The electricity industry operates in an environment of constrained supply and increasing demand, resulting in some serious challenges going forward:
- Growing production capacity constraints and a critically low reserve margin are destabilising the electricity grid, resulting in widespread forced load-shedding to reduce demand. An intensive and extensive new build programme is underway and needs to be funded. Substantial tariff increases (50% to 60%) are predicted. Despite the build programme and price increases, capacity constraints are expected to cause supply disruptions for the next 5 to 7 years, unless a sustainable power conservation programme can be implemented. Deloitte’s strategic capability is assisting numerous stakeholders to face the challenges posed by the current electricity supply crisis.
- At the distribution level, government has attempted to intervene by creating the regional electricity distributors to restructure the distribution industry and introduce efficiency and cost savings; however, potential constitutional challenges to this process, and the absence of a sustainable ‘Deal’, have thwarted any tangible progress. Once again, Deloitte is assisting the both public and private players to resolve the impasse and develop a sustainable electricity-distribution industry.
- Finally, the ‘quick wins’ of the electrification programme, off a low base, are dwindling and the more expensive, less affordable non-grid options for electrification will need growing subsidisation. The broader strategic objectives of the government in this regard will undoubtedly lead to interventions in the market, opening up opportunities for public private partnerships (PPPs) – a Deloitte global competency.
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