South Africa is close to a tipping point in terms of its capacity to manage energy risks according to the 2022 SANEA Energy Risk Report.  The fifth publication of the report highlights that although some progress has been made in reducing policy uncertainty, a silo mentality and the lack of integrated planning and implementation means that what actions are being taken are not sufficient and the change is not rapid enough.  A lack of maintenance and quality of infrastructure, insufficient skills are also putting further pressure on the energy system.

This is evidenced through increasing energy costs, a lack of energy security and load shedding in the case of electricity.  This is compelling customers to source and supply their own energy needs (oftentimes at a lower cost) and take control of their business risk.  This negatively impacts the business models and financial viability of State Owned Enterprises and municipalities – causing the proverbial utility death spiral where costs increase to cover fixed costs, driving customers away and reducing revenue.

This “constellation of disruption” will increase the already considerable pressure on government to bail out energy players with an already constrained Ficus and decrease affordability with all the socio-economic implications that it brings. 

The situation can be turned around if there is agile and integrated policy, all players integrate their effort  and a laser focus on implementation.  These shifts are urgent as the green hydrogen and associated clean molecules are a significant opportunity for the country.  It will however mean that skills need to be realigned or scaled up, ease of business needs to be a priority and action taken to ensure South Africa is globally competitive.  This may require some trade-offs, but unless urgent action is taken the energy risk landscape in South Africa will continue to be a thorn in the foot of progress.

The full SANEA 2022 Energy Risk Report will be launched at the SANEA Conference taking place on 9 – 10 November at the Gallagher Convention Centre.

To be part of the Energy Risk Report discussions and the conference thought leadership, register now! Click here to register