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Will the African Utility of the Future be a Lion, Hyena, a White Elephant or a Herd of Elephants? – GIBS Study

A brand new study into the future of African power utilities and the challenges they face has highlighted four possible scenarios of what the continent’s energy sector will look like by the year 2030.

Cape Town, South Africa, August 03, 2018 --( A brand new study into the future of African power utilities and the challenges they face has highlighted four possible scenarios of what the continent’s energy sector will look like by the year 2030. In the whitepaper, titled: “The Future of Energy and Power Utilities in Africa,” utilities are envisioned to either become “The Lions of Africa,” “Hungry Hyenas,” “An Elephant Herd” or “White Elephants,” with each scenario having different consequences for both the African energy industry at large as well as the consumer.

The research project was conducted by the Gordon Institute of Business Science (GIBS) at the University of Pretoria, in collaboration with Clarion Energy, organisers of flagship energy events such as African Utility Week, Future Energy East Africa, Future Energy Nigeria and the Utility CEO Forum series - meetings and events that share ideas, encourage networking and facilitate business partnerships across the continent.

Can utilities remain relevant?
“The future of power and energy in Africa is at a significant junction,” says Natalie Bacon, programme director at African Utility Week, “and African states and the power stakeholders operating within this sector realise that the impact of providing universal access to affordable energy will not only lead to accelerated economic development but significant social improvements. Yet, to achieve universal access executives have many strategic decisions ahead of them.”

She explains: “hitherto business as usual for utilities has meant bulk energy production and distribution through coal-fired power plans, centralised grids and public sector monopolies. However, this is quickly coming under threat from new models of energy production and distribution. The four scenarios outlined by the study will help utilities and the wider industry visualise what African utilities could look like in 2030 and try to answer the important question of how utilities can remain relevant, effective and lead the African energy revolution.”

Honest reflection of sector in flux
Natalie Bacon adds: “We are very pleased with the completed GIBS Scenario Whitepaper which, even for a lay person, is easy to read and contains a treasure trove of background information, telling figures and statistics and country profiles. It provides an honest reflection of a sector in flux, detailing its current challenges and opportunities. “The Future of Energy and Power Utilities in Africa” will no doubt contribute to the on-going dialogue, knowledge sharing, challenging of the status quo and peer-to-peer interaction in the energy sector that we are continually striving to facilitate at our events.”

Four scenarios of future of utilities
Short summaries of each of the four scenarios identified in the study are:

Scenario 1: The Lions of Africa
In 2030 African utilities have become a pride of agile lions, hunting for new opportunities in collaboration with business and community partners.

Scenario 2: Hungry Hyenas
In 2030 African utilities have become a pack of hungry hyenas, scavenging for short-term returns and manipulating the interests of their business and community stakeholders.

Scenario 3: Elephant Herd
In 2030 African utilities have become a herd of African elephants, dominating the energy landscape in Africa with bold investments funded from abroad. Businesses and communities have little choice but to pay a premium to cover the rising cost of sovereign debt that accompanied the rapid expansion of bulk energy infrastructure between 2020 and 2040.

Scenario 4: White Elephants
In 2030 African utilities have become a herd of white elephants, struggling for survival and relevance on a vibrant African continent.

Major uncertainties in sector
The research revealed that there are four major uncertainties that form the backdrop for the alternative future scenarios for African utilities and will determine their trajectory in a changing energy landscape:

Fiscal stability and viability of alternative models:
Will the precarious fiscal position of utilities be resolved in ways that produce long term sustainability and will viable alternative funding models be created in this process?

Governance and regulatory readiness:
Will the low quality of governance in the sector be improved and will this coincide with an appropriate regulatory response that is enabling and facilitating of new opportunities in the sector?

Partnership and collaboration across social partners:
Will the private sector and social actors such as communities consider partnership with utilities as an attractive prospect or will they seek to take advantage of new avenues for energy provision in isolation?

Climate change:
A wildcard / shock scenario: Will climate change and the effects thereof, such as extreme weather, persist, desist or accelerate, and what will be the effects?

The Scenarios Whitepaper: “The Future of Energy and Power Utilities in Africa” is free to download from the African Utility Week website.
Contact Information
African Utility Week
Annemarie Roodbol
+27 21 700 3558

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