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BCG highlights challenges, opportunities amid energy transition

28th February 2024

By: Sabrina Jardim

Creamer Media Online Writer


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Amid the global transition to cleaner energy sources, African countries face various challenges and opportunities pertaining to the adoption of renewable energy.

Consulting firm Boston Consulting Group (BCG) partner Rudi van Blerk noted during an online discussion on February 27 that many African countries did not yet have access to reliable and affordable electricity, while also lacking sufficient energy infrastructure.

As a short-term solution to unlock additional electricity generation capacity, he said there was potential for commercial and industrial customers to generate their own electricity and supply it to others.

“There's all kinds of interesting business models that are starting to form around this, around procuring renewable energy from a third party, but also becoming developers partnering with other commercial industrial customers to jointly develop renewables projects,” he said.

He highlighted that unlocking capacity required the correct transmission systems and necessary transmission infrastructure to be in place. Addressing global infrastructure gaps could, thus, allow the private sector to scale up and invest in large-scale renewable energy.

As a long-term solution, Van Blerk said a market mechanism to incentivise private sector investment in renewable energy was needed, enabled by the right regulatory environment and transmission capacity, and supported with the right investment.

He also noted that there was an opportunity to bypass transmission and allow municipalities to procure renewable energy directly from the market and run that through the distribution network rather than through the transmission network.

However, challenging supply chain bottlenecks have arisen as a consequence of many countries scaling up transmission infrastructure.

Further, a large scale-up in renewable energy globally is also expected to contribute to a growing skills gap.

Van Blerk noted that the development of more renewable energy products in South Africa could result in about 300 000 new jobs being created by 2050.

He also warned that if South Africa did not decarbonise rapidly, 33% of trade could be at risk owing to carbon tariffs being implemented by some of the country’s biggest trading partners by 2030.

African economies will thus increasingly face a trade risk as trading partners implement their decarbonisation goals and regions, such as the European Union and the US, introduce carbon border taxes that will threaten Africa’s carbon-intensive exports.

“There [are] large shares of our domestic product earmarked for export, that could be at risk if we don't decarbonise, but energy also forms a very big cost to many of our major industries, including mining and steelmaking.

“I think, in Africa, we have the potential to use our ability, or our access to relatively attractive, renewable resources to decarbonise our industries,” said Van Blerk.

“If we make the most of this, we have the opportunity to not only increase our access to electricity, [but also] to . . . ensure that that energy is sustainable and low carbon,” he added.

Meanwhile, BCG MD and partner Tycho Moencks noted that, while many mines had invested in technology and digital infrastructure, there was also concern about job losses among employees.

Hence, he noted the importance of fostering a better understanding of the benefits of new technology that can improve mining operations without putting jobs at risk.

In a previously written article, BCG MDs and partners Peter Clearkin and Alexis Bour argued that, while artificial intelligence (AI) and the automation of jobs have social implications, they could also create jobs, or turn lower-skilled jobs into higher-skilled jobs that benefit the workforce.

They noted that there were five main areas where AI was starting to drive greater efficiencies in mining, namely metallurgical processing, exploration decision-making, predictive maintenance, AI-enabled decision augmentation, and moving from supply-driven to demand-driven mining.

Moreover, with cost already being an important focus for mining companies, Clearkin noted during the discussion that South African infrastructure challenges, such as loadshedding and rail issues, were creating more pressure for local miners.

“While we have a lot of the resources in the ground, I think there’s a lot of work that needs to be done to enable those resources to be effectively extracted,” he expressed.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online



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