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Jan 20, 2012

Energy deregulation could spur new businesses, industries

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Jasco CEO Pete da Silva discusses the deregulation of the South African energy industry. Camerawork: Nicholas Boyd. Editing: Darlene Creamer.
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A diverse and robust energy industry can be created in South Africa through government’s deregulation of the South African energy generation market, similar to the deregulation and subsequent boom of the telecommunications industry, says electronic and electrical specialist company Jasco CEO Pete da Silva.

“The government is moving towards deregulation. The first independent power producers (IPPs) will come in the renew- able-energy space, including solar and wind. I hope to see an IPP in South Africa com- parable to cellular carriers Vodacom, Cell C or MTN.

“I believe the energy sector will follow a similar path to the telecommunications industry for the next 20 years,” he says.

The deregulation of the telecommunications industry took a long time, he emphasises, and Jasco expects a slow birth in the energy sector as well.

However, Da Silva encourages companies and government not to lose momentum and to move into larger-scale developments of renewable-energy projects.

“The management of [State-owned power utility] Eskom has called on corporate South Africa, industrialists, municipalities and IPPs to help it to achieve its goals.”

However, it is critical to ensure that the technical energy industry knowledge be developed and retained in South Africa, he says.

“We must be able to develop the know- how and ensure the sustainability of the industry.”

Further, lessons can be taken from other countries around the world and implemented in South Africa to shorten the period of development of renewable-energy generation projects.

Da Silva adds that smart electricity grids will draw on the information and communication technology industry’s knowledge of smart networks and the migration of the intelligence in the Internet protocol industry to energy.

“There are already examples of functioning smart grids in Europe and the world. We can learn from other countries what has and has not worked, such as the required form an independent power-buying body should take,” he says.

Da Silva encourages government and the Department of Energy to speed up and place as much urgency as possible on the deregulation of the energy industry because it is a catalyst for growth.

“Energy is needed to grow and we have to ensure that we have it in abundance so that investors, seeking secure, affordable power, will invest and build factories in South Africa,” he says.

He mentions that government’s three-year study for its renewable-energy feed-in-tariff programme, which was unceremoniously dumped for a bidding process, had wasted time. However, he concurs that implementation of an independent power production industry must be stable and sustainable to attract investment.

“In some Nordic countries, and specifically in Germany where there is less solar radiation than in South Africa, the country boasts fully functioning, large-scale solar photo- voltaic farms.

They have forced the development of the industry, enabling investment by setting a long-term, 20- to 30-year power purchase agreement with the farms, saying that they will buy all the electricity produced by these renewables projects.

“This type of bold statement enabled an industry to be built around it,” concludes Da Silva.

Edited by: Martin Zhuwakinyu
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