Can South Africa embrace renewable energy from the sun?
Coal is still South Africa’s primary source of electricity, despite the fact that many areas of the country average more than 2,500 hours of sunshine a year.
By contrast, the UK averages just 1,500 hours of annual sunshine – so, for South Africa to make better use of this abundant energy source to generate its own electricity would make a lot of sense.
Over the next decade this energy supply picture could change quite radically.
In June it emerged that South Africa’s state power utility Eskom, Africa’s biggest greenhouse gas emitter, is putting forward a $10bn (£7.4bn) plan to close the vast majority of its coal-fired power stations by 2050 and embrace renewable energy.
During the COP26 climate summit, the US, EU, UK, Germany and France pledged $8.5bn over the next five years, to assist South Africa’s big plan to go green.
Eskom’s chief executive André de Ruyter says the COP26 announcement will enable South Africa to meet its “new and ambitious” targets.
But many question whether Eskom is capable of delivering such a huge transformation.
The company is staggering under a $27bn debt burden, which has hampered investment in its already ailing infrastructure. Rolling blackouts, known as “load-shedding”, are a common occurrence across the country.
It is clear something needs to be done. South Africa is the world’s 12th highest emitter of carbon dioxide and the highest emitter in Africa, according to the Global Carbon Atlas.
Even if Eskom decided to stick with coal, the company says it would need more than $20bn to make its ageing coal power plants compliant with South Africa’s current minimum emissions standards.
So, some kind of move to renewables seems inevitable, but industry insiders agree with Mr de Ruyter that his plan is ambitious.
Sharief Harris, head of development at Red Rocket Energy, a private green energy firm says that if there is any hope of transitioning to renewable energy, Eskom first needs to address its failing infrastructure and financial challenges.
Mr Harris also points out that as well as building solar plants and wind farms, Eskom would have to spend more money to connect them to the electricity network.
“Serious upgrades to the electricity grid will be required to connect any capacity to the grid and $10bn will not be sufficient,” he warns.
The power giant has acknowledged that, and recently estimated it would need around $35bn over the next 15 years, to make a successful transition to renewable power.
The hope is that there will be a ripple effect from the initial commitment of $8.5bn from the US and Europe, encouraging future investment from foreign private investors.
Meanwhile, South Africa’s transformation to greener energy might get some help from independent energy firms.
Until recently, restrictions and regulations on private power production hindered the solar industry’s growth in South Africa. But this year regulation changes have allowed commercial power firms to build much bigger power stations – up to 100 megawatts.
Red Rocket currently has two solar plants in operation in Africa and is planning further expansion.
The company also helped build one of Africa’s biggest solar power plants, the 75 megawatt Kathu plant in South Africa’s Northern Cape, which covers 800 hectares (2,000 acres) – it can produce enough electricity for 73,000 homes in the surrounding communities.
But South Africa will need hundreds more solar power plants, if it is to end its reliance on coal.
The switch to solar also faces significant political challenges. In a country with an official unemployment rate of 34%, there are questions over whether a transition to solar will be good or bad for the country’s workforce.
South Africa’s Energy Minister, Gwede Mantashe, has raised concerns about job losses resulting from the shutdown of multiple coal power plants. He referred to the switch to solar as “economic suicide”.
Eskom has challenged this assumption, and Mr De Ruyter says that rolling-out the solar infrastructure could generate over 300,000 jobs in South Africa.
In an attempt to address these uncertainties, the nations investing in South Africa’s green transition, say a task force will be established to create “green and quality jobs”.
It is hard to compare the jobs generated by solar power versus coal. Coal power stations provide job opportunities throughout the facility’s operational life, while renewable technologies see large numbers of jobs created during the initial construction phase, but require fewer workers once operational.
Yet, a more stable energy supply would benefit the country’s economy as a whole and might encourage more foreign investment, which would be good for employment.
The Solar Green Academy, which has five training centres across South Africa, has already seen an uptick in demand for its courses in anticipation of further investment. The academy provides technical training for people hoping to build a career in the solar energy industry.
Amanda Dzivhani from the Academy says that solar is increasingly important because it has “opened up space for people to create their own job opportunities, or for people to create job opportunities for others”.
Innovating on a budget: how FSI organisations can remain agile in the face of adversity
Source: Finance Derivative
By Charlie Thompson, Vice President EMEA, Appian
There’s little doubt that tough economic times will necessitate difficult business decisions. Gloomy forecasts from the World Bank predict just 1.7% growth this year, forcing businesses to reevaluate their operations as they navigate this flux – all whilst protecting the bottom line. Remaining agile is imperative for any business. The cost of doing nothing and simply adopting a ‘wait and see’ approach to ride the economic storm will lead to stagnant business growth.
