African electric utilities typically operate at a low level of efficiency, according to the African Development Bank. Almost a quarter of the electricity utilities produce is lost on the distribution network due to technical inefficiencies and theft, compared with only 10% for a well-run utility. Less than 90% of charges billed to customers are actually collected by utilities, compared with 100% for a well-run utility business.
In countries such as Burkina Faso, Ghana, Niger and Uganda, the value of uncollected power bills can run as high as 1% of GDP. These inefficiencies lead to cash shortages that make it difficult for utilities to maintain networks, replace parts, and invest in infrastructure upgrades.
Robert Mubiru, Distribution Management Expert, Energy Utility Corporation Limited, Rwanda told us at African Utility Week that technical loss reduction “involves a lot of investment in the network and it should not be ignored.” It requires proper network analysis and long term sober commitment to good prioritisation so that utilities obtain maximum value from network investment, he added.
With non-technical losses, Mubiru says that it is important for admin to carry out revenue cycles well and document customers properly but there is also a need to educate the population. “A cultural shift is needed to curb theft.” This requires the involvement of government, civil society and utilities. “A consistent message is necessary.”
Sicelo Xulu, Managing Director, City Power which was awarded the “Power Utility of the Year 2016” at Africa Utility Week, said that when it comes to managing cable theft, modern grid technologies are helping the company to curb losses and enhance revenue collection. “It’s about being proactive, as well as adopting a multiple approach which involves new technologies and solutions. You also have to respond from an intelligence point of view where education, harsher sentences and a change in legislation come into play. The ‘business as usual approach’ is no longer appropriate.”
Models and tech that support operational efficiency
Reforms are the key to improving utility performance. Countries that embrace the reform agenda and that have well-developed power regulatory frameworks, and that do a more efficient job managing their state-owned utilities, suffer significantly less from inefficiency than those that have done little or nothing to fight unnecessary losses, says the Bank.
Measures that seem to have a substantial impact on reducing hidden costs are private participation in power distribution and (among state-owned utilities) performance contracts that offer clear incentives for managers to improve efficiency.
Mubiru says that Africa is not leveraging the opportunities that can be gained from operational efficiency and as a result, business is cost heavy. He explained: “Adopting models that will promote operational efficiency such as unbundling will expose the different leakage areas in terms of revenue and holding people accountable.” He added that by getting stakeholders to work together to agree on a tariff that meets everyone’s needs (as well as providing an affordable rate for the customer) forms part of this aim for efficiency.
Caroline Faasen, Senior Engineer, Africa, DNV GL told us in the studio that by improving performance and operations you can “gain a lot and increase generation, reduce your losses and increase revenue.”
“She highlighted the importance of the professional management of operational assets. She added: “Operational efficiency is largely untapped. Inspections, performance measurement, and data analysis will enable better operational efficiency of projects.”
Enhancing control with new tech
The ability for utilities to understand and control the network is becoming a lot more important especially when it comes to a higher level of operational efficiency. Technologies are becoming smarter from a utility point of view as a result. Power quality, losses whether commercial or technical, predictive maintenance, and network planning are the main areas that new technology can improve.
A lot more disruptive tech is on its way into the market like EVs and solar so it’s important for the grid to be adapted and upgraded in order to operate efficiently in the future and to accommodate for these technologies.
Phil Dingle, Marketing Director, Lucy Electric told us at the African Utility Week studio that while the traditional power distribution exists, today’s networks need additional and smarter technology to really enhance control, automation, and monitoring.
He pointed out that more than ever before, utilities must understand their more complex network and be able to control and manage it given the variability of technologies that are being introduced to the network, particularly the impact of renewable integration.
New technologies enhance business operations
Disruptive technologies and the increasingly complex needs of today’s consumer should be seen as opportunities by utilities if they are to prosper in the future.
Xulu says of new technologies: “In response to this disruption, we need to structure ourselves so that we land in the driver’s seat. By embracing new technologies and innovation, we will have more control over new business revenues.”
Metering and billing has improved thanks to smart metering but there’s more to the new technology space, explained Xulu. He adds: “It’s broader than just billing. We need to prepare our networks for PV integration, net metering, EVs and flexible load management to name a few. Without new technologies, we won’t be able to adapt to new demands on the grid.”
“For us, the metering technology is not just about metering consumption. It’s about making sure that we change the way we manage the business going forward so we actually make sure that we start embracing new technologies and our infrastructure is agile enough so we can deal with some of these new types of factors.”
He added that operational efficiency is not only about new technologies, it also involves hiring the right skills and developing these further with the right kind of leadership.
Investing in the future grid today
Gerardt Viljoen, Managing Director, Sensus South Africa told us at the studio that it was important that utilities start investing in advanced metering infrastructure (AMI) today. “Don’t wait until tomorrow to improve your resource management. Invest in the future grid today.”
Viljoen explained that AMI investment will help utilities better understand their networks and will become more proactive instead of reactive. “Ageing infrastructure needs to be upgraded to improve operational efficiency and reduce energy and monetary losses.”
He concludes: “End to end solutions and technologies in real time will provide utilities a complete and holistic overview of their entire network. It’s time to start investing now in proper technology for the future grid and future generations. Don’t delay your investment because the sooner you deploy, the sooner you benefit. If you delay too long, there’s often no turning back.”