Report proposes replication of collaborative water model in electricity sector

20th November 2023 By: Terence Creamer - Creamer Media Editor

A new PwC report makes the case for replicating a collaborative infrastructure model that has been used in South Africa’s Limpopo province to provide bulk water to both mines and some 400 000 residents for the delivery of electricity infrastructure.

Titled ‘Africa Energy Review 2023’, the report highlights the success of Lebalelo Water User Association (LWUA), which was established in 2002 to supply bulk raw water to the mining sector and communities on the eastern limb of the Bushveld Igneous Complex.

Using what PwC describes as a ‘collaboration-aggregation model’, the LWUA leveraged the commercial support provided by large-scale mining offtakers to reduce the risk of funding of the Olifants River Phase 2 programme, while also alleviating pressure on the fiscus.

“Given the proven concept, the opportunity also exists for energy collaboration-aggregation.

“The essence of this system-based energy model is that it would aggregate demand (using a series of sub-aggregation pilots) and design a best mix of technologies to provide stable power at best cost, including transmission/distribution considerations,” the report argues.

PwC notes that aggregation enables businesses to create economies of scale that can improve the negotiating position of the collective buyers, support competitive pricing, yield favourable power purchase agreement terms and accelerate deployment.

Aggregation models also mitigate risks associated with energy procurement by spreading the risk across a larger portfolio and creating buffers against potential market volatility and changes in regulatory policies.

“The collective demand can accommodate a variety of energy sources, including renewable energy, promoting a diversified and sustainable energy mix.

“This flexibility enables buyers to align their procurement strategies with their sustainability goals and adapt to changing market dynamics,” the report adds.