Prosumers have potential to disrupt the energy landscape

Modernising the current energy infrastructure in South Africa will dramatically change the energy utility business model, says diversified power management company Eaton electrical sector Africa MD Seydou Kane.

“Modernising the current energy infrastructure, gives industrial and private energy consumers 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). These could be manufacturers, businesses, or groups of consumers that have the potential to cause a shift in the structure of the energy industry, he explains.

“At present, energy is mostly unidirectional as State-owned power utility Eskom produces electricity, which is then distributed and sold to industrial, commercial and residential consumers, either directly or through municipalities.”

“Post-lockdown, businesses will 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.”

Kane explains that this will then create the opportunity for a major 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 is a shift in the structure of the industry, creating the scope for bidirectional flows of energy. This will enable individuals or companies to both draw energy from the grid at a cost, or send energy into 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 residence, he says, it is likely that larger users like manufacturing sites could do the same.

“It is even plausible that residential estates could look to installing their own microgrids, to create more resilience in the face of the power utility’s inconsistencies. A microgrid energy system provides a reliable, efficient and sustainable solution to overcome unexpected power loss.”

This has come about because of a power shift where consumers – residential and commercial – are taking accountability and responsibility back, highlights Kane.

He adds that the hardware and technology in South Africa exists for them to go off-grid if they want to. “Indeed, South Africa has the most sophisticated grid and energy market in Africa, and what happens here will lead continental trends in the decentralisation, decarbonisation and the digitalisation of energy.”

Additionally, the most important development that has made this shift possible is that energy storage costs have dropped by up to 90% in the last eight years or so, he adds.

This is 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 they weigh less than before too, despite having a greater capacity, notes Kane.

Meanwhile, from a software point of view, battery management systems have evolved to include more capacity for artificial intelligence, so that the system monitors and learns users’ behaviour, explains Kane.

“The system then adapts its energy generation and storage behaviour to align with user patters, to optimise for cost and capacity. Developers have also focused on improving the overall safety of these systems.”

Further, he warns that the big challenge that South Africa faces is how the monopoly utility and municipalities will adapt to this change, because prosumers have what they need to operate.

“Eskom is R450-billion in debt, and municipalities need to balance Eskom and end-user requirements, complicated by the fact that the utility is not able to provide enough energy when required.”

He notes that the key question for the future 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.

A utility’s success is based on its ability to plan its generation to meet demand, adds Kane. Once energy consumers are able to generate their own electricity, it will become difficult for them to evolve above that.