But how can those in heavily regulated industries, such as financial services and insurance (FSI) companies, continue to innovate and grow in this economic environment? How can they remain agile in adversity whilst managing the increased risk from a downturn? Not only are they contending with protecting business performance in a turbulent economy, but they are also facing increased regulatory compliance when it comes to being held accountable for their environmental, social, and governance (ESG) practices. This is all come at a time when customer expectations are higher than ever. Staying ahead of the curve – especially given the number and success of many fintech disruptors – has to remain paramount. Thankfully, constraints offer ample opportunities for technological innovation.
When it comes to planning for the year ahead, there are three main areas that FSI business leaders should embrace to enable agility and remain competitive.
Managing increased regulatory reporting
This year, there will be increased scrutiny of process controls and higher regulatory enforcement from governments and agencies. Transparency around the reliability of digital currencies and open banking will heighten as the industry looks to adopt an appropriate framework to manage and mitigate the risks around these new paradigms. The focus on ESG will also lead to the need for more comprehensive reporting, which will become even more critical this year with more emphasis on climate change and the requirement for companies to demonstrate their commitment to operating with purpose.
Recent news also confirms this, with the World Economic Forum citing that the failure of climate mitigation is the number one long-term global risk facing the planet today. As the public sector and investors require more accountability in this area, we can expect compliance around ESG reporting to increase substantially.
Whilst further regulatory measures are inevitable, the good news is that technology can help companies stay compliant and enable them to stay competitive, helping them not to lose ground as a result of increased regulatory controls. For example, organisations can deploy solutions to monitor and report ESG activities with a process automation platform and data fabric. This innovative technology helps companies manage their data easily in one place, regardless of where the data resides. A virtual data layer can help unify information across systems and quickly build enterprise applications. In doing so, integrated data will lead to better insights, enabling organisations to simplify and accelerate all their critical processes. Ultimately, this makes compliance monitoring and reporting easier and faster, thus allowing businesses to meet requirements whilst remaining agile.
However, despite the value that technology brings, there is a need for FSI organisations to strengthen their ability to adapt rapidly to change by using these digital tools to gain a competitive edge. In a recent survey, 81% of European IT leaders in financial services and 73% in the insurance sector said they are concerned the transition from the pandemic to an economic downturn will see businesses freeze IT budgets and headcounts. It is critically important that business leaders take the advice and use the digital solutions available to help them to innovate and remain competitive in a challenging environment.
Designing, orchestrating, and optimising processes
These challenges are inevitably creating a pressure cooker, where businesses are tasked with cutting costs, yet remaining agile in the meantime. This may mean that the ability to innovate could be short-lived. This is also supported by the research study that shows that eight in ten (81%) developers and software engineers across Europe in the FS industry say their organisation is already shifting focus away from innovation projects towards cost-cutting initiatives.
So, could this present a Catch-22 situation, where the troubled economy requires ambitious innovation, yet tight budgets prevent companies from carrying out that innovation?
This may not be the case. What remains important during uncertain times is that FS firms streamline their IT stack to focus on time-to-value, maximise return on investment, and stay competitive in an increasingly recessionary global economy. Process automation on a low-code platform is one solution organisations have used to design, orchestrate, and optimise critical processes. By leveraging the right technology, business leaders can increase productivity, and boost profits and savings, thus putting them in a stronger position to remain innovative even in the face of economic adversity.
Using technology to bridge the skills gap
Nevertheless, whilst FSI organisations must ‘do more with less’, we should not look exclusively at the impact of budget shortfalls in 2023; we also have to navigate the talent landscape. If organisations have not recruited the right technical skilled workers to keep up with increased business and regulatory requirements, then growth will ultimately be affected.
To address these issues, a multi-pronged approach is needed. Firstly, FSI organisations need to make better use of innovative solutions, without heavy lifting from coders who have exclusively and painstakingly written applications in the past. Low-code development is helpful here as it enables those with no coding background to support, building robust business applications efficiently and quickly.
This will likely become a critical skill in the future, helping reduce the sole reliance on IT. Not only can we take advantage of low-code to develop applications faster, which is vital in the battle to be agile in the financial services industry, but we can also train more people to create these solutions. For example, business analysts without years of technology experience would be able to create a simple app with mobile forms and automation features; then collaborate with more technical engineers to ensure enterprise readiness with security, compliance, and data integrity.
Upskilling and reskilling existing talent will be particularly important for organisations during the downturn when budgets do not allow for new hires. Low-code platforms powered by process automation lead in this approach, empowering a broader set of users to participate in digital innovation.
