7 December 2012 – South Africa is caught in the middle of an energy balancing act, where reserve margins are low, compared to the global recommended level of 15%. This low margin is due to energy supply not meeting energy demand. The situation of uncertain energy security is driving industry to find alternative energy sources, to maintain and enhance competitiveness.

Analysis from Frost & Sullivan finds that the renewable energy landscape, specifically wind turbine and solar photovoltaic (PV) technologies, are becoming more affordable when compared to rising fossil fuel costs. Generators are also playing an increasing role in the advancement of energy security, especially for smaller- and medium-sized industries.

“The load shedding experienced in South Africa in 2007/2008 is still fresh in the minds of industry, as well as the estimated R50 billion losses suffered by the economy,” notes Frost & Sullivan’s team leader for energy and power, Johan Muller. “A potential repeat of the load shedding situation has been the major driver in the pursuit and installation of alternative energy sources.”

Until the new power stations of Medupi and Kusile come online, the industry will be very aware of energy consumption activities, while continuing to invest in alternative energy options on a case-by-case basis. Demand side management will also promote energy efficiency initiatives.

One of the biggest challenges will be the pioneering status of alternative energy initiatives in South Africa. Many, if not all, are greenfield projects such as concentrated solar power (CSP) projects, solar PV farms and wind farms. Therefore, teething problems in the form of policy development, obtaining financing and grid-connection are expected.

“Furthermore, South Africa has a strong legacy of coal usage,” cautions Muller. “Industry participants, therefore, need to investigate alternatives to coal, by not accepting the status quo (coal-fired power plants) as the only option. As with any move towards a new technology direction, there is a learning period which needs to be factored in.”

Participants also need to cultivate a more in-depth understanding of their business and industry, as well as of associated supply chains.“Industries, especially at the second and third tier, are often not sufficiently informed about issues and opportunities related to their own energy consumption and efficiency,” concludes Muller. “They need to essentially identify where they can include alternatives to being connected to the grid, and whether it is beneficial from a cost perspective.”