Exploring Africa’s energy potential

SHEQ Management recently attended the 2019 Africa Energy Indaba (AEI). Now in its 11th year, the indaba has been celebrated for its success in bringing together leading energy stakeholders to debate challenges and opportunities facing the African energy sector.

With the benefits of renewable energy so clear, but not yet fully leveraged, the theme for this year’s event was “Africa’s Energy Potential”. Topics on the agenda included energy access and security concerns, innovative financing solutions, disruptive business models, regional integration (energy pooling), the impact of digitisation, as well as potential business opportunities in the energy space.

Besides renewable energy, discussions included sustainable, cleaner and more affordable energy, as well as energy-efficiency, energy security and the development of applicable skills for the future.

Speakers at the AEI included project developers, financiers, industry experts, energy users, government officials and energy industry manufacturers.

As was the case in previous years, participating exhibitors had the opportunity to promote their businesses to local industry players, international investors, buyers and governments worldwide.

This year the Indaba was held in collaboration with international partners including the World Energy Council (WEC), the New Partnership for Africa’s Development (Nepad) Agency and the South African National Energy Association (SANEA).

Setting the framework

The Sustainable Development Goals, read in conjunction with the African Union-sponsored Agenda 2063, sets out a framework to end poverty and hunger, preserve the planet and provide affordable and clean energy.

The AEI keynote address was issued by Minister of Energy, Jeff Radebe, who recognised that the economic development of any country cannot be accelerated without a secure supply of electricity.

Radebe began by congratulating Eskom for connecting another 80 000 households to the national grid since 1994. This gives us a figure of 81 percent total electrification, but there are still three-million people without access to electricity in South Africa alone.

On the continent at large, there are at least 600-million people without access to electricity. Radebe stated that the “business as usual” approach applied in the energy sector has not been successful in delivering universal access to electricity.

At the same time, Africa has some of the highest levels of infrared solar radiation (sunlight) in the world, yet is lagging behind the rest of the world when it comes to implementation of solar photovoltaic (PV) technology and other renewables.

With the decreasing cost of renewable energy technology and its capacity to be brought online quickly, in isolation of the grid, it is considered the ideal solution for rural electrification.

“For South Africa, a just transition from coal must take into account the need to minimise job losses through reskilling where possible, including the appropriate support mechanisms for mining towns that are at risk,” said Radebe.

Market dynamics

A number of trends and clean energy influencers are seen to be stimulating change in the energy sector with the collective drive towards a safer, more environmentally friendly, reliable and sustainable future.

Among these forces are population growth, rising consumption, urbanisation, transportation, energy storage, market dynamics, trade, climate change, CO₂ reduction, technological developments, as well as policies and regulations and a desire to alleviate poverty.

Macro, micro and off-grid solutions are a type of localised power generation that can be set up independent of the national grid. The company Bushveld Energy is currently satisfying a need for off-grid power in areas not catered for through traditional power distribution models.

The company’s hybrid PV solar storage facility in Diepsloot, Gauteng, makes use of vanadium flow batteries instead of the more common lead-acid or lithium-ion batteries. Mikhail Nikomarov, CEO of Bushveld Energy, said that, over the past three years, the price of PV solar technology has come down 25 percent year on year.

In terms of the renewable energy value chain, he noted that there will be some sectors of the industry where South Africa can compete and others where the mass economies of China and the United States won’t be beaten.

“We must concentrate on the areas where we can compete,” said Nikomarov. As a case in point, Bushveld Energy mines the vanadium needed for its flow batteries and assembles locally.

“Without energy storage, PV solar or wind energy can only work when the sun is shining or the wind is blowing. I believe that within the next five years the industry will be able to set up hybrid plants with the capacity to supply base-load energy at less than one rand per megawatt hour.”

In the European Union, countries are able to trade energy with each other should one or the other be experiencing a shortage or excess in supply. In Africa, rapid investment in renewable technology in Kenya and Ghana has resulted in excess capacity, while some of their neighbours have almost no power.

However, the current situation is actually a burden on consumers, who are required to pay for the excess electricity because it cannot be easily stored. With an integrated grid, this energy could be sold to the highest bidder.

Projects like the Grand Inga in the Democratic Republic of Congo (for which Eskom has already demonstrated its commitment with the signing of a memorandum of understanding) guarantees Eskom’s purchase of power once the 30 000 MW hydro power plant goes online.

Energy challenges and opportunities

In rural areas, the cost of transmission infrastructure (power lines) outweighs the potential return on investment, making it unviable. Luckily, renewable energy plants can be set up where the energy is required without having to link to the national grid…

Until recently, funding for renewable energy plants was seen as risky and banks were hesitant to lend money to small independent producers. Now, evidence of the profit-making potential is there, and there are a number of support mechanisms available to interested parties.

In sub-Saharan Africa, rapid urbanisation is expected to continue over the next 20 to 50 years. With this will come a need for more energy, as well as millions of new jobs. Again, renewable energy does not require the technical skillset required at traditional utilities and workers can be more easily trained to assemble and maintain renewable energy plants.

In South Africa, uncertainty surrounding the revised Integrated Resource Plan (IRP), and the role that independent power producers (IPPs) may play, resulted in the failure of the industry to invest in renewable energy over the past three years.

A major challenge at Eskom is municipal debt and a culture of non-payment. It is important to note that a large percentage of those not paying are people that can afford electricity, but feel indemnified from paying claiming a “social revolt”.

Currently, about 90 percent of South Africa’s energy generation comes from coal-fired power stations, and 80 percent of the country’s total emissions can be attributed to power generation. The IRP is expected to make provisions to raise the renewable energy mix to four percent.

Disruption

Ever since Albert Einstein arrived on the scene, the model used for the distribution of power has remained the same. “However, with the ability to feed power back into the grid, consumers become producers,” said Professor Anton Eberhard, representing the University of Cape Town.   

In the future, smart metering will be paired with smart energy-efficient devices. So, if there is a problem with supply, the utility can communicate with fridges and washing machines and command a “shut down” until demand has eased.

Paul Holwaeber, of Vestas (a wind turbine manufacturer) noted the importance of communication technology. “The biggest ‘taxi’ business in the world (Uber) doesn’t own any cars, the biggest online retailer (Amazon) doesn’t keep any products and the biggest hotel chain (Airbnb) has no hotels.

“The best way to stay ahead is to look at what technology is doing in other sectors and to make a link,” commented Holwaeber.

Cindy Poulton, a general manager at Eskom, said: “There has been a slowing of demand for electricity and Eskom is selling less power now than it did in 2007. This is because people are using power more efficiently.

“Eskom will need to compete with companies previously not involved in the energy sector. It will no longer have a monopoly and will need to work closely with IPPs.

“Eskom will also have to develop a range of products to cater for specific markets,” said Poulton. “Some renewable energy producers have chosen not to sell power by megawatt, instead they sell a system, or connection, able to power a number of appliances. The most basic system may have space for a cellphone charger, two lights and a fridge, for example.”

Eberhard stated that disruption need not be a bad thing. “By putting more power in the hands of consumers, an impetus for reform is created and a conflict of interest is prevented. Here, we may see an unbundling of utilities and other SOEs as suggested by President Cyril Ramaphosa in his State of the Nation Address.”

While coal will remain a vital part of our energy mix for some years to come, the 2019 Africa Energy Indaba has suggested a roadmap to ease our transition to renewable energy while improving the lives of citizens.