In times of economic adversity, businesses must continue to build and innovate. An increasingly complex compliance landscape lies ahead, and this is why the FSI industry must embrace digital solutions to enable them to grow and not stagnate. Demand for automation and low-code development – which makes it much faster to build, modify, and execute enterprise applications – continues to surge as organisations seek new solutions to help them remain agile. The ability to stay ahead of the curve lies at its core in technology, and those that embrace it will ultimately have the competitive edge in uncertain times ahead.
How to improve the accuracy of your ESG reporting
Source: Finance Derivative
Rajesh Gharpure, Global Head- ESG, Larsen & Toubro Infotech (LTI)
ESG initiatives have become increasingly significant in the business world, with organisations integrating sustainability into their core business strategy and using them as drivers to strengthen resiliency and create long-term value. As a result of this elevated focus, investors now require greater transparency into ESG performance. This means organisations need to make public commitments towards sustainability and provide robust, relevant, and routine updates to their strategies, goals and metrics. They also need to collate accurate ESG data which is critical for making the right capital allocation and investment decisions, and for investors to understand their investment risk and value preservation.
But organisations often struggle to report ESG data effectively. In fact, more than half of leadership across organisations today experience challenges around data availability and data quality. However, with upcoming regulatory changes, such as the European Commission’s Sustainable Financial Disclosure Regulation (SFDR), investment firms need to ensure organisations provide the right data for accurate reporting to support green claims in their ESG-labelled investment funds.
While organisations focus on robust and accurate ESG reporting, it’s not just about trying to report everything, but more about knowing what should be reported. This can be achieved through the focused implementation of the Selection – Innovation – Assurance (S-I-A) approach:
It’s important for organisations to continually reassess their ESG journey and establish the correct boundaries through a precise selection process. Selection criteria should categorically define the areas for reporting. A well-planned and executed materiality assessment can help identify areas which are most impactful for business as well as stakeholders. Taking inspiration from the 17 UN SDG goals, alignment with the objectives, jurisdiction, peer benchmarking and geography-specific requirements, organisations need to limit their reporting purview to the most significant topics. By taking a structured programmatic approach, these steps ensure reliable choices are made regarding organisation boundaries, programmes and KPIs, all of which are crucial for an organisation’s long-term sustainability. This is all while taking into consideration the bandwidth and resources needed to ensure proper governance and accurate reporting.
Reporting as a means to precisely monitor and govern creates a multitude of challenges as data needs are continually expanding. So it’s important to factor in that large organisations grow both organically and inorganically and, in the process, end up having a wide digital landscape most of which is focussed on primary operational needs and not necessarily targeted towards integrated digital fabric. Organisations often struggle with sourcing the right data as much of the non-operational information is recorded and manually maintained in excel spreadsheets. It is also a question of how to track all the relevant data and compile it in a way that is meaningful and ingestible for generating an ESG report. This means a typical ESG reporting cycle for a mid to large scale organisation can take up to 4-5 months to complete, significantly delaying its ability to monitor and adjust course. Furthermore, the myriad of frameworks and reporting programmes used globally only tend to multiply the problem. Manual data collection also comes with the risk of errors and inaccuracies. It also makes it difficult to scale ESG initiatives and examine transactional data for disclosure purposes.
Through digital intervention, this timeline can be systemically reduced, enabling organisations to quickly adapt and evolve their sustainability programmes and metrics. Usage of digital tools to capture and perform the extract, transform, load (ETL) work before reporting serves the triple purpose of effort and time savings, data validation and reporting accuracy. Taking a productised IT and data product approach focussed on ESG data can help more effectively catalogue data from organisational systems and subsystems into formats needed for reporting and disclosures. This reduces the risk of poor data quality. IoT technologies are capable of tracking and measuring the performance of each individual asset in an operation and data from these platforms can be directly pulled and integrated into such catalogues for ESG reporting purposes and auditing.
Assurance (internal, followed by external) provides the evidence to support the accuracy of an organisation’s data, and adds the element of truth and trust in your ESG report. The 2021 survey by the International Federation of Accountants (IFAC), showed that only 51% of the organisations who shared their ESG information, provided assurance with their disclosures. And most of those were limited to certain facets of the total report. However, an ESG report validated by a recognised auditing organisation and verified against an accredited standard provides an impartial overview of performance and compares findings against best practice. This ensures compliance with policies, which gives confidence and security to the investors and reduces the fear of greenwashing. International Standard on Assurance Engagements 3000 (ISAE 3000) and AccountAbility’s (AA) AA1000 Assurance Standard are the dominant standards in the ESG sphere.
However, before you seek external assurance, your leadership need to review the quality and coverage of the data being reported. It should add value by helping to establish a functional ESG control environment and perform a review of the effectiveness of ESG risk assessments and controls. It also adds the benefit of levelling up an organisation’s performance in sustainability-related rating and benchmarking.
