The world is changing fast and to keep up you need local knowledge with global context.
Rentia van Tonder and Berrie de Jager of Standard Bank join Alec Hogg to discuss PowerPulse, a new digital platform introduced by Standard Bank that provides alternative energy solutions by connecting clients with appropriate power suppliers. As Alec Hogg says, the shift from centralised to decentralised power generation could not come at a better time. Earlier in the week, state-owned power utility Eskom confirmed that an explosion at unit 4 of its Medupi power station caused “extensive damage” to a generator. With years of electricity supply challenges already behind us, business owners will surely be only too happy to take matters into their own hands, but as our guests explain, we’re not out of the woods just yet. – Claire Badenhorst
Rentia van Tonder (head of power for wholesale clients) on the power supply situation in SA:
It’s a very interesting time for South Africa, and I think we’ve been experiencing electricity supply challenges for the last few years with a significant uptick in load shedding in 2020. I think [it’s] the worst we’ve seen ever, which is really worrying, especially in terms of industry and economic growth going forward.
On progress being made with Independent Power Producers (IPP):
It’s very important for us to keep momentum as a country. I mean, the Integrated Resource Plan was gazetted in 2019 and it really outlines the roadmap for South Africa in terms of future supply. However, we’ve seen a slow rollout. We [are] busy with RMIPP, which is the Risk Mitigation Programme, 2,000 megawatts that need to reach financial close, at the moment, end of September. Then we’ve got the Renewable Energy IPP programme going into round five with bid submission actually next week, the 16th of August. All of these projects are extremely important to stay on track, and I think [it’s] a big concern if we can’t manage to have bids going in financial close and reaching Commercial Operation Date (COD) on a regular basis to be able to ensure that we have new capacity coming on stream regularly.
On whether this means the country is less vulnerable:
No, I don’t think so. Until we know that we have the additional capacity committed and when they will reach COD, we cannot really relax. I think what we see is that the energy availability factor from the Eskom fleet is not really recovering, and I think it’s understandable because the fleet is quite old. So the sooner we have new capacity coming online, the better, and I think we definitely have to keep momentum in procuring more generation capacity.
Berrie de Jager (head of natural resources and for business and commercial clients) on the shift from centralised power to decentralised power generation:
I’m very excited about the shift that we’ve seen away from the large centralised systems into the decentralised energy space. What we see nowadays is that businesses are really taking power matters into their own hands, and then in the process, they [are] also putting money back into their own pockets. From Standard Bank’s perspective, we [are] really trying to enable clients to grow but if a client doesn’t have electricity and access to reliable and affordable electricity, it’s really becoming challenging. So our focus in this regard is really to say, how do we enable clients? How do we help them to take this leap into the decentralised energy world and then start generating electricity on the way forward.
On Standard Bank’s role through PowerPulse:
They say that power to a company is like oxygen to trees – if you don’t have it, you can’t live and you can’t operate. So for us, it’s really around sustainable business performance of companies and to help them. I think globally when you look at this decentralised environment, there’s certain thrusts that we are observing and those are mainly things like decentralisation, decarbonisation, and digitisation, and we believe that we can help clients to address those things. When you look at things like decentralisation, we know that nowadays it’s really possible – and I could add viable – for businesses to generate at least some of their power requirements on their side of the meter. We find that the most popular way of doing it is really through grid-tied systems where they effectively co-generate their own electricity.
On the decarbonisation side, we know the challenges around climate change. South Africa is a signatory to the Paris accord. We hear new terminology like net zero carbon goals, etc., but I guess ultimately each and every corporate citizen really wants to play a role in minimising its carbon footprint, and you can do that through generation of your own electricity. Then, of course, the digitisation part that I mentioned, we are very fortunate to live in the digital age where it’s relatively simple and affordable to collect data and then use that data to make decisions. So whether that decision is around behaviour on power consumption and whether it’s about understanding your own power consumption pattern and generating energy in line with that, through proper digitisation, you can make a massive difference in that regard.
Rentia van Tonder on companies being allowed to generate electricity without a licence:
We [are] definitely very excited about the announcement by the president a few months ago, allowing companies to be able to do generation and also view electricity through the grid without requiring a licence. However, we still waiting for Schedule 2 which is effectively going to stipulate exactly what the requirements are in terms of the Electricity Regulatory Act and that is imminent now. So we hope to see that within the next few weeks as per the commitment by the president when he indicated 60 days.
I think the one-megawatt threshold previously was already acceptable for small entities and for clients that are looking for a rooftop type of solution. However, what we did find was that, especially for large-scale manufacturing entities like your mining companies or even the paper industry, the packaging industry, when they wanted to do a larger-scale type of self-generation facility, it was quite problematic.
So what we see now is that, for example, a mining company that utilised, let’s say, between 500 and 1,000 megawatts, they can start to do [their] own generation. Even if they have sites in different areas in the country, they will be able to do 100 megawatt and then wheel, so use the electricity grid to transport the electricity from point A to point B. How exactly all of that will work and how the requirements will stack up in terms of the registration with Nersa, whether we have transparent agreements and how do we go by in terms of grid compliance? I mean, all of that is still expected to be clarified, but definitely something positive that all of us are looking forward to. I think the benefit here is that it can address, in the short term, some of the supply challenges that we currently see in the country, especially for industry supporting economic growth.
On why there is a limit of 100 megawatts:
I think it’s important to note the importance of balancing the grid, understanding exactly what do you allow into the grid. So what you need here is still a grid compliance certificate and sign-off from Eskom. I think it’s important to understand that this system always needs to be balanced and that there needs to be proper management of the system. So especially if you are still a grid-tied client, I think it’s important to have limits in place to be able to manage it better. However, this could change. As we go through a sector reform and see the power sector change over a period of time going into the future, we may see these limits being lifted or even being changed.
Berrie de Jager on the mining industry wanting to get started:
I think what we have seen is that ESG, in general, is very close to mining companies. It’s very important for them environmentally, especially, to try and make a difference. Then the sustainability part is also key, you know, to have electricity available when they require it. So when you do look at mines, the systems that might be attractive to them will typically be larger systems – not necessarily grid-tied but with a suitable blend of energy resources, etc., and therefore, they need a scale. Effectively, this will create an opportunity for them to scale up.
On what PowerPulse is about:
It’s been a very interesting journey for us as a bank, you know, for the past five or so years, we’ve been aware that there is a requirement amongst clients to come up with appropriate solutions. But what we found is that it’s a very complex ecosystem of players. You have to partner with the right suppliers – the EPCs (the Engineering Procurement Contractors). You have to have a proper understanding of your own needs and then you need to have proper integration. So with that awareness, we realised that there must be an opportunity and a need to really bring clients or users of energy together into an environment where they could be partnered with trusted suppliers and that we’ve done through this digital platform that we call PowerPulse.
On who it is aimed at:
For the moment, we are happy to look quite wider. I think when it comes to Standard Bank clients, obviously, we’ve got a deep understanding of their unique needs. We’ve got established relationships and we’ve got access to information. In future podcasts, we will elaborate a bit more on the details of the programme but for the moment, it’s really around creating the awareness around PowerPulse as an opportunity to effectively integrate all of those various suppliers.
On whether suppliers are filtered:
Correct. There’s a very big ecosystem of players in the market. This proposition really focuses on the commercial industrial type of clients – I would say 200-kilowatt peaks to about a megawatt peak and slightly upwards, etc. In that market, it is very important to partner with the right operator who is typically an electrical engineer, etc. and on the platform, we do have a process of onboarding of those preferred suppliers.
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