November 17, 2017

Venmyn Deloitte predicts shift to more decentralised power generation

Venmyn Deloitte predicts shift to more decentralised power generation

With the Southern African power pool facing a net power deficit, Venmyn Deloitte says coal-fired energy will continue to remain relevant.

A shift from centralised monopolies to unbundled structures and a greater role for independent power producers (IPPs) in the coal space are expected. These trends, which will combine with increasing moves to alternative sources of energy, are seen as critical answers to alleviate the regional power deficit. Chris de Vries from  Venmyn Deloitte says while coal IPPs are certainly not a “silver bullet” to solving the energy problem, more power partnerships will be the best way to begin plugging the gaps.

This comes as governments in the region increasingly look for more support in their plans to diversify the energy mix and secure more power to meet rising growth needs.

Sub-Saharan Africa grew at an average of 6% over the past 15 years and despite a recent slowdown after a rout in oil and other commodity prices, the region is expected to remain one of the fastest growing in the world.

Venmyn Deloitte research shows that 25 different coal IPP projects have already been communicated to the market across the region, with Indian backed Maamba in Zambia the first to get off the ground. Publically announced coal IPPs in South Africa include projects spearheaded by mining majors Glencore (Lesedi), Anglo America (Khanyisa) and Exxaro (Thabameetsi), with De Vries noting that there are likely more projects in South Africa that are kept confidential at this stage.

“All of these coal IPP projects in the Southern African region may not progress to eventual construction, , but investors are seeing clear opportunity as governments look to the private sector to help close the energy deficit. Once a couple of these IPPs come on stream we will see more momentum as perceived execution risk reduces. We are also likely to start seeing pooling models where coal from different mines are pooled into a central coal IPP” says Mr De Vries.

Delivering a successful coal IPP calls for partnerships at a technical, funding and governmental level. Closer relationships between public and private players in terms of technical and funding models, as well as regional projects and solutions is seen by Venmyn Deloitte as “key requirements”.

 

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