Accurate reporting supports decision-making by both investors and taxpayers at one end, and leadership and governing bodies at the other. Organisations should apply the same rigor and checks to ESG reporting, as they do for financial reporting. This can result in increased stakeholder/investor confidence, business value and effectiveness of capital markets.
Solving the Future of Decarbonisation in Real-Time
Source: Finance Derivative
Jamil Ahmed, Distinguished Engineer at Solace
The energy sector has faced many disruptions and challenges in recent years, from pipeline disruption to the growing demand for hydrogen. However, the most significant of all of these is the global desire to decarbonise. The growing concern over fossil fuels has created intense pressure for businesses to transition towards renewable energy sources and cut carbon emissions. Governing bodies have begun to impose regulations on organisations to force them to cut emissions by 3.4 gigatons of carbon dioxide equivalent (GtCO2e) a year by 2050, which amounts to a 90 per cent reduction in current emissions.
The constant development of markets and digital transformations will only increase the demand for energy in the future across all industries. Therefore, reducing emissions, in reality, is no small feat, however harsh or impressive the targets may be. To make decarbonisation a reality in the near term, businesses must adopt an inward-looking strategy to reduce emissions through their own operations. These are termed Scope 1 emissions and refer to emissions released as a direct result of one’s own current operations. Achieving this requires companies to streamline their operations, and improve their internal visibility to measure and track energy consumption.
The major challenge companies face in accurately measuring their energy consumption lies in overcoming the mass amounts of siloed data within their system. These data silos not only diminish productivity but also bury these useful insights, compiled into a mountain of data that is hard to identify and analyse. Ultimately, data silos are a result of organisational infrastructure built for a previous era, one with limited technological adoption, and limited pathways for dataflows. Over time these have created complex organisational barriers.
The lack of data transparency in organisational infrastructure is severely undermining businesses’ ability to gain insight from their existing data. This also impacts their ability to share data with external partners in search of meaningful solutions for decarbonisation. The value of data sharing cannot be overstated when searching for innovative solutions. A recent study shows that 45% of businesses in the energy sector see analytics and innovation as critical tools. With the entire energy sector’s ability to effectively decarbonise hinging on data sharing to drive innovation, gaining greater data insights are non-compensatory.
Another major consideration in decarbonisation is power reliability planning when transitioning to renewable energy sources. Solar and wind energy rely on changeable weather factors for operability, the varying levels of power readiness in these energy sources make them difficult to implement into the national grid. This makes reliably planning this an increasingly complex and important part of the decarbonisation journey as the sector must test for long-term stability and the potential for energy transfers and storage. A solution must be found that can address these real-time concerns.
Reliability in Real-time
Real-time data is the information that is delivered immediately after collation and enables businesses to respond to information at lightning speed. Real-time data has a host of usages in the energy sector, from alerting major weather changes that may impact power reliability to detecting overheating or electrical wastage in appliances. These information transfers are known as an ‘event’ that requires further action or response.
Real-time capabilities play a major role in overcoming data transparency issues associated with the sector, in its ability to connect interactions across systems and processes could enable energy providers to effectively identify opportunities in reducing energy wastage.
Enter event-driven architecture (EDA), the structure that underpins an organisation’s ability to view event series that occur in their system. EDA decouples the events from the system so that they can be processed and then sent in real-time as a useful information resource. This can then be analysed by resource companies to assist with optimising decarbonisation initiatives.
The strength of EDA is its scalable integration platform, as this allows companies to manage enormous quantities of data traffic coming from multiple data streams and energy sources. From this, energy companies can develop durable systems by aggregating information. This can then be sent to control systems to identify power outages or extreme weather events and conditions.
To achieve this, an architectural layer known as an event mesh is required. An event mesh enables EDA to break down data silos and facilitate the real-time integration of people, processes and systems across geographical boundaries. Implementing an event mesh also upgrades and streamlines existing systems/processes to enable better data transparency in real-time data sharing. It is unsurprising that given the great benefits of EDA both in terms of its scalability, durability and agility that a recent study found 85% of organisations surveyed view EDA as a critical component of their digital transformation efforts.
Decarbonising for the future
Regulations on the energy sector are rapidly increasing, most recently the US Senate passed the Inflation Reduction Act (IRA) on August 6th of this year. This Act signals the intense pressure on the energy sector to immediately undertake significant decarbonisation initiatives. It is designed to accelerate the production of greener and more renewable energy sources such as wind and solar. Once nations like the US have begun higher production of the technology that can harness these energy sources, others will follow suit. The only way the large-scale adoption of renewable energy sources will occur is if businesses build real-time capabilities to become event-driven businesses. Only then can the transition to decarbonisation and achieving net zero become a reality.