer, who will not necessarily be a prosumer, can look forward to an ensemble of energy efficient products released into the market. The push here is interestingly from government regulation requiring equipment to be labelled with accurate and comparable information on the products’ energy efficiency level.

A key sector in Africa’s economy, the mining industry, requires huge amounts of diesel to keep their large vehicles operating at maximum output – here, according to Bosch, lies another efficiency opportunity. “The mining sector is conscientious about having to reduce its diesel consumption and effectively reduce its carbon footprint. This is motivating a switch to fixed electricity networks, which could also result in a reduction of productivity expenses.”

The labour workforce is no different as innovative trends affect how human resources are used. “The reality is that digitalisation and technology advancements will change the workforce as well. We are already seeing how equipment can be operated remotely, thereby increasing safety standards and optimising production.” However, Bosch is confident that this in turn allows for new skills to be developed by the existing labour market.

He advises that, for utilities, this trend will eventually see substations managed remotely and privately. Bosch confidently shared a vision of the future where this can no longer remain the sole remit of local government in the long term. “There will be a massive decrease in maintenance costs since personnel need not visit regularly to check on transformers as this will be monitored remotely. It’s already happening at mining sites where sensors equipped with a live feed provide operators with a view of the electricity current flow every hour.”

These technology and energy efficiency trends are impacting on the liability and costs of companies and utilities. Bosch notes that technology is always being improved on and initially these innovations prove expensive to introduce to the market. It is here that the early adopters benefit the most since operations and maintenance costs decrease in the long term.

In terms of reliability, having operated in this market for six years, ArmCoil’s general manager has witnessed the results of equipment neglect, which may or may not be on purpose. Without the use of digitalisation, it could take 30 minutes or more for an operator to check on a transformer in a remote location. However, when managed through an off-site maintenance programme, with heat sensors, oil floating sensors, and cooling sensors, “the level and variety of protection involved in these substations is substantial”.

These programmes operate continuously, with a high level of accuracy increasing reliability; however, Bosch warns that nothing can replace years of maintenance employees’ know-how. Incorporating this knowledge with new data analytic skills will be essential in the utility space. “This is already happening in the mobile telephony and digital television space. It’s unfortunate that the utility industry is lagging behind in this regard.”

Bosch is not surprised that utilities and municipalities appear to be impeded by government policy when it comes to pursuing technology trends since “governments’ main concern is to keep the lights on and the health and wealth of its citizens”. For example, government departments and state-owned entities are usually the biggest employers of a country, and many are deemed to be overstaffed. “If they implement technological advancements, many current job roles will become redundant and job cuts will ensue. Digitalisation will also result in cost savings on employee benefits.”

However, Bosch concurs that government is not the only employer battling with this double-edged blade. “At ArmCoil, the company is committed to keeping pace with industry trends and norms in terms of decreasing manufacturing and maintenance costs and increasing output by purchasing new equipment and machines.”

The company has undertaken to use digitalisation in their design projects. This increases the quality and reliability of the design, and reduces costs for the client, but has negatively impacted on staff complement. However, ArmCoil remains committed to training people in the private sector and at utilities – especially on transformer and motor maintenance.

“Utilities must take up programmes to enhance skills transfer from their long-service engineers to young market entrants.” This, along with introducing digital solutions to every aspect of the electricity value chain, will position all stakeholders on solid ground to withstand the current unsettling market conditions. ESI

This article first appeared in ESI-Africa Edition 5, 2018. You can read the magazine’s articles here or subscribe here to receive a print copy.

About the company

Established in 2002, ArmCoil – a Level 2 BBBEE company – is a leading supplier and repairer of transformers and electric motors offering its own proudly South African brand, ACEM, along with a diverse set of products and services: manufacture, installation, commission, repair and maintenance in accordance with ISO 9001 (quality) and IS0 14001 (environmental) procedures. www.armcoil.co.za | morneb@armcoil.co.za


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