Amid the technological ‘tsunami’ in renewable power technologies under way, African energy regulators need to have rules that are market friendly and that encourage competition, highlights University of the Witwatersrand Business School’s African Energy Leadership Centre visiting adjunct professor Dr Rod Crompton.

With many African countries adding generation capacity, but struggling with weak, State-dominated power grids, Crompton says it would be helpful for professional, independent electricity regulators to determine cost-reflective tariffs for the use of electricity grids, with the ownership and operation of grids as separate, standalone entities, without any vertical integration, whether publicly or privately owned.

He also endorses the establishment of independent and microgrids. Grid codes should be approved by independent regulators setting out the rights, obligations and duties of all parties associated with and using an electricity grid.

“It would be helpful to have rights for private investors to invest in parts of a grid where there is demand and/or inadequate grid services, and a requirement for grid owners to publish yearly, five- and 20-year grid development plans for their grids,” he says.

Balancing Act

Noting that cost-reflective tariffs are often viewed as essential for sustainable power systems, and amid affordability and political concerns, Crompton says unelected independent regulators should not be expected to balance social and economic realities by producing or implementing social policies.

Instead, they should strictly stick to “pure, electricity system-based” decisions.

“It is for the democratically elected representatives to determine what social policies, if any, should be introduced. Such social policies should be funded from outside of the electricity system and the funding delivered to beneficiaries through payment channels outside of the system used for the payment of electricity services,” he adds.

Reflecting on South Africa’s energy transition, Crompton highlights that while there is no single definition of a just energy transition (JET), it “will cost all societies more than business as usual”.

He notes that implementing a JET requires extensive and careful planning, beginning a decade in advance and involving society at local, regional and national levels.

“Market forces, left to themselves, are unlikely to deliver a JET. An ‘institutional home’ is needed in government to drive this, and an economic alternative is needed for those adversely affected,” Crompton highlights.

Further, he notes that the evolution of energy governance and regulation to manage the competing priorities of decarbonisation, energy access and economic growth are complex and difficult trade-offs.

Consequently, building trust and respect “for the long haul” is key and evidence-based planning, rather than emotion, is required.