Why power utilities are not the solution
With an estimated population of more than 1.2 billion people, Africa finds itself in 2023 with more than 600 million people without access to electricity. Even among those that have access, the quality of the service remains a challenge, as millions of people across many cities in Africa are subjected to electricity blackouts for many hours daily, in some cases for several days.
As debates continue to rage on about how to best address this challenge, a little reality check helps put a few things into perspective, making it possible to steer into the right direction for where the solutions lie.
Globally, the energy sector is undergoing a massive change and transition, and traditional utility companies are adapting. From changing their business model and embracing technology in managing their infrastructure, to integrating their businesses into the decentralising model of electricity generation, power utilities around the globe are continually aligning themselves with a new reality. In Africa, there is a significant lag in transitioning to the new paradigm, as power utilities continue to grapple with several endogenous challenges, including:
- Their origins and the legacy of national monopoly. Most utility companies in Africa are state-owned enterprises established in an environment of centralised control where generation, transmission and distribution (and even regulation) were handled by one entity. This set up made them highly bureaucratic, inefficient, entitled and often overstaffed, unable to respond to the demands of a modern economy.
- Fuel source. Many African electricity companies are still heavily invested in fossil fuel-powered plants, especially in South Africa, with the largest power utility in Africa commissioning and investing in new coal power plants. An energy transition also includes a change in the generation mix, diversifying away from fossil fuels, which is proving to be a major challenge given entrenched interests.
- Large and slow to adapt. By virtue of their size, workforce and managerial levels, as well as their entrenchment in old (tried and tested) technologies and processes, many power utility companies across Africa find it difficult to adapt to change and sometimes are quite resistant to it. This includes their interaction with technology which itself is not static and is evolving rapidly every day.
- Political influence (cost-reflective tariffs and others), maladministration, corruption, over-indebtedness, coupled with centralised control over generation, transmission and distribution as reforms struggle to take hold, mean that traditional power utilities are not easy to manage effectively, further exacerbating the challenge of transitioning them to the future.
- Aged, ageing and badly maintained infrastructure. Most, if not all, utility companies across Africa face the challenge of ageing infrastructure at every level (from generation to transmission to distribution). Power plants are inefficient, operating below capacity as reinvestment and maintenance budgets are overlooked, resulting in output that is significantly below the installed capacity.
Other challenges facing African utility companies include the deployment of appropriate technology to manage the grid as more small-scale generation units come online (frequency fluctuation, maintaining voltage levels, avoiding both load and fault masking). As many of them continue to face inadequate investment in infrastructure, these problems are compounded.
The problems in themselves are not new and the evidence available shows that little will change in the future, if not for the worst. With many other challenges that African power utilities face, it is difficult to imagine them as the platforms to effectively support economic growth across the continent by providing a basic input into the various processes of a modern economy, let alone transition Africa into the new reality of electricity provision, unless some very courageous and drastic actions are taken.
