Just months after a historic climate conference in Paris, I can’t help but marvel at how far the world has progressed in the uptake of renewable energy. Take solar power, for example. What used to be a prohibitively expensive endeavor just years ago, is now a household-level solution in many countries. Then there are the record-setting solar auctions in countries like Zambia, the United Arab Emirates, India, Mexico, and Peru.
So what’s the next critical piece of the puzzle in our global efforts to provide sustainable energy for all?
In my view – and that of many others – it is to establish a viable, stationary solution to store energy. While stationary energy storage on a large scale has always been around – hydro energy storage, as an example, is efficient and cost effective – it is tied to topography and difficult to add at will. The cost of batteries has also been a big obstacle to widespread deployment and was a primary reason for the electricity grid to be designed as the biggest real-time delivery systems humans have ever made.
Two decades ago, when I was working on utility sector reform we knew the answer. Here (using the example of electricity) is what it was: unbundle generation, transmission and distribution; introduce an independent regulator; rebalance prices; privatize. Two decades later, we have learned the stark limits of orchestrating reforms on the basis of ‘best practice’ blueprints such as these.
What would a more ‘with the grain’ approach to electricity sector reform look like? To explore this, I asked my Johns Hopkins SAIS and University of Cape Town students to review how a variety of country efforts unfolded in practice – focusing specifically on efforts to introduce private sector participation into electricity generation. Some striking patterns emerged. Here I contrast South Africa’s experience with those of Kenya, Peru and Lebanon. The former illustrates powerfully the hazards of ‘best practice’ reforms; the latter point to the promise of more incremental, cumulative, with the grain approaches.
In 1997, an official South African report signaled that in 2008 the lights would go out if there was no new investment in electricity generation; the report proposed that the country embark on a far-reaching effort to implement the ‘best practices’ template for electricity sector reform, constraining the dominant parastatal, ESKOM, and turning to the private sector for new investment in electricity generation. In 1998, the government adopted the report’s recommendations. In her richly-researched Masters dissertation (available on the link that follows), Nchimunya Hamukoma detailed what happened next.
Contestation over the agenda among competing factions within the ruling African National Congress and its allies interacted with a hugely-ambitious reform design — one for which almost none of the requisite political, institutional, economic and organizational capabilities were in place. The result was that after six futile years of trying, the effort at restructuring and private participation was abandoned, and ESKOM was given a green light to invest in new capacity. But the six lost years – the result of futilely pursuing an unachievable ‘best practice’ chimera – had an inevitable consequence. In 2008, as predicted, the lights went out.
Amsterdam is aggressively developing its ‘smart’ electrical grid. The smart part is the inter-linked power system, and the efforts made to involve all parts of the community. The result to-date is impressive: in just two years 71 partners have joined (and growing), pilot energy savings of 13 percent were achieved, and a possible reduction of 1.2 million tonnes CO2e already identified if pilots scaled-up city-wide. The program grew from a smart electrical grid to a ‘smart city’; in eighteen months Amsterdam Smart City or ASC, hosted or attended more than 50 smart city conferences.
The four pillars of ASC program are: (i) cooperation; (ii) smart technology and behavior change; (iii) knowledge exchange; and (iv) seek economically viable initiatives. Much of the impetus of ASC came from the establishment of a Euro 60 Million catalytic climate and energy investment fund created when the electricity and gas company was privatized.