Time for a new paradigm in electricity generation

Could we be experiencing the early stages of a paradigm shift in the energy universe? Will this change the way we build, operate and finance our electricity infrastructure in South Africa?

Our energy sector has historically operated on a model of centralised, state-owned power plants, typically co-located with major sources of fuel. This has meant that a small number of large power plants have provided the vast bulk of electricity needs, typically physically clustered together.

Centralised generation refers to the large-scale generation of energy at a facility typically located away from end-users. The electricity that is generated is distributed through the power grid to multiple end-users.

The problem with the centralised model is the number of negative environmental impacts, and the fact that much of the primary energy of fossil fuels burned at power plants is wasted during generation and delivery to end-users.

In the African context, where rural electrification is a critical for any meaningful socio-economic activities, the centralised model is a significant obstacle. Nigeria has successfully implemented energy solutions that move completely away from the centralised approach and many other African countries are evaluating similar options.

Decentralised energy is produced close to where it will be used. Local generation reduces transmission losses and lowers carbon emissions. Security of supply is increased nationally as customers don’t have to share a supply or rely on relatively few, large and remote power stations.

The core principle of the centralised model is that power flows in one direction, from a small number of large generators to a large number of small consumers. In a decentralised market, power flows in both directions.

There are a number of factors pointing to fundamental change for sustainable energy through a decentralised approach:

  • the fast pace of innovation in distributed generation technologies,
  • the need for increasingly empowered consumers and communities and
  • the global drive to address climate change, to name a few.

While we still have a long way to go and the path ahead is still uncertain, South Africa is moving towards this decentralised transformation. It is likely to result in some difficulty but there also a number of advantages.

As with all disruptive technologies, a more distributed form of generation creates winners and losers. Those who have benefited from the traditional system will tend to resist change; others will embrace it. It is potentially an exciting and dynamic time for the energy sector to drive innovation.

A ‘new normal’ has not yet been established. Surely, if an innovative approach to energy investment lowers the cost of new infrastructure, improves competition and better utilises existing infrastructure, such a solution as decentralisation warrants a closer look?