Energy, or the lack of it, has been a hot topic of discussion and debate in South Africa over recent years. South Africans have become accustomed to load shedding, the country’s internationally acclaimed renewable energy generation program is on pause and Eskom, the country’s electricity generator and provider, is mired in debt. To discuss these issues, and more, Ken Fullerton, recently caught up with Chris Ahlfeldt, Founder and Director of Blue Horizon Energy. In part one of this two-part interview series, Chris discusses his background and interests in energy, the recently held South African State of the Nation Address.
Introducing Chris and his interests
Ken Fullerton (KF) Thanks Chris for your time. Can you explain how you first got interested in the renewable energy field and how you ended up coming to South Africa from the United States to establishing your own consultancy?
Chris Ahlfeldt (CA): Studying Energy Systems Engineering at Stanford University sparked my passion for clean energy and sustainability solutions that can help address climate change. After graduating, I worked for a few years within the energy practice of a management consultancy in San Francisco before moving to South Africa to get some more international experience in the clean energy industry. When I first came to South Africa in 2010 the renewable energy industry was very new here, so my experience from a more established market in the US made it easier to add value to the local industry.
KF: Through your work, what sort of positive impact(s) have you been able to have?
CA: It’s been rewarding to be part of the growth of the renewable energy sector and most of my projects have focused on enabling growth for the industry in Southern Africa. I’ve worked on a number research and advisory projects for investors, manufacturers, and public sector clients and I’m most proud of the renewable energy policy I helped draft for Namibia in 2016. As part of the policy we set a goal of 70% renewable electricity by 2030 and Namibia has since made a lot of progress to reform its electricity sector in a way that encourages more private investment in power generation to meet this goal. I’ve also been getting more involved recently in helping some impact investors identify and assess opportunities for investment in Southern Africa, which has a lot of potential for positive impact on the local economy.
KF: Times are certainly challenging at present in South Africa. Load shedding, rising energy prices, high unemployment, uncertainty over REIPPP and, of course, the President’s recent State of the Nation Address just to name a few. But as the expression goes ‘In the midst of chaos, there is also opportunity’ …….
CA: Uncertainty in South Africa can make it a challenging market to work in, and you’re right that these challenges create lots of opportunity for companies. For example, the return of load shedding has increased demand for solar PV panels and batteries for homes and businesses looking to improve reliability and save money from Eskom’s rising prices. The power shortage is also increasing the pressure on government and Eskom to act quickly to reform the utility and enable a power sector that is less dependent on coal.
State of the Nation Address
KF: President Cyril Ramaphosa, mentioned the word ‘energy’ 13 times during his February State of the Nation (SONA) address. He’s obviously aware of current energy issues but is he doing enough to overcome these serious challenges?
CA: The President’s plans cover a lot of key issues to address the challenges posed by Eskom’s supply shortage and its impact on the economy. For example, unbundling the utility into separate generation, transmission, and distribution will help break-up Eskom’s monopoly and improve transparency in the industry. Likewise starting Round 5 of the REIPPPP will provide some clarity for developers and investors that government is serious about moving away from its dependency on coal. More could be done to further enable distributed generation solutions by customers which can be built within months and don’t require financing from government.
KF: Despite Ramphosa’s announcements in his SONA, current Minister of Mineral Resources, Gwede Mantashe, has since issued conflicting messages on what can be done and by when. Why do you feel this is the case?
CA: I don’t know why Gwede Mantashe would want to go against the President’s plans to solve the energy crisis, as growing the clean energy industry will create lots of new jobs and improve the affordability and reliability of the energy sector as a whole. Continuing to ask his Ministry to clarify the implementation plan, commit to a timeline, and keep his department accountable to meet commitments could help move the industry along faster.
KF: The Democratic Alliance (DA) in the Western Cape has been quite vocal calling for municipalities to be able to source their own power from independent power producers rather from the grid. They’ve even taken it to court. This is done successfully in other countries so could it work in South Africa? Why or why not?
CA: Some municipalities like the City of Cape Town have been pushing for this, and government said it will put in place measures to allow municipalities to buy from IPPs. It’s not a simple process to open the energy market to more distributed IPPs in this way and the unstable financial situation of many municipalities in South Africa will increase off-taker risk for IPPs and financing costs. In my view, municipalities should be more focused on partnering with their customers to buy excess power from them first and provide other services to improve customer loyalty which reduces the likelihood that their customers will go off-grid completely or bypass them through wheeling agreements.
KF: Like with many other poor decisions or policies, the poor are hardest hit and often powerless to act. How have they been impacted and, given their limited circumstances, what can they do?
CA: Low income communities are also feeling the pressure of increasing electricity costs and load shedding. They have limited access to financing that would allow them to invest in distributed generation and energy efficiency solutions. Municipalities have an opportunity to help these customers by facilitating access to low cost financing through vehicles like Pay As You Save that leverage green bonds to finance efficiency and clean energy solutions for customers. The funding for these solutions is available, if municipalities are willing to deploy it for their customers.