Energy Demand Management –

requirement for new supply methods

August 2016

by Amatka (Pty) Ltd

Example 1 After the previous energy crisis in South Africa in 2008 (power shortages of 10% of peak demand every weekday for months)., World bank started together with UN Development Program long-term planning to create measures to manage energy efficiency. At that time also energy demand management measures were introduces to South Africa. Fund was created with Eskom and Department of Minerals and Energy to start initiatives related to reduce bureaucracy, accelerate the approval of projects and adjust incentive scheme to provide equal treatment of projects.

Signal title: Energy Demand Management

Description & what’s new? In 2015, the energy market and efficiency of the energy market was put in focus with the major energy crisis that hit South Africa. The state owned energy company Eskom, which generates approximately 95 percent of all energy in South Africa (45 percent of all energy in Africa), was struggling to supply enough energy to keep the lights of South Africa on. When demand of energy repeatedly eclipsed supply, Eskom needed to start blackouts or so called loadshedding. Loadshedding put South Africas crumbling energy infrastructure into focus of fierce public debate. One of the implication is that new energy related supply methods are about to strengthen its role in South African energy market. One of the possible implications might be further acceleration of energy demand management initiatives.

Examples & references (1-2)

Industries: (choose one or more)

Arctic competencies & industries

Bioeconomy

Cleantech

Creative industries & design

Education & learning

Energy

Food and beverage

ICT & digitalization

Life Sciences, health & wellbeing

Manufacturing

Themes: (choose best) Business to People Advanced Manufacturing Health Strategy and Finance Emerging Markets Game Changers

Time to market Now 2-5 years 10 years

Maturity of the signal (weak signal vs. ongoing trend)

weak signal

Market area or country: South Africa

Keywords: energy, infrastructure, consulting

Example 2 Eskom has program called Integrated Demand Management (IDM) in which it provides consulting and advice to businesses to save energy. The main objective of IDM from an Eskom point of view is to improve efficiency by reducing the average costs of generating electricity and better utilisation of resources. IDM includes load management, peak clipping and energy efficiency. One of the services Eskom provides is audits to establish potential for energy demand management.

Relevancy and impact for Finnish companies Energy,

Context – Energy market and energy utilization in

South Africa

South Africa is one of the least energy efficient countries in the world

1) South Africa uses approximately 45% of Africa’s energy

2) 11th of highest emitter of green house gases in the world

3) the government and Eskom have had great difficulties in increasing energy supply in South

Africa, main reason being constant delays of new power plants

4) currently South African energy supply relies heavily on coal-fired energy

5) South Africa has relatively immature but growing renewable energy sector – plan is to have

approximately 40% of all new energy coming from renewable sources in the future. Cape Town

has most advanced plans and target to source 20% of its energy from renewable energy

6) Independent energy producers are seen as one source to ease energy supply problems –

first contracts signed e.g. in the city of Cape Town.

7) nuclear energy is expected to solve many energy supply problems, South Africa is

expecting to build 9 new nuclear power stations by 2030 – currently only one nuclear power

plant in South Africa

Government has put in place National Energy Efficiency Strategy (NEES) that defines measures

and plans to save energy on consumer and business level

Eskom is a key player in South African energy market and Eskom launched response to

government’s NESS as establishing Energy Efficiency and Demand side management funding

programme that promotes more energy-efficient and demand driven processes and technologies

Target of the energy efficiency programme is to reduce demand for energy significantly

REQUIREMENTS

FOR

FINNISH COMPANIES

Do your homework but get to the market and

meet relevant people as soon as possible to

really understand the needs, requirements and

limitations. Local representation is needed in

order to operate in the market successfully.

CHALLENGES

Energy market is still monopoly in

South Africa and only real driver for

energy demand management is

energy savings – is it enough for

energy companies to invest in new

technologies and processes energy

demand management requires.

Energy related ICT technology that

support new kind of initiatives is not

in place - is that a real bottleneck for

energy demand management to

grow big time?

OPPORTUNITIES

Energy market opportunities are

propably the single biggest business

opportunity globally right now.

Various Finnish companies are

seriously able to contribute to energy

management market (consulting,

technology, energy providers) in

South Africa. One good opportunity

would be to create network of

companies contributing the

development of energy market

through joint offering that is

integrated to energy demand

management offering.

Should Finnish companies think (South) Africa as a

Energy Demand Market? – bigger picture STRENGTHS OF FINNISH

COMPANIES

Country with one of the most

advanced energy market in terms of

deregulation and technology.

Finnish companies (consulting,

technology etc.) have already

witnessed the rise of new energy

consumer who is environmentally

savvy and more active in terms of

demanding services from energy

companies.

Should Finnish companies think (South) Africa as a

energy demand market? - practicalities YES

Energy is hot potato and potential

demand to develop new ways to save

energy is huge

There are already programmes in

place (Eskom, Government) that are

addressing energy demand

management

New supply methods increase the

need for energy demand

management

If you share the view that energy

market in Africa is single biggest

business opportunity in the future

If you are willing to invest in

developing partnerships, not just

sales channels

If you are willing to adapt your offering

and business model to African needs

and cultures – and take locals on

board

NO

Eskom is the main player in the market

and question is whether company really

want and/or can execute solutions

Eskom has huge corruption problem and

companies that want to work with Eskom

need to adjust to that

South African political instability might

affect negatively on possible business

opportunities in energy sector and EDM

market

Limited resources of main players might

need financing/funding outside

There is huge potential for all

kinds of energy saving methods.

In case one wants to have a piece

of the energy demand

management market cake in

Africa, NOW is the time to test the

market – and be patient.