New Roles and Business Models for Municipal Electricity Utilities in the Energy Sector

In an effort to tackle challenges in the energy market sector, South African – German Energy Partnership in collaboration with SEA, recently held a knowledge exchange workshop for municipalities. Both South African and German municipalities provided insights on their experiences and opened up discussions for possible pathways that SA municipalities can consider.

Due to the rapid transformation of the energy sector, local electricity utilities are under pressure to change the way they operate and adapt their business models to the new developments, taking into account climate change imperatives and the increased affordability of new technologies, which, with a concomitant increase in electricity tariffs, result in radical behavioural changes of customers. Local utilities are compelled to change their business models and make the most of opportunities arising from the energy market transformation to ensure their sustainability.

The knowledge sharing workshop “New Roles and Business Models for Municipal Electricity Utilities in the Energy Sector”, which took place on the 22 of February in Pretoria, opened the space for discussions on new possible business approaches in the South African municipal context. Initiated by the South African – German Energy Partnership implemented under the German Federal Ministry for Economic Affairs and Energy (BMWi) and facilitated by SEA, the workshop included a mix of insightful presentations from South African and German municipal representatives as well as fruitful discussions on possible business models for South African municipalities and the overall longer term objectives for the South African municipal electricity utility sector.

The workshop was well attended by both national stakeholders, such as SALGA, AMEU and DOE, as well as local stakeholders represented by metros. Mr Thorsten Herdan, Director-General for energy policy, heating and efficiency at BMWi and Mr Jacob Mamabolo, Member of the Executive Committee of the Gauteng Department of Human Settlements and Co-operative Governance and Traditional Affairs both stated in their key note speeches that the changes towards local energy supply and services are happening and municipalities have to fully embrace them. As one of the outcomes of the workshop, the need for establishment of a working group with all relevant national representatives to further unpack the topic was identified.

The South African – German Energy Partnership will further support the dialogue on this topic and under this partnership, there will be a further opportunity to engage with the German experts.

The South African – German Energy Partnership has also compiled a case study based on Germany's experiences and provides an overview of how German municipal utilities responded to the changes in energy market environment caused by liberalisation, unbundling as well as increased shares of renewable energy and embedded generation in particular. The paper is aimed to enable an intensive dialogue on the development of new business models for South African municipalities, giving some first ideas on possible new approaches within the South African context.