SA’s electricity reform is opening new markets for savvy entrepreneurs

Policy change brings with it market opportunities and work for entrepreneurs. Read policy not only as regulation. Read it as a signal of where markets are moving, where new problems will need to be solved, where customers will need new services and, ultimately, where new businesses can emerge.

SA’s Revised Electricity Pricing Policy provides a particularly important opportunity to apply this lens. The Cabinet has approved the policy for public comment, updating a framework that dates back to 2008.

At first glance, this sounds primarily like a technical regulatory matter about electricity tariffs. It is much more than that.

SA’s electricity industry is being restructured into increasingly distinct generation, transmission, distribution, trading and retail activities. The new pricing framework seeks greater transparency around the tariffs and charges that apply between generators, traders, the National Transmission Company South Africa and distributors.

This is happening alongside the implementation of the Electricity Regulation Amendment Act and SA’s movement towards a competitive electricity market. Whenever an industry is structurally reorganised in this way, new interfaces appear. And where new interfaces appear, businesses are needed to service them.

Eighteen possible businesses

Our initial analysis identifies at least 18 categories of entrepreneurial opportunity emerging around the changing electricity system.

1. Energy-efficiency services.

2. Solar PV installation and maintenance.

3. Battery and backup-energy services.

4. Smart-metering services.

5. Energy-data and analytics businesses.

6. Electricity-bill optimisation.

7. Municipal electricity services.

8. Solar and battery energy storage system operations and maintenance.

9. EV-charging services.

10. Embedded-generation development.

11.     Wheeling support services.

12.     Electricity aggregation.

13.     Electricity trading.

14.     Electricity-market data services.

15.     Independent Power Producer (IPP) supply-chain participation.

16.     Transmission and distribution supply-chain services.

17.     Community energy services.

18. Energy advisory businesses.

Some are sophisticated and regulated. Electricity trading, for example, is not an entry-level activity. But many are surprisingly accessible.

That distinction matters.

For too long, we have allowed entrepreneurship in energy to become synonymous with owning a renewable-energy project. That creates an unnecessarily high psychological and financial barrier to entry.

A young entrepreneur may conclude: “I do not have R50-million. I cannot participate in energy.”

But what if that entrepreneur could build a company that services 300 smart meters? What if another could analyse electricity consumption for 100 small businesses? What if another could maintain solar and battery installations?

And what if another could provide vegetation management, logistics, security, environmental services or drone inspections to renewable-energy and transmission projects?

These are energy businesses too.

The opportunity behind the meter

One of the most immediate opportunities may be found behind the customer’s electricity meter. As electricity pricing becomes increasingly cost-reflective and transparent, understanding when, where and how electricity is consumed becomes commercially valuable.

Consider a small manufacturing company. Its owner may know the monthly electricity bill, but may not know which equipment drives peak demand, whether the business is on the appropriate tariff, where efficiency losses occur or whether solar, storage or load shifting would produce the greatest savings.

That problem is an entrepreneur’s market. An energy-services micro, small or medium enterprise could analyse the customer’s bill and load profile, install monitoring technology, identify inefficiencies, recommend interventions and continue managing the customer’s energy consumption.

Instead of simply selling solar panels, the entrepreneur sells energy-cost reduction as a service. That distinction can produce recurring revenues through monitoring subscriptions, maintenance contracts, energy-management fees and potentially shared-savings models.

Municipalities are another market

Electricity-pricing reform also has important implications for municipal electricity businesses. Cost-reflective tariffs depend upon reliable information.

Municipalities need to know who their customers are, how much electricity they consume, whether meters are functioning, where technical and non-technical losses occur and whether customers are being billed accurately. Each weakness creates a potential market for solutions.

Customer audits. Meter verification. Smart-meter installation. GIS services. Data cleansing. Revenue protection. Network inspections. Billing analytics. Loss-reduction services.

These activities do not require an entrepreneur to construct a power station. They require technical competence, technology, credible execution and access to procurement opportunities.

