Construction World October 2017

ENERGY

of South Africa’s energy production mix INCREASING THE DIVERSITY

According to PwC, the unique utilities model is a thing of the past as the growth in electricity demand, investments in the power sector all over Africa, aging and badly maintained systems, smarter and cheaper renewable technologies and the changing role of the customer are revolutionising the power and utilities market structure that drives company and country strategies. Power and utility industry trends 1. According to the 2016 PwC report entitled Electricity beyond the grid , two-thirds of the world’s population will remain without electricity until 2030. 2. Growth of behind-the-meter resources: As electricity customers rapidly add new distributed energy resources, from solar photovoltaic (PV) to energy storage to electric vehicles, utilities see opportunities to tap into these resources to balance the grid, improve efficiency, boost reliability and resilience, and defer or avoid the cost of investment in new generation, transmission and distribution assets. 3. All or nothing’ approaches that focus primarily on the national grid are increasingly out of step to what is now possible in power technology. 4. Battery storage technology is fast evolving to the point where it is going to play a significant role. 5. Using low cost mobile phone technology to empower the utility workforce and enhance operational effectiveness. 6. According to Deloitte, a trend that’s likely to continue is the overall utility sector’s transformation. Five recommendations for accelerating the increase of electrification The PwC report Electricity beyond the grid recommends five approaches to increasing access: 1. Develop an integrated energy access plan and map – so that everyone can plan with more certainty for either off-grid or grid extension solutions. 2. Create an enabling environment for off-grid development - including clearer criteria for mini-grid development, support for skills and training and more supportive regulation to allow private players to unlock the off-grid market potential. 3. Recognise the value of and promote the growth of mobile infrastructure, microloans and payment solutions in supporting energy access. 4. Establish an off-grid innovation and development fund – Power and utilities companies globally face the triple challenge of improving environmental performance, keeping consumers’ costs down and maintaining system reliability. The focus is now on the transformation of the industry and the concern around consumers' experience and the ever-looming evolution where we are seeing consumers becoming ‘prosumers’.

a highly visible development and innovation fund can play an important part in spurring off-grid growth in each country. 5. Have a high-level energy access champion that can drive results – to cut through bottlenecks and monitor results. Disruptive change globally Disruptive forces – distributed power generation, technology changes, and a new breed of customer – mean that the traditional power utilities business model which has endured for decades is under threat, according to PwC’s global power & utilities survey. Many in the industry expect the existing power utility business model in their market to transform or even be unrecognisable in the period between now and 2030.The majority of utility companies (94%) predict complete transformation or important changes to the power utility business model. Fifty percent of companies in Africa say it is likely or highly likely that increasing levels of distributed generation will force them to change their business models. The prospect of transformation of the industry business model arises from a number of potentially disruptive changes. The 13 th PwC Annual Power and Utilities Survey 2013 shows that four in every 10 (41%) of companies anticipate business model transformation and, a further 53% expect existing business models to undergo ‘important changes’. Nearly two-thirds of companies believe there is a medium to high probability that distributed generation will deliver more than a 20% share of worldwide generation by 2030. More than half of companies (57%) say there is a high or very high likelihood that distributed generation will force utilities to significantly change their business models. In addition, companies anticipate distributed generation to push up the price consumers pay for transmission and distribution. Customers will dictate the experience An emerging trend that utilities must pay attention to is the realisation that customer expectations in the future are the outcome of movements that have been underway for decades. Changes such as the explosion of digital, the empowered customer, and the acceleration of innovation are having a profound impact on customer expectations. The customer of 2020 will be more informed and in charge of the experience they receive. They will expect companies to know their individual needs and personalise the experience. Immediate resolution will not be fast enough. Looking ahead into the future can be difficult in our ever- changing business environment. But the future is not that far away, with the year 2020 being just around the corner. Those that win are the ones who begin preparing today. Customers know more, and they expect more. Fast forward three years, and there’s little doubt the bar will be set even higher and new priorities will have emerged. With that said The PwC Survey finds that companies and sector stakeholders are optimistic about a range of key African electricity issues. What remains to be resolved is the security of electricity supply and cost reflective tariffs as these continue to be the number one challenges. Until they are resolved, power systems will remain stretched, as investments in the power sector will be limited.

*References for this article are available from the editor.

sustainable construction world

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OCTOBER 2017