Abstract
Transformation in the energy sector through transition from high carbon fossil fuel energy to zero carbon energy is certain to cause drastic disruptions in the sector. The transition is driven mostly by climate change, technology development and demographic changes. The transition significantly changes the structure of power system with new trends such as pro-sumer and self-generation emerging. As a result, traditional electricity utilities across the world are experiencing significant revenues losses. Therefore, in order to remain competitive and sustainable utilities need to undergo business model transformation.
There is a significant amount of research on energy transition and utility business model innovation done in developed countries compared to developing and undeveloped countries. Therefore to close the gap, the aim of this study is to establish an in-depth understanding of energy transition in the context of the South African electricity utility environment. This was done by establishing future local energy trends that utilities must respond to and potential alternative business models. Qualitative research approach was conducted with structured interview method as a primary data collection method. Non probability convenience interview sampling was adopted for practicality, curtesy of personal and professional relationships. To ensure reliable and relevant data is collected only participants within the energy sector were selected.
The study has found innovation and technology change to be the main driver of transformation in the local electricity sector followed by climate change and urbanisation and demographic changes. Furthermore, the study further found Distributed Energy Resource Services (DERs), power system carbonation and changing consumer preferences as trends of interest that are likely to shape the future of local electricity sector that utilities must respond to. Moreover, the study has established relevance and feasibility of consumer utility, product innovator, green utility and grid developer business models in the local environment as potential alternative business models that local utilities can adopt to respond to the emerging trends.