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Energy market reforms: Natural evolution or necessary policy change?

The energy sector keeps evolving not only from a fuel mix point of view but in recent times, more importantly, the market structure and characteristics play a crucial role in its sustainable future operations.

Speaking at the South African Association for Energy Economics (SAAEE) 2021 Symposium, Profs James Smith and Yukari Yamashita, representing the International Association for Energy Economics (IAEE), stressed in their opening keynote speeches the international nature of the challenge of market reform.

In theory, liberalisation of energy markets and a transition to a more competitive market environment is considered the only way forward, particularly for South Africa.

More competitive markets in all aspects of the energy sector have the potential to encourage investment and promote efficiency, at least in theory. There are signs of a second attempt at electricity supply industry reform with the publication of the ‘Roadmap for Eskom in a Reformed Electricity Supply Industry’ in 2019.

Similar signs are evident in the draft ‘Upstream Petroleum Resources Development Bill’ gazetted in 2019. But there are no similar signs in downstream markets concerning liquid fuels price regulation.

During the symposium, the effects of such changes in the status quo were discussed from various perspectives such as the regulation in petrol price and the potential price deregulation’s socio-political impact.

Guest speakers also discussed the responses of Small Medium and Micro Enterprises (SMMEs) to these changes with regards to their financial sustainability and opportunity, and the change in the power dynamics of the stakeholders between municipalities, national departments and the state utilities in the distribution and generation of electricity.

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Energy market reforms “more complex than we think”

The symposium offered informative sessions for emerging researchers in the field, such as a panel discussion of high-profile editors of academic journals that shared their experiences on the research questions that trend recently in the literature and gave advice on how to get research work published.

Also, interesting sessions on how involvements in associations and organisations such as SAAEE, SANEA and BRICS YEA inspired the youth in making an impact through networking and collaboration, while the symposium closed with a session that included GIZ and Eskom young energy professionals sharing valuable lessons from their careers thus far.

The common thread in all the discussions is that the challenge of energy market reforms is more complex than we think.

Collaboration between academia, policymakers and industry is the only way forward starting with open discussions around a table and at the next level by evidence-informed policymaking aiming at long-term solutions with the ultimate purpose of sustainable socio-economic benefits instead of short-term gains and vote maximising goals.

Hosted in a virtual format in February 2021, the SAAEE conference brought together energy experts from academia, the industry and the public sector.

The symposium provided a platform to discuss the advantages and disadvantages of the liberalisation of energy markets in South Africa, the conditions for successful market reform and impacts on the energy sector, energy transition efforts, various economic sectors, and the economy and society in its entirety.

Nicolette Pombo-van Zyl
As the Editor of ESI Africa, my passion is on sustainability and placing African countries on the international stage. I take a keen interest in the trends shaping the power & water utility market along with the projects and local innovations making headline news. Watch my short weekly video on our YouTube channel ESIAfricaTV and speak with me on what has your attention.