Prosumers’ access to technology is set to disrupt Eskom’s business model
Many companies are likely to consider going off-grid after lockdown to escape load-shedding
Modernising SA’s energy infrastructure will dramatically change the energy utility business model, as industrial and private energy consumers now have access to technology that allows them to produce, store and distribute energy.
Parties that are able to do this are known as “prosumers” — producer-consumers — and they could be manufacturers, businesses or groups of consumers that have the potential to cause a shift in the structure of the energy industry.
Energy is mostly unidirectional now: Eskom produces electricity, which is distributed and sold to industrial, commercial and residential consumers, either directly or via municipalities. After lockdown, as businesses emerge into an environment still threatened by the prospect of load-shedding and extreme energy price increases, many are likely to consider going off-grid, or at least finding ways to supplement their power needs with renewable energy resources.
This creates the opportunity for a shift, with the possibility that the electricity network and grid will evolve in such a way that individuals or companies will be able to receive or resend energy to the grid. This shift in the structure of the industry would create the scope for bidirectional flows of energy in which individuals or companies can draw energy from the grid at a cost, or send energy to the grid in return for payment.
While there is a tendency to believe that the most natural likely prosumers would be individuals with solar panels at their residences, larger users such as manufacturing sites could do the same. It’s even plausible that residential estates could look to install their own microgrids to create more resilience amid the power utility’s inconsistencies.
Microgrids are localised stand-alone power-generating, distribution and energy storage systems that can be operated independently or connected to the primary grid. They balance variations in energy demand, optimise energy usage for more reliable power, and reduce operating costs and carbon emissions. Using advanced software, microgrids dynamically shift energy loads between power sources — whether solar photovoltaic, wind, energy stored in batteries, generators, or the grid — to maximise efficiency and reduce costs.
There has been a power shift towards consumers — residential and commercial — because the hardware and technology exists in SA for them to go off-grid if they want to. SA has Africa’s most sophisticated grid and energy market, and what happens here will lead continental trends in the decentralisation, decarbonisation and the digitalisation of energy.
The most important development that has made this shift possible is that energy storage costs have dropped by up to 90% in about the last eight years, mainly driven by the adoption of electric vehicles, lithium ion batteries and nickel manganese chrome, used in electronics. Apart from dramatic drops in costs, batteries have evolved to have a much smaller footprint and weigh less than in the past despite having a greater capacity.
From a software point of view, battery management systems (BMS) have evolved to include more capacity for artificial intelligence (AI), so the system monitors and learns users’ behaviour. The system adapts its energy generation and storage behaviour to align with user patterns, to optimise for cost and capacity. Developers have also focused on improving the overall safety of these systems.
The challenge SA faces is how the monopoly utility and municipalities will adapt to this change, because prosumers have what they need to operate. Other challenges are that Eskom is R450bn in debt and municipalities need to balance Eskom and end-user requirements, complicated by the utility being unable to provide enough energy when required.
The question is how utilities such as Eskom will survive if industries and homeowners are able to go off-grid — and even sell their surplus energy to one another. Utilities’ success is based on their ability to plan generation to meet demand — so how will they evolve once energy consumers are able to do as they please?
Power is fundamental to create jobs and for a country to develop and grow — access to power is one of the key requirements for any economy to progress. If a community cannot access power, its first response will be trying to identify an alternative means of generating that power.
• Kane is Africa MD for Eaton Electrical.
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