Q&A: MATLENG ENERGY SOLUTIONS - JSE MAGAZINE

Q&A: MATLENG ENERGY SOLUTIONS

Nelisiwe Magubane, chairperson of Matleng Energy Solutions, on renewables, localised generation plants and SA’s ideal power mix

Q&A: MATLENG ENERGY SOLUTIONS

Q: You served as the Department of Energy’s first director-General (2009 to 2014). One of your flagship projects was the Renewable Energy Independent Power Producer Procurement programme (REIPPP). What effect did this have on you? And how did it impact on your involvement in starting Matleng Energy Solutions?
A: The REIPPP seeks to introduce private sector participation in our energy-generation industry, which was long overdue. You will recall that even the white paper on energy policy of 1998 envisaged private power generation. Matleng’s vision is to provide energy solutions to power our economy in the most cost-effective manner by utilising the energy that is fit for the purpose. I am of the firm view that the establishment of Matleng Energy Solutions enhances the offering of the REIPPP by ensuring that deployment of renewable energy is not only embraced but also widely deployed. The success of the REIPPP was both a personal achievement and that of SA as a country.

Q: What is the main focus of Matleng?
A: We strive to solve clients’ energy-related challenges through the effective implementation of new and/or existing technologies. We believe that finding new energy solutions is the key to unlocking development on the African continent. We seek to ensure that the energy solutions we provide are appropriate. For example, it is a proven fact that gas is the most efficient form of energy to meet thermal [heating] needs. It is also a fact that renewable energy running costs are low at its best, and can be intermittent at its worst. That is, when the sun is not shining, there is little or no energy output, and similarly when the wind is not blowing. The solutions we provide to our clients ensure that such shortcomings are mitigated. It is our considered view that the future of energy is ‘distributed generation’. This means that smaller, localised generation plants will play a significant role in the future, and renewable energy is going to play a major role in that scenario.

Q: What is matleng’s main customer base?
A: Matleng started business operations in February 2015. Our main customer base comprises housing developers, power utilities, renewable energy companies and various turnkey contractors. We design a suite of solutions for all our customers. Based on the information provided, we seek to guide them on what we believe will be the best solution for their requirements.

Q: How do you work with Eskom and the Department of Energy?
A: We work very well with both Eskom and the department. Our team has combined experience in the energy sector of more than 70 years, placing us in a good position to offer our services to them. In fact, the department has invited us to participate in a high-level panel discussion at the South African International Renewable Energy Conference, which is being hosted in Cape Town in October under the auspices of the UN.

Q: Do you believe SA is doing enough to solve its grid power problems and are there short-term solutions that aren’t being explored?
A: SA was a latecomer in inviting the private sector and renewable energy producers to the energy-generation table. The energy challenges we experienced since 2007 created a fertile ground for new ideas and solutions. The fact that the Department of Energy has issued a number of requests for information and requests for proposals indicates the urgency to improve SA’s power grid problems. The Minister of Energy has invited businesses, academics and industry players to advise the department and provide energy solutions. I am therefore convinced that South Africans are  viewing the energy challenge as an emergency and all appropriate short- and medium-term solutions are being pursued.

Q: Renewable energy has a reputation for being expensive. Is this true?
A: The answer is a categorical no. When we label an item expensive we need to provide an honest answer to the question ‘compared to what?’. If we compare renewable energy to the current electricity tariffs we need to realise that we are comparing apples with pears. The current electricity tariffs reflect the cost of production of electricity. This is based on power plants that were built 30 to 50 years ago. The capital costs of those power plants are no longer reflected in the tariffs. I would like us to compare the cost of the renewable energy tariffs with the costs of Medupi and Kusile, which are new power plants and that are likely to reflect the capital costs. I have already indicated the shortcomings of renewable energy and the required support it needs to be able to provide the same service as traditional fossil fuel or other non-renewable primary energy sources. Our view is that over the lifetime of renewable energy generation, the costs are lower than those of fossil fuel and non-renewable primary sources. This is an emotive debate that I believe is misplaced. SA needs an energy mix that is appropriate. It is well endowed with coal and uranium resources and there are indications of significant shale gas reserves in the country. The debate that SA should have is: what is an appropriate mix that will ensure we utilise our resources with the least impact on our environment and water resources, which are in short supply?

‘The energy challenges that we have experienced since 2007 have created a fertile ground for new ideas and solutions’

Q: What off-grid solutions would you recommend for townships and poorer areas, and is it practical to roll out those solutions?
A: We are already providing answers for housing projects in Gauteng. The off-grid solutions that will be acceptable are the combination of gas [for thermal] and solar energy with storage for lighting and entertainment needs. The next challenge for the energy sector will be the availability of gas. We believe that this challenge must not be underestimated as it has the potential to undermine off-grid solutions that are being provided.

Q: Illegal electrical connections in informal settlements are a concern. Would renewable energy solutions present similar problems?
A: A lot has been learnt about the situation concerning the payment of services, and the issue of energy theft has been handled successfully in some of the metros. We believe these lessons can be utilised in the provision of energy solutions. The prepaid metering system is quite effective and can be used for other services too.

Q: What role can renewables play within the power grid?
A: The renewable energy projects from previous Department of Energy bidding windows are beginning to provide regular power supply to the grid. Additionally, technical generation capacity has the ability to stabilise the grid. The provision of renewable energy therefore has a positive impact on the grid.

Q: What options can businesses pursue when considering energy efficiency?
A: The best is to perform an energy audit. Businesses must ask themselves where and what is the energy used for? Once this is answered, an appropriate energy-efficient source can be used that will ensure that input costs can be managed.

‘If we compare renewable energy to the current electricity tariffs we need to realise that we are comparing apples with pears’

Q: How does a lack of energy impact on the development of microenterprises, particularly in rural areas?
A: Energy is the lifeblood of the economy. This statement applies to any enterprise, irrespective of the location. Lack of energy will definitely impact negatively on any micro or SME, or for that matter large business, especially where load shedding is concerned. Therefore distributed generation – generation in a particular area for that area – is important, especially for the rural parts of the country. Local generation empowers rural economies.

Q: Outside of main grid problems, what are the other barriers experienced by businesses, especially for multinationals, in providing energy for SA?
A: When I was director-general of the Department of Energy, one of the achievements I’m particularly proud of was the development of the Integrated Resource Plan 2010. This was the blueprint that led to the creation of the REIPPP programme. The plan was developed with the close collaboration of all stakeholders, including multinationals. It was not a perfect plan, but it formed the basis of the journey for all of us to move forward. In its development, there was a lot of honest engagement, which was sometimes difficult. I believe that some of the barriers that businesses have identified can be solved by honest and frank engagement. My opinion is that some of the regulatory uncertainty, especially in mining, and inflexible labour laws, is a clear roadmap for the future of the electricity industry and will remain a barrier to successful engagement.

By Kerry Dimmer
Image: Matina Steyn