In October, the then president of the Association of Municipal Electrical Utilities, Sicelo Xulu, warmly welcomed attendees to the 65th Convention of the association hosted by Emfuleni Local Municipality. Before handing over the reins to the current president, Moferefere Tshabalala [refer to page 50 for the exclusive interview with Tshabalala – Ed], Xulu introduced the focus of the 2016 convention, Electricity: Landscape of the Future.
Attendees at this year’s event eagerly awaited the start of the sessions, which would address new models for municipal electricity utilities, the role of women in electricity, asset management and industry governance and regulation over three days of intense sessions.
The main objective set out for attendees was to use the information delivered by expert speakers and panellists to understand the electricity landscape and how its current trajectory is impacting municipal service delivery. ESI Africa took the opportunity to unearth some of the important messaging delivered by the panellists and speakers.
During the Women in Electricity debate, panellists also shared commentary on various topics: including how the consumer is becoming the commodity, the role of ICT in finance, asset management and the maintenance backlog, new operating models and the skills set that will be needed for this transformation, different views on partnerships for recruitment and retention techniques, and tariff structures.
Sy Gourrah, General Manager at Actom Power Systems, shared her insight from the panel discussion on what these topics, which are challenging the ‘business as usual’ model, mean for municipalities.
Gourrah explained that the generation efficiency estimate suggests that electricity demand is growing by 1% while the South African economy is on a growth path of 2% of GDP despite the fact that demand for energy has flattened over the period since the global financial crisis – this is a product of low growth and limited supply due to significant energy savings.
Sustained economic growth recovery will require expanded generating capacity. If demand for electricity increases at 3% per annum and coincides with an average GDP growth around 4% per annum by 2018-2020, we would exhaust all available capacity; and by 2024 we would face a shortfall of several thousand megawatts.
If the country were to grow in a predominantly industrial, commodities and manufacturing direction then pressure on the grid would be even greater. Municipalities and state-owned power utility Eskom are uniquely unprepared for the future. It is more risky to hold onto the legacy energy system than to adapt and change the electricity system.
Backlog of maintenance by the municipalities is huge and even if we were given the resources, financially the electricity supply industry would have challenges such as:
Neli Magubane, chairperson of Matleng Energy Solutions, added her views on the important take-home message for the utility sector in view of the work that lies ahead for electricity professionals over the next 12 months.
The majority of the presentations focused on the fact that the energy business landscape is experiencing a ‘major disruption’. Gone are the days when municipal distributors simply bought power from Eskom, put a markup on the wholesale price and resold it to consumers. All that municipal distributors needed to do was to ensure an uninterrupted supply and a robust maintenance programme.
This is no longer the case; now rooftop solar installations, selfgeneration, gas use for thermal energy needs and a sophisticated ICT rollout have to be taken into consideration. All these interventions have seen the decrease of the energy business of municipal distributors. At the AMEU, one of the managing directors of a municipal electricity business lamented the fact that the kilowatt hour tariff had gone up and his business was now selling less kilowatt hours.
This means a tipping point has been reached, where electricity consumers are beginning to look elsewhere for their electricity needs while using the municipal distributors as back up. This suggests that the municipal distributors need to manage the business differently and to review their current business model in the next 12 months if they want their energy business to be sustainable.
According to Magubane, the highlight of the Women in Electricity panel discussion on the Evolution of Women in the Electricity Landscape of the Future was the journey travelled by women in the electricity sector. This journey included changing the way things were done in the sector. The struggle that women have undergone to ensure that the sector is inclusive was a further point of discussion. The panel also explored some of the more nuanced discussion around the issue of the gender pay gap.
Of late, a recurring theme at annual conventions has been around embedded generation: ESI Africa asked Rachel Seabela, general manager at City Power, whether the AMEU regards this as a threat or opportunity, and how it is driving the electricity landscape of the future.
Seabela stated that the electricity industry is experiencing significant growth in the connection of embedded generation, in particular from renewable energy sources. This is why the AMEU sees it more as an opportunity than a threat as it will assist with balancing the load.
To this end, embedded generation has a great impact on the electricity landscape of the future as it will contribute to how utilities and private businesses alike will service their customers, conduct their planning processes, utilise technology and develop skill sets. These will have to be adapted to accommodate new ways of engaging the grid and customers. This presents great opportunities and challenges and will require groupings like the AMEU Women in Electricity (WiE) to influence future policies in the industry.
Lastly, ESI Africa asked Yolanda Ngalwana Mabuto – formerly in Eskom Western Cape’s Operating Unit – from the well-attended 2016 AMEU session, which ones stood out for her personally. She thought that the Women in Electricity session was one of the popular discussions possibly because it touched on enabling women participation to grow the economy.
Other topics that generated considerable debate were smart grids [refer to page 14 for an article on The Power of Smart Grid Technology from the AUTC – Ed], embedded generation, nuclear power generation and the panel discussion on the Partnership between Industry and Municipalities to ensure high level of service delivery. ESI