Smart cities

Digitalisation is impacting the entire energy system and in recognition of this revolution, the 2019 AMEU Convention provided a platform to address the effects of the fourth industrial revolution (4IR) and build the municipal power utility of the future, today.

This article first appeared in ESI Africa Issue 5-2019.
Read the full digimag here or subscribe to receive a print copy here

We aren’t likely to see cyborgs doing jobs at our municipalities anytime soon, but we are going to experience a shift in the importance of data and digital skills as the 4IR and energy revolution unfolds. This is already underway as there is a growing public outcry around poor municipal performance – Joe and Jane Public are no longer captive customers as the 4IR has given them options. These choices are increasing their expectations of service delivery from their municipal power utility.

It’s a reality faced by municipal managers who for decades have operated within the confines of strict regulatory frameworks, but now find themselves in a quandary as distributed energy resources challenge the grid. This is the message from the AMEU president, Refilwe Mokgosi, during the opening of the association’s 27th annual convention, which sought to provide the municipal market with clarity on how to build the power utility of the future, today.

Poor municipal performance was a message echoed by Ayanda Noah, a former Eskom employee, during the keynote panel discussion, which unpacked whether we are ‘fit’ to face the future. Noah recalled a personal story that many South Africans can relate to – a complete lack of customer centricity and a missed opportunity by a local municipal office to use a readily available digital solution such as an EFT payment.

Since municipalities have little control over the steep tariffs from Eskom, they must address managing their cost-reflective tariffs through the power of engaging with customers. Preparing municipalities for the 4IR need not be daunting. Just because the 4IR is about going ‘smart’ doesn’t make it any different from how you would implement a traditional ‘non-smart’ project. Start by applying a small pilot project to establish a business case and proof of concept to secure the finance needed to expand the project.

Value of embedded generation in municipal budgets

“Studies show that 97% of photovoltaic solar power is generated between 9am and 6pm. This is also the time when municipalities could recoup their losses and represents up to 60% of profit loss,” states the winner of best paper at the AMEU convention, Poonam Lutchman.

The award-winning paper on Incorporating embedded generation into municipal networks unpacked ways to reduce the financial impact caused by privately owned microgrids and generate sustainable revenue in the process. Lutchman, the digital solution architect at Schneider Electric, explained: “The problem becomes more acute when ‘losses’ during peak times are not fully recovered from the sale of electricity during off-peak and standard times. Higher flat-rate residential tariffs mean that South Africans have to save electricity where they can. However, they save during standard and off-peak times, which is where the surpluses are generated.”

According to Lutchman, residents and businesses paying the highest block tariffs are looking to move to solar water geysers and embedded generation (largely installing PV panels). Yet, during the early mornings and evenings (peaks), these customers are still drawing electricity from the grid, which makes them increasingly less profitable. Municipalities are not able to fully recover their position due to the flat tariff imposed on these customers.

Currently, residential and commercial consumers with PV or other alternative forms of energy do not pay fully for their share of the system’s fixed costs. [Ed: refer to page 54 for more on embedded generation in the C&I market] This shifts the burden to households without PV systems, she emphasised, and added: “In South Africa, municipalities around the country are also challenging the ‘single buyer’ model, which restricts the purchase and sale of electricity to Eskom. They intend to purchase electricity directly from independent power producers.”

The 4IR presents multiple opportunities

During the AMEU keynote session and welcoming the delegates to the City of Cape Town, Councillor Phindile Maxiti noted: “South Africa is currently grappling with energy shortages and this poses a threat to its own economy if not dealt with urgently.” He acknowledged that the City is looking into innovative smart technologies including SSEG to boost energy supply. “With the pool of IPPs, the City believes this is another way to solve the country’s energy crisis,” he said.

Also speaking at the opening of the Convention, SALGA CEO Xolile George stressed that in order to move in a more balanced manner, the “4IR must find us ready”. He also revealed that government is working on a diagnostic report to guide the country in the shift towards the 4IR and highlighted some of the opportunities this shift presents, including:

• Development of business models: making services relevant.

• Re-skilling existing personnel: the importance of measuring new jobs presented by the revolution.

• Understanding demand response: according to George this will increase the quality of services.

• Achieving reliable energy supply: he noted that this can be achieved by using digital enablers such as IoT.

In conclusion, what you as a municipality are aiming for is to make your services relevant in today’s world of Mr and Ms Smart Public. It will be necessary to reskill your personnel to increase the quality and reliability of your service offering.

This can be achieved through using your data to know more about your customer, their supply (small-scale embedded generation) and demand (when, where and how – such as a new school with an IT department or an EV charging station). This also raises the question of what does your customer need – electricity or energy?

The immediate ‘cyborg’ for municipalities to watch out for is big data. Don’t become a slave to your data but rather put your data to good use to stay ahead of your customer’s expectations and relevant in tomorrow’s energy market. ESI

This article first appeared in ESI Africa Issue 5-2019.
Read the full digimag here or subscribe to receive a print copy here