SANEA is the South African member committee of the World Energy Council. It was formed in 1923 and was a founder member of WEC. Registered as a not-for-profit company, SANEA is governed by an independent Board elected by SANEA members. SANEA members come from the governmental, mining, industrial, commercial, financial, legal and academic sectors and also include individual citizens. SANEA strives to promote greater understanding of energy matters in all levels of society and it achieves this through conferences, lectures, articles, strategic briefings, media interviews and committee work. Its vision is “Energy People Working Together”.
Energy in South Africa
As in 2017, Economic growth has again been identified as the primary Action Priority. This is not surprising given the lack of economic growth in South Africa in recent years and the negative impact it is having on all South Africans. The role, functionality and improving costs of Electric Storage has moved this issue from a Critical Uncertainty in 2017 to an Action Priority in 2018, indicating that there is much more certainty on the application and use of this technology in addressing the intermittency of solar PV and wind. Electricity prices have continued to escalate and, together with the sluggish economy, they are seen as an issue that needs action. The response of consumers is a greater use of solar PV and storage to become self-sufficient, unfortunately initiating the utility death spiral.
Corruption has moved from an Action Priority in 2017 to the most important Critical Uncertainty in 2018. This uncertainty probably arises from the lack of clarity of the outcomes of the various initiatives that were launched in 2018 to tackle corruption. Market Design remains in the top three critical uncertainties due to the death spiral affecting the national utility, a concern which needs to be addressed. Exchange rates are always a concern in South Africa but there is very little that can be done on this issue. However, the issues of Innovative Transport and IoT/Blockchain are new Critical Uncertainties for South Africa - probably as not enough is understood about them and about their impact on the South African Industry and economy.
In 2017, Corruption was an Action Priority and during 2018 several initiatives to address this issue in South Africa have started. However, the outcomes of these initiatives are still not clear. It is therefore an expected result that corruption is now perceived as one of the top Critical Uncertainty for energy leaders.
Increasing numbers of Independent Power Producers (IPPs), prosumers and large consumers want to be freed from trading with the national utility while the national utility is struggling to remain viable in the face of the competitive dynamics. Any market design will also need to ensure universal access to affordable electricity for the millions of impoverished citizens in both rural and urban settings. There is plenty of diverse opinion but no clarity on suitable market designs.
In recent years South Africa has experienced social and economic turmoil which has resulted in volatility in investor confidence. This, coupled with global market caution, means that as a developing country the South African currency is at the mercy of international exchange rate volatility.
Economic growth in South Africa has been poor for several years impacting on all sectors of society and business. During 2018, a number of new initiatives to kick start the economy have been launched. It will be interesting to see where this issue is rated in the 2019 survey.
In the 2017 survey, electric storage was one of the top Critical Uncertainties for South Africa. There is now a much better understanding of the technology and the costs have reduced making it more economically viable to include storage in solar PV and wind systems to manage the intermittency challenges. As a result, with the growing implementation of renewable energy systems, the issue is now a high Action Priority.
Electricity prices in South Africa have escalated at rates significantly above the inflation rate for several years. This high level of escalation is not expected to reduce in the near future. Consequently, it is an Action Priority as consumers find ways to manage large increases in cost. The popular response is to move to self-generation using mainly renewable energy solutions. Unfortunately, this response is likely to reinforce escalating electricity prices from the national utility as the demand it serves reduces.
Two Critical Uncertainties that have come to the fore in 2018 are Innovative Transport and IoT/ Blockchain. Both issues are relatively recent but are starting to impact on South African businesses. A lack of knowledge and experience related to these issues as well as their applicability is the reason for the high level of uncertainty that is shown in the survey. As more knowledge and understanding is achieved, the issues are likely to move into the Action Priorities.
Once again, the World Energy Issues Survey is useful in highlighting the Critical Uncertainties and Action Priorities that South Africa needs to focus on. Besides those issues that are ranked highest, there is useful knowledge to be gained by examining how issues ranked high in previous surveys have moved over time. One example is Energy-Water-Food nexus – last year, it was the second highest Critical Uncertainty; this year it has dropped back significantly even though it is still a critical issue to address and manage. Other issues are just perceived to be more important this year.