Credit rating movements, exchange rate volatility, political shuffles, legal challenges, foreign elections and local activists all add to the turbulence of the world in which we live and work. How is the energy sector impacted and how should it react? Perhaps, like a super-tanker, the sector has too much inertia to be affected by short-term squalls. What steps should energy leaders be taking to navigate through these non-technical disruptives?
The South African National Energy Association (SANEA) held its bi-monthly Energy Rendezvous in Johannesburg recently. Addressing the topic “Non-technical disruptives”, a panel comprising Coenraad Very of DRA Projects; Dudley Baylis of Bridge Capital Refco; and Wendy Green from Fusion Energy, under the leadership of SANEA’s Heloise Nel, discussed five factors which are likely to disrupt the energy sector in not-too distant future.
These factors, dubbed non-technical disruptives, include changing consumer behaviour, funding and financial models, political imperatives, tariff hikes, societal demands for clean generation, and the potential of foreign ownership of the power market.
Disruptives on the horizon
Challenges and proposals
The panel discussed the following challenges and proposed a number of solutions.
In order to separate politics and the energy sector, it was suggested that the energy sector could help establish mechanisms of electing leaders, such as calling for CVs from the energy industry to help elect the best board members for Eskom’s board.
To solve geographic power access inequality, it was suggested that South Africa should move away from a big utility approach to a distributed generation model and get local communities involved through ownership in such projects. This would entail focusing on smaller, modular and more flexible systems instead of large ones.
Although other modes of generation, such as distributed generation, should be incorporated, the country’s distribution network must be protected since they remain essential and could be used to connect micro-grids together. Faster moving technology processes, shorter project timeframes (e.g. renewable plant construction), and declining electricity demand all call for more flexible systems.
The panel said that the public has be made aware of the difference between consumer awareness (making energy choices) and consumer hysteria (influencing energy decisions without a proper understanding of the energy sector and long-term outcomes) so that rational decisions are made by the energy sector and supported by the public.
The panel said that investor confidence and a resulting trust deficit has been created by political decisions which have created policy uncertainty. This damage could be long-term, the panel said, with the full effect only felt in a decade from now.
“The arrogance of success is to think that what you did yesterday will be sufficient for tomorrow.” – William Pollard, 1828-1893.
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