South African electricity market: Adaptive power generation models will become essential


Neeraj Sanjay Mense

Over the past decade, the South African electricity sector has witnessed dynamic change. An economic shift from mining and industrial production towards a service industry has reduced electricity demand to pre-2008 levels. Under these challenging circumstances, the continued development of the electricity supply industry will prove essential in achieving business sustainability and providing power at competitive prices.

A sluggish economy and rapidly decreasing technology costs, associated with grid-connected solar and wind power, are proving to be critical determinants in the future development of the power generation industry in South Africa. Coal and nuclear power are set to become less competitive in the future, paving the way for alternative sustainable generation sources that have the potential to ignite economic growth and job creation.

Recent research from Frost & Sullivan’s Power Generation Growth Partnership Service programme, South African Electricity Market — 2016 Snapshot, analyses South Africa’s total electricity supply industry (ESI) and explores trends in current and future electricity demand, transmission and distribution infrastructure, and possible power generation scenarios until 2050.

Several trends and developments are encouraging growth in the South African electricity market, including the vast potential for solar photovoltaic (PV) and wind renewable energy, decreasing cost of renewable energy technologies, and new business models, such as pay-per-use in the off-grid segment involving renewable power generation.

The Renewable Energy Independent Power Producer Procurement Program (REIPPPP) for infusion of renewable power into the national grid has become a global benchmark for procurement of renewable power projects developed and owned by private players. The potential implementation of an adaptive model for power generation and electricity demand that takes into consideration evolving conditions in South Africa, is encouraging. so too, are successful smaller projects with short lead times, lower liabilities, low power-generation costs, and operational flexibility.

Future investments in power generation should be determined through an up-to-date central database, which considers changing conditions and demand. Establishing local supply chains and relationships with regulatory authorities will be critical for companies foraying into renewable project development, while leap-frogging power storage technologies can improve project viability and impact.

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