The challenge for policymakers must therefore be to ensure that electricity reform deliberately creates pathways for capable micro, small and medium enterprises (MSME) to enter these emerging value chains.

Follow the infrastructure

There is another principle we encourage entrepreneurs to understand: follow infrastructure investment and interrogate its supply chain.

SA is entering a period of significant investment in generation, transmission, distribution and storage. Every project creates an ecosystem around it. A renewable-energy entrepreneur therefore does not necessarily have to be an independent power producer.

Between an IPP and the completed asset sit engineering, procurement and construction contractors, subcontractors, technology providers and dozens of service categories.

Civil works, electrical contracting, transport, security, environmental services, fencing, vegetation management, personal protective equipment, accommodation, logistics, cleaning, inspection and maintenance all represent economic participation. The same applies to transmission infrastructure.

If SA is going to build and strengthen substantial grid infrastructure, the entrepreneurial question should immediately be: Which parts of that expenditure can become sustainable South African MSME businesses?

The electricity market 

The more sophisticated opportunity lies in the architecture of the emerging competitive electricity market. The Electricity Regulation Amendment Act provides for competitive electricity trading, and recognises traders and market operators within the electricity system.

This creates a different commercial architecture: not every entrepreneur will become an electricity trader. But businesses will be required around electricity trading.

Customers need to be acquired and aggregated. Electricity needs to be metered. Consumption needs to be forecast. Transactions need settlement data. Customers need dashboards. Portfolios need administration. Generators and buyers need energy-accounting services.

Entire businesses could develop around these functions. We have seen similar patterns elsewhere in the economy. When industries move from vertically integrated structures towards more open ecosystems, opportunities frequently emerge not only among the large operators, but among specialised companies servicing the interfaces between them.

SA should deliberately cultivate those companies.

Entrepreneurship needs a progression model

This is why we should stop presenting energy entrepreneurship as a binary choice between being outside the sector and becoming an IPP.

There should be a progression.

Level One: Enter the market

Energy audits, meter services, energy efficiency, solar operations and maintenance, customer verification, data services, logistics and IPP supplier services.

Level Two: Build capability

Solar engineering, procurement and construction, battery integration, EV charging, municipal energy services, embedded generation, energy-management platforms and wheeling support.

Level Three: Build assets and market positions

Generation ownership, aggregation, electricity trading, storage portfolios, wheeling portfolios and independent power projects.

An entrepreneur could start by maintaining meters, progress into managing customer energy portfolios and eventually become an aggregator, trader or asset owner. That is how an inclusive energy economy should work.

Policy must become enterprise

SA’s energy transition will require enormous capital. But inclusion cannot be measured only by the megawatts we procure or the billions of rand invested. We must also ask how many new South African enterprises those investments create.

How many first-time entrepreneurs enter the electricity economy? How many businesses graduate from suppliers to contractors, from contractors to developers, and eventually from developers to asset owners? How many women and young entrepreneurs move into technical and commercial areas of the electricity value chain from which they have historically been absent?

This is why entrepreneurs must learn to read policy differently. A revised electricity pricing policy is not merely a document determining what electricity should cost.

It changes incentives. It changes commercial relationships. It creates new information requirements. It creates new customers. It creates new infrastructure requirements. And those changes create markets.

At African Women in Energy and Power, this is the discipline we want entrepreneurs to develop: whenever a new policy is announced, don’t stop at asking “What does the policy say?”

Ask: What changes because of it? What new problem now needs solving? Who will pay to have that problem solved? Can I build the business that solves it?

SA’s emerging electricity market will need generators, transmission infrastructure and significant institutional reform.

But it will also need thousands of businesses performing the functions around them. The opportunity is no longer simply to generate electricity. It is to measure it, manage it, save it, store it, move it, maintain it, analyse it and, increasingly, trade it.

For South African entrepreneurs, that is where electricity reform becomes enterprise. DM