Decentral Energy Managers is purpose built to execute investments in the energy future.
Traditional energy generation projects are highly capital intensive, especially when risks materialise, as demonstrated by Eskom’s Medupi and Kusile projects. Such projects have protracted development lead times, and alternative supply options have surpassed the usefulness of these projects before they’re fully commissioned. Eskom’s mega projects are “lumpy” investments with high potential for regret. South Africa produces most of its energy in the North-Eastern parts of the country, yet consumes much of it in the South West, and transmission inefficiencies are fast becoming a significant cost per unit energy delivered.
Change is afoot, and South Africa’s energy sector is on a trajectory towards reform. South Africa is blessed with abundant wind and solar energy resources. IPP Wind and Solar PV are now the lowest cost new-build generation capacity available on a kilowatt hour basis. Solar PV is modular, enabling generation facilities to produce low cost energy near demand centres. The technology has demonstrated strong scale inelasticity, and facilities are viable at orders of magnitude smaller capacities than traditional utility projects. The decentral sector is robust, quick to deploy, smart, adaptive to energy demand, with low potential for regret.
Distributers are recognizing change in the sector, and are beginning to reinvent their operating models to embrace the future. The City of Cape Town Metro has mounted a legal challenge to the single buyer model whereby, barring Ministerial determination to the contrary, Eskom is the single legal buyer of energy in South Africa. To benefit its citizens, the City argues it should be free to purchase competitively priced output from IPPs, rather than being bound to purchasing energy from Eskom. The City has implemented measures allowing small-scale private producers to offset their power bills through net metering. Other municipalities have followed and local government, as electricity distributors, are recognising inevitable change in the sector.
Crucially, national government is starting to support the decentralised energy sector and on the 10th November 2017, the Minister of Energy amended the Electricity Regulation Act in terms of which projects below 1MW are no longer required to apply for a generation license and instead must simply register with the Regulator. This legislation creates an avenue for development of small, decentralised generation assets.
The energy future will see a prevalence of small scale, distributed and cost-effective generation facilities integrated with smart grid enabled peer to peer transacting. Decentral Energy Capital is purpose built to execute investments in the energy future.