Africa’s energy sector is undergoing a major transition with the rapid growth in renewable energy deployment and new additions of decentralised energy systems connected to power grids. This major transformation will come with new levels of complexities for power and utility companies on the continent. It could also be an opportunity to create new business models and find additional revenue streams for players in the power industry should they embrace digitalization.
African power utilities’ business models have remained relatively unchanged over the past half century. As digitalisation makes inroads in almost every sector, disrupting traditional business models and making inefficient businesses obsolete, the African energy sector will not escape this wave of change. African energy companies and utilities need to prepare for a changed energy landscape in the future led by digital technologies and consumer centricity.
The internet of things (IoT) provides a unique opportunity to ensure sustainable operation of power systems. Affixing IoT sensors to generation, transmission and distribution equipment can enable energy companies to monitor the systems remotely. IoT sensors measure parameters such as vibration, temperature and wear to optimize maintenance schedules. Automation will also ensure continuous operation of power generation systems.
Artificial intelligence (AI) also has the ability to unlock the vast potential of renewables in Africa. The intermittent nature of renewables requires new innovative solutions like AI to keep power grids stable. AI provides provide better prediction capabilities, enabling improvement in demand forecasting and asset management. This could provide competitive advantage to utilities and energy producers whilst ensuring cost savings. Digitalization and AI can help utilities and energy producers improve energy security supply, not embracing it would be a missed opportunity.
Evolving customer expectation to drive change
Evolving customer expectations are set to drive disruption in the African energy landscape. The African energy consumer has several connected smart devices in their homes. They are also looking at the prospects of owning electric vehicles that they will charge at their homes. These interconnected technological systems and decentralised electricity systems embedded to the grid would require smarter grid management and optimisation.
African electricity consumers now have very high expectations from their energy suppliers. Many of them are dissatisfied due to a number of reasons. The exponential rise in electricity prices, and the unreliable, and insufficient power supply has left many consumers frustrated. Traditionally energy secure countries like South Africa have been experiencing recurrent power blackouts that have been blamed for slowing down economic growth. Many consumers in Africa are working from home due to the COVID-19 pandemic. Power blackouts would mean many consumers lose much needed production time.
Climate change is also driving many African consumers to adopt energy efficiency solutions and energy management solutions. The advent of the Internet of Things brings significant benefits to the consumers as well. IoT enables households to advance energy efficiency through its ability to interconnect devices, controlling how much power devices uses, which devices to use and when.
What can utilities and energy companies do?
African power systems have to change to meet the continent’s developmental goals, add new energy connections and satisfy customers. Digitalisation can enable power utilities to build new architectures for an interconnected energy system, breaking down traditional boundaries between demand and supply and establish intelligent grids.
Adoption of renewable energy systems must facilitate the reduction of electricity prices. Globally, renewable energy technology prices are falling, this presents an opportunity for utilities to provide consumers with cheaper, cleaner energy that consumers demand. This is a win-win situation that will keep both the consumer and utilities happy.
Digitalization presents a myriad of opportunities for utilities and energy companies to offer new products and services. They can roll out electric vehicle charging stations across many African highways and be able to stay in business.
The Digitalization & Energy report produced by the International Energy Agency last year shows the benefits for utilities and energy companies embracing digitalization. They would not only remain in business but grow their revenue streams, improve safety and satisfy their customers. This is the future of the African energy landscape.
Munyaradzi Jani is the Executive Director at RenewAfrica.Biz. He writes in his personal capacity.