Addressing the Energy Crisis in South Africa: Episode 3

It is possible to overcome the energy crisis in South Africa and build a sustainable energy future. Solutions do exist and some are leading the way. In this episode we first look at how the City of Ekurhuleni is dealing with the energy crisis whereafter we explore the Transformation of the Electricity Supply Industry in South Africa.

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Presented by Enpower Trading

The South African landscape and Electricity Supply Industry is changing rapidly, and as the market evolves, the incentive for municipalities to procure their own power becomes more evident.

Decarbonisation owing to climate change, is a key motivation to transition to green energy but as electricity costs accelerate and loadshedding increases, municipalities are forced to 'future-proof' their strategies in order to provide access to affordable, sustainable energy for all.

Episode Summary:

• 00:00:00 In this section, Hendrick Raedani, Divisional Head: Alternative and Renewable Energy - Energy Department at City of Ekurhuleni shares that the focus is on the City of Ekurhuleni's vision to secure affordable, green, and sustainable energy for all. The city aims to have 30-40% of its energy supply come from renewable sources by 2030 and increase this to around 50% by 2050. They have already appointed independent power users to sell clean energy to the city, totalling below 700 megawatts. By pursuing their sustainability goals and supporting industries in achieving their own renewable energy targets, the City of Ekurhuleni is taking steps towards a more sustainable future.
• 00:05:00 In this section, the municipality discusses its energy strategy in both the short and long term. In the short term, they focus on developing their own small-scale generation for internal use, such as installing solar panels on their buildings. This helps reduce their reliance on the grid and lower the demand for electricity. In the medium term, they plan to generate their own electricity to supply their customers. In the long term, the municipality aims to reduce their reliance on the national grid by appointing independent power producers and signing long-term power purchase agreements. By 2050, they aim to have 50% of their supply come from independent producers. To adapt to the changing environment, the municipality plans to position itself as a service provider and allow private companies to distribute energy through their grid. This will help the city remain sustainable and relevant.
• 00:10:00 In this section, Hendrick Raedani discusses the changes within the municipality to address the energy crisis in South Africa. They emphasize the importance of generating their own electricity and implementing energy efficiency initiatives. The municipality also aims to incorporate customers, including residential customers and businesses with embedded generation systems. They have created a framework to integrate these generators into the network and allow them to feed excess power onto the grid. Additionally, the municipality is open to private generators wheeling power across their grid and supplying it to end users. This approach aims to accommodate the changing energy landscape and ensure the security of energy supply. The municipality has already appointed several independent power producers to sell renewable energy directly to the city, further addressing the energy crisis.
• 00:15:00 In this section, Hendrick Raedani discusses the role of the private sector in driving change in the energy sector in South Africa. He mentions that inquiries from the private sector about setting up solar plants and selling energy to the city prompted the municipality to consider opening up to electricity wheeling. Although there was initially resistance due to the potential impact on the city's revenue from selling electricity, the municipality eventually recognized the need to adapt and accept this new market concept to avoid being left behind. Hendrick also highlights the trade-offs involved, such as not selling as much electricity but retaining investments and job opportunities from companies transitioning to low-carbon operations. Overall, the private sector's drive for change and the need to protect socio-economic benefits played major roles in the acceptance of electricity wheeling.
• 00:20:00 In this section, Hendrick discusses two scenarios regarding wheeling power in South Africa. The first scenario involves a customer in one location requesting power from a generator in a different area. In this case, the generator would connect to the grid and transfer the power to the customer, but there are challenges related to security deposits and the lack of a national willing framework. The second scenario involves a generator and a customer in the same area, but they may not be in close proximity. He mentions the need for guidelines and discussions with Eskom, the national electricity utility, to bypass security deposits. Overall, the challenges with willing power in South Africa include the lack of a clear framework and the need for security deposits.
• 00:25:00 In this section, the speaker discusses the challenge of multiple independent power producers (IPPs) and private core producers competing for the same connection points on the grid in South Africa. They suggest temporarily suspending private renewable energy projects until all the IPPs have connected, as the IPPs were appointed and legally contracted first. Hendrick Raedani highlights the value of a trading solution in accelerating new generation capacity onto the national and municipal grids. This trading solution brings liquidity to the marketplace and underpins the bankability of new power assets. It allows for aggregation of different energy sources, such as solar, wind, geothermal, and hydro, to increase a municipality's renewable energy penetration and offer a competitive product into the municipal network. The trading system acts as the glue that connects various stakeholders and power plants in South Africa.
• 00:30:00 In this section, James Beatty, Chief Executive Officer at Enpower Trading discusses how a trading solution can aggregate renewable energy profiles, such as solar and wind, to create a more full and optimized renewable profile. He explains that by combining the kilowatt hours generated by different renewable sources at different times of the day, they can provide customers with a more comprehensive renewable energy supply. James also mentions that blending solar and wind power can lead to high levels of renewable energy penetration, with examples ranging from 80% to even 100% renewable energy supply. This blending of different renewable sources offers significant value propositions for customers across various sectors, from corporations looking to reduce carbon emissions to private buyers wanting to be greener. Additionally, James addresses how municipal revenue is protected through wheeling, ensuring that municipalities remain revenue service neutral regardless of the presence of a trader in the network.
• 00:35:00 In this section, James Beatty and Dan Claassen discuss the importance of a harmonized tariff approval system in South Africa to ensure revenue neutrality for municipalities. They explain that municipalities rely heavily on power supply revenue, so a traded solution that provides cleaner and more affordable energy not only incentivizes customers to stay on the network, but also ensures municipalities continue to receive revenue. The focus should be on future-proofing services by considering customer needs and providing competitive solutions to prevent customers from opting for off-grid alternatives. James also highlights that while initially larger businesses may benefit from the trading model, in the medium term, the solution benefits everyone by increasing the supply of power and facilitating the construction of new power assets in the country.
• 00:40:00 In this section, the James discusses the potential for the private sector and businesses to support the grid and alleviate the energy crisis in South Africa. He suggests that the private sector can contribute to the grid by generating an additional 10 gigawatts of power, which could help with load sharing and bring stability to the grid. They also highlight the potential for this solution to support local economic development by creating jobs and minimizing the burden on local municipalities. Overall, he believes that privatizing and opening up these networks can be a positive force for everyone involved.

About Enpower Trading
Enpower Tradingis one of the first companies, to provide unique and innovative energy supply solutions for the future energy industry in South Africa.
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