Owning our energy future

July 11th, 2014, Published in Articles: EE Publishers, Articles: Energize, Featured: EE Publishers


At a recent conference in Cape Town I was asked to address the load shedding of 6 March this year and the dire consequences for the South African economy and investor confidence. My response was that there are two ways we can view the South African power sector. On the one hand you could consider the almost half a trillion rand being invested in the sector over the next five years (a lot of it foreign funds invested in renewables projects) as the biggest inward investment ever, a massive vote of confidence in our economy and the foundation of our future growth. On the other hand you could view 14 hours of load shedding in six years as a sign of doom and gloom and a precursor of more of the same.  Which do you choose?

eskom-lennon006 (2) - portraitUnfortunately too many South Africans choose the latter. In particular the so-called expert commentators are too quick to bemoan our fate and suggest that an incompetent power sector is the root cause of the majority of South Africa’s economic ills now and into the future. The reality is somewhat different. Yes we do have a constrained power system, but we have become very good at managing a tight system with aging assets and powering a growing economy, whilst building new assets at an unprecedented scale.

I believe we need a new mind-set in South Africa when it comes to the power sector. If our NDP growth aspirations are to be realised this will be essential, as a tight supply/demand balance could be a continual feature of a dynamic and growing economy. Either we can see this as a limitation to growth or we can rise to the occasion and ensure that growth is unhindered by any resource limitations – including the energy resource.

There are those who will say that growth is a function of available energy supply. Well, if that is the case, then how is it that there are several nations, most notably India and China, which have been able to produce growth close to double figures over a sustained period in the face of power constraints far greater than those faced in South Africa? I think it is time for us to rise to the occasion, to bring the inherent innovation that I believe is in all of us into play and stop looking for excuses as to why we will not succeed.

Let’s rather see how we can succeed in the face of the challenges we face. I agree those challenges should not be taken lightly. In the power sector each challenge, taken in isolation, is enormously daunting. Collectively they can be contradictory and seemingly overwhelming. For example how do we keep the lights on whilst keeping tariffs down, growing the economy, protecting the poor, maintaining aging plant, meeting environmental, social and economic empowerment imperatives and building new capacity in the face of massive capital constraints? The fact is that we are doing this virtually every day – but we have to do more if we are to become the sustainable and globally competitive nation we all strive for.

The South African power sector has a long and proud history of innovation. This nation brought dry-cooling at scale to the world. We led the game in the use of high altitude, high voltage transmission infrastructure and at one stage our electrification programme was the biggest and most effective in the world. We continue to show we can innovate. We see this in the world’s largest dry-cooled power stations, Medupi and Kusile, a leading conservation effort at Ingula and one of the world’s most successful energy efficiency programmes.

In rising to the challenge of growing our economy beyond current projections, we need to consider the opportunities facing us. In addition to the obvious ones inherent in the current investment programme, we need to be aware that the power sector’s technological base is on the brink of a fundamental change. This is driven by the emergence of renewable and low resource intensity supply and demand technologies which are increasingly competing with the current asset base of the industry. When coupled with the as yet untapped potential in smart grid technologies and emergent low cost, high efficiency storage technologies, it is clear that the conventional utility business model will change dramatically over the next 20 – 50 years. We need to prepare for this future as we grow our economy. This means more investment in research and development and identifying those niche technologies which we can build on in order to position us competitively.

The bottom line is that the South African power sector is more than capable of powering our collective future, of harnessing our inherent innovation in taking our economy, society and environment to new heights – we just need to have more confidence in our ability to do it!

Send your comments to: energize@ee.co.za

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