Green Cape 2040: Towards a smarter grid

Electricity is crucial for the economic and social development of South Africa, but disruptive changes loom on the horizon.

Electricity is crucial for the economic and social development of South Africa, but disruptive changes loom on the horizon. It is now clear that Eskom is unlikely to keep its electricity prices lower than those of alternative forms of electricity production, most notably small-scale photovoltaic (PV). As the current structure of municipal revenue provision relies heavily on electricity consumption for funding, an increase in residential production of PV could be disruptive.

This analysis finds that a significant amount of revenue will be lost to PV uptake, but that policies aimed at investing in advanced metering infrastructure (AMI) and other smart technologies, changing the tariff structure and encouraging economic growth from domestic PV manufacturing can reduce this loss. Because many of these technologies have not yet reached maturity and there is uncertainty over how smart grids will be deployed, this analysis suggests that policies be pursued sequentially. First, over the short term, the province should promote the use of AMI to provide policymakers and planners with the data they need to make effective decisions about private PV. Second, in the medium term, the province should consider investing in limited smart grid technology – a system where decentralised and centralised electricity production can coexist. Third, in the long term, the province should explore promoting the local PV industry to take advantage of this unfolding trend in renewable energy production, and look to other global cities for lessons in deploying more advanced smart grid technology.

These policies alone will not solve the municipal revenue problem – in all of our scenarios the province experiences significant revenue losses. However, decisions made now using the foresight available in this brief can keep the province ahead of the curve. Private PV uptake is inevitable and the province can either fight the trend and possibly experience increasing revenue losses or embrace clean energy and smart technology and promote a ‘Green Cape’.

Authors: Hanna Camp, Steve Hedden, David Bohl, Aa-ishah Petersen and Jonathan D Moyer