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The pre-requisites for sustainable electrification – Electricity 4.0 in South Africa

December 13, 2022

Taking into account that total electricity consumption in South Africa hovers around 3,284 kWh⁽¹⁾ — about ten times the sub-Saharan average — and the increasing energy demands due to the growing population, the logical conclusion is to enhance production. That is where we run into roadblocks: Because the country’s electricity production is so heavily tilted towards burning coal, the nation is essentially on a collision course with climate actions. The question remains: How can we correct this contradiction?

By one estimate, the country gets about 90% of its electricity from burning coal⁽²⁾ — which makes South Africa one of the African continent’s highest emitters of GHG. That essentially places the nation on a collision course with climate actions. I say this because electricity, which is 3–4X more efficient than other energy sources, is a tested-and-proven method of decarbonizing fossil fuel-powered systems and processes. Globally, we believe the share of electricity in the energy mix will grow from 6% today to at least 40% by 2040. However, carbon-intensive production will only nullify the climate action of electrification.

Re-envisioning electricity — from production to consumption

Electricity continues to have connotations of privilege in South Africa, with at least 3.5 million households without access to reliable supply. The reasonable electrification level of 84.4%⁽³⁾ is skewed toward urban areas, leaving much to be desired in remote, rural locations. So, reliability and accessibility take precedence in the electrification framework. Electrification also assumes a sustainability imperative due to the predominantly coal-burning production, necessitating higher adoption of renewables. These cannot be achieved without a structural shift in electrification. At Schneider, our phraseology for this much-needed transformation is Electricity 4.0.

Like Industry 4.0, which saw technology revolutionize every function known to humankind, Electricity 4.0 posits a more-electric-more-digital world that gives more and wastes less. It requires a combination of higher renewables adoption, more efficiency in existing systems and production processes, greater “dispatchability” into rural areas, overall affordability, and political will. In other words, the “zero” in Electricity 4.0 connotes a zero-waste, zero-emissions, and zero-carbon future. This vision for South Africa is contingent on many factors, starting from renewables adoption.

Renewables are the prerequisites to Electricity 4.0

Globally, there is a broad consensus on the need to increase renewables share in the energy mix. We estimate the contribution of renewable sources to electricity production to increase six folds by 2040. In South Africa, where renewables account for about 10.5% of total electricity production, the adoption rate needs to be increased significantly. Fortunately, the country, along with the rest of Africa, is blessed with abundant renewable sources, including solar and wind power — which are the mainstay of the South African renewable mix. The decreasing life-cycle costs of PV panels and batteries and increased accessibility provide a timely boost for harnessing solar energy. Solar systems also present opportunities for off-grid, decentralized electrification in remote, rural areas while being aligned with the clean energy and sustainability imperative.

Digitalization is the bedrock for a structural shift

Evidence-based research⁽⁴⁾ argues that South Africa requires a minimum of 20% electrification rate per annum and a 200% increase in budget to $500 million to achieve universal grid access by 2025. This is to say, the scalability hinges on investments and the budget can be rationalized only through a clear perspective on ROI. That is perhaps where digitalization makes a compelling case. The adoption of IoT and analytics solutions in existing electricity infrastructure gives deeper visibility into inefficiencies and excessive energy consumption, revealing areas requiring optimization. These data-driven insights can translate to remedial actions, leading to savings in energy and operational costs.

In a few case studies using Schneider’s EcoStruxure — an IoT-led, plug-and-play, open, interoperable architecture platform — in residential buildings, grids and industries, we have registered up to 80% reduction in engineering costs and time, up to 75% reduction in maintenance costs, and up to 50% reduction in carbon footprint, on average. Such findings have great implications for South Africa, where industries account for about 52% of the total electricity consumption⁽¹⁾. Likewise, digitalization across the electricity value chain, particularly the downstream such as grids, can have a direct bearing on rural electrification and associated civic outcomes. Digitalized grids characterize bi-directional, decentralized power transfers, capable of integrating with renewable sources such as solar panels.

Cloud connectivity, centralized monitoring, timely maintenance, and transparency in IoT-powered grids ensure disruption-free “dispatchability” of electricity to remote, rural areas. Considering over 32% of the population in South Africa resides in rural areas, the impact can be profound on education, healthcare, and employment, among other socioeconomic axes. The increase in value-chain efficiencies, reduction in energy usage, and the optimization of operational costs, besides the replacement of coal by cost-effective renewables, can enable policymakers’ spending as part of the Integrated National Electrification Plan (INEP) and other national-level initiatives.

In other words, for sustainable electrification, the answer lies at the intersection of digitalization and renewables. South Africans stand to benefit immensely by subscribing to this notion, but the political will must first pave the way.