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Consumers will eventually produce their own power - PwC

Apr 23 2015 06:15

Johannesburg - Consumers in the future will likely produce their own power to the point of self-sufficiency, PricewaterhouseCoopers (PwC) said on Wednesday.

Angeli Hoekstra, PwC's power and utilities leader for Africa, told journalists in Johannesburg: "In Africa specifically we have stranded [power generation] assets because we haven't done our maintenance.

"Government haven't spent on new capacity to get it online in time...and that results in an increase in cost as you have more maintenance to do [and] you have less electricity to sell. It's a vicious cycle."

She was speaking to journalists at the release of PwC's The road ahead: gaining momentum from energy transformation report.

The power generation market was going through fundamental change, with there being a drop in the value offered by large fossil fuel power generation. Renewable energy was where current and future value was being created. Coal power plants for example used lots of water, but like other parts of the world, Africa by around 2025 would be suffering from water scarcity problems.

In the end, consumers would produce their own power if they did not receive it from utility companies, as the vertically integrated power generation model that exists on the African continent, and elsewhere in the world, changes to a more network type model.

This would be aided by advances in technology, both in terms of electricity generation through renewable energy. Also, smart meter technologies would help differentiate between paying and non-paying customers, and regulate efficient energy usage. 

‘Embrace forces of change’

In the South African context, new businesses were already being established that focused on providing power to consumers, efficient energy usage, and supplying power back to Eskom.

"Customer collections, we are in a difficult situation because the power utilities are government owned, so what are you going to do, or look at a different type of method to increase customer collection?" she said.

"In an African context, government needs to look at how it can embrace the forces of change, such as what type of new businesses should [they] support so that new value could be created within the electricity value chain."

South Africa for example had specific peak demands times. If it was known that electricity was very expensive during that time and that would start changing the way people used electricity at those times.

There was also a lot of standby generation in Africa as businesses had built their own generation capacity, so a model that could be pursued would be one where businesses fed excess energy back into the grid for others to use.

"For example, setting up a solar park next to a new housing development, and the people in that housing development, they are the shareholders in that solar park... That is a new type of business model that can be established," Hoekstra said.

"So what really needs to happen in the African context is that everyone really needs to work together," from government, to regulators, consumers and business.

She said South Africa had something to be proud of, in that the country had the highest electrification rate in Africa, comparable to the United States and Europe.

"We are just running out of electricity supply because we didn't plan well enough ahead."

However, while Africa and South Africa may be behind in terms of the changing world of power generation, this offered an opportunity since it could be seen what worked and did not work elsewhere around the world, and from there, apply the relevant lessons to the specific market.

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pwc  |  energy crisis  |  power generation
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