Spotlight on Johannesburg’s Electricity – How the City of Gold is Regaining its Shine
by Candice Louw
The city of Johannesburg, located in Gauteng province South Africa, earned its nickname as “the city of gold” due to the gold rush that occurred during the late 18th century. During this time, thousands of hopefuls from all over the world came to Johannesburg, which at the time, was merely a mining camp, in search of precious gold and riches.
The immense influx during 1886 most notably brought about the need for better services and infrastructure and by 1889, Johannesburg had evolved from a tented mining camp to a city consisting of brick and mortar buildings, running its very own stock exchange (City of Johannesburg, n.d.:87).
Now, decades later, after the gold rush had subsided, Johannesburg, or Joburg for short, still attracts hopefuls with the promise of riches, housing over 4.4 million inhabitants (Joburg Tourism, n.d.). Although these modern day riches may not be in the form of gold anymore, residents of the city of Johannesburg may profit from higher paying salaries as opposed to residents of the cities of Cape Town and Durban for example (MyBroadband, 2016).
By attracting top talent from across the country in this manner, Johannesburg can economically compete with some of the biggest cities on the African continent housing almost 74% international headquarters and being the most visited city in Africa during 2013, 2014 and 2015 according to MasterCard Global Index (Joburg Tourism, n.d.). This makes the city a leader in business tourism not only in South Africa, but also in Africa as a whole.
The city of Johannesburg’s logo subsequently pays homage to its humble past as a gold mining camp indicated by the use of gold-like colour accents, as well as its present/future as an international business hub through its slogan: “Joburg, a world class African city”.
Johannesburg (Joburg) city logo and slogan. (Official website of the city of Johannesburg, 2016)
The Load Shedding Phenomenon
Despite the promise of certain riches and reward, however, the city of Johannesburg hides its own dark secret – and quite literally so. Frequently planned, electricity outages often leave numerous parts of the city and its surrounding suburbs in darkness for as long as 4 hours per day, multiple times per week.
This phenomenon, also referred to as “load shedding” by locals, has plagued the city of Johannesburg (and other parts of South Africa) for the past 10 years to such an extent that dedicated load shedding schedule websites and apps have been developed. Despite these efforts, the repetitive, prolonged and unpredictable nature of load shedding resulted in many private households, organisations and institutions investing in fossil fuel driven electricity generators (publicly leased and privately owned) – now a common sight on many sidewalks in Johannesburg.
Publicly leased (left) and privately owned (middle, right) electricity generators in Johannesburg. (Photos by Candice Louw)
In 2016, however, out of fear of experiencing a rating downgrade to become a country of junk status (Mahr, 2016), load shedding was declared to be a thing of South Africa’s past. Despite the good news (load shedding being a thing of the past and South Africa having avoided a rating downgrade), bribery, corruption, mismanagement, unreliability and poor customer service still overshadow the reputation of the government owned, fossil fuel electricity producer, Eskom (News24 Wire, 2015).
As a result, a culture of non-payment has been fostered among many citizens for almost two decades, resulting in 32% of electricity delivered (by Eskom) to the city of Johannesburg, being lost (T-Systems, 2015; MyBroadband, 2015).
Fortunately, a local start-up may prove to be the light at the end of a very dark tunnel by harvesting the power of international entrepreneurial initiatives such as La French Tech in combination with the digital disruption.
The Digital Disruption
According to IBM, a certain degree of digital disruption has already happened in the lives of urban dwellers with the (IBM, n.d.):
World’s largest taxi company owning no taxis (Uber);
Largest accommodation provider owning no real estate (Airbnb);
Largest phone companies owning no telecommunications infrastructure (Skype);
World’s most valuable retailer owning no inventory (Alibaba, Amazon);
Most popular media owners creating no content (YouTube);
Fastest growing banks having no actual money (SocietyOne);
World’s largest movie house owning no cinemas (Netflix); and
Largest software vendors not writing apps (Google, Apple).
Urban infrastructures, and urban electricity systems in particular, can benefit from these disruptive technologies by combining Information and Communication Technologies (ICTs) with the phenomenon of electrical market liberalisation – the unbundling of electricity infrastructure and services (Innovative Governance of Large Urban Systems (IGLUS), École Polytechnique Fédérale de Lausanne (EPFL), 2016:6).
The successful integration of ICTs and electrical market liberalisation has already been recorded in a major, historically non-payment cultured suburb of the city of Johannesburg earlier in 2016. After installing and converting customers to split prepaid electricity meters instead of post-paid meters, a 39 million Rand improvement in electricity revenue collection was observed over a year-long period (News24 Wire, 2016). By putting the power, quite literally, in the hands of the consumer, the producer has reaped the benefits.
The desirable outcome of this digital disruption between an urban electricity system and ICTs in Johannesburg, serves as witness to the major impact that consumer-pushed services may have over the producer-pulled alternative.
Entrepreneurs and Electricity Market Liberalisation
Residents from the city of Johannesburg, in addition to numerous other major cities and suburbs across South Africa, can now begin to benefit from the digital disruption of the urban electricity system with ICTs through the introduction of prepaid electricity meters. French-founded, South African based start-up, Powertime has established its role as the leader in mobile vending in South Africa and was the first to introduce electricity vending mobile apps in 2010 (Powertime, n.d.). Additionally, Powertime has grown to such an extent that they now also serve more than 60 municipalities throughout the country.
The success of any start-up naturally depends on its founding members’ ability to identify an opportunity, and their subsequent skill in addressing it. Additional entrepreneurial characteristics that may then contribute to growing the start-up further, include (Van der Lingen & Van Niekerk, 2015):
A need for achievement in situations where performance may be assessed for success or failure;
Creativity and innovation which refer to the ability to create, develop new ideas, investigate and experiment with new ideas, find new market opportunities, and improve existing products and services to provide new value;
Propensity for risk-taking in an uncertain environment;
Maintaining an internal locus of control i.e. not believing that luck, fate or other external forces determine success;
The desire for independence and autonomy; and
Tolerance for ambiguity in handling uncertainties that surround a business.
It is possible that Powertime founders have mastered all of the above characteristics in ensuring the success of their business, although the liberalisation of the electricity market introduces additional concerns pertaining to electricity purchasing, customer relations and grid management (IGLUS EPFL, 2016:6).
Despite these concerns, it is arguable that the long term (financial) rewards gained from implementing a more complex, prepaid electricity meter system could far outweigh the losses incurred by traditional post-paid systems. This approach may attract new investment, development and talent to the city, ultimately ensuring that the city of Johannesburg stays the city of gold, and doesn’t become the city of darkness.
Active construction and development in the city of Johannesburg (October 2016) to possibly attract investment. (Photo by Candice Louw)
The digital disruption has already affected the lives of many urban dwellers by providing an opportunity for digital innovators, tinkerers and entrepreneurs to disrupt traditional ways of thinking and problem solving. Urban infrastructures, in particular, are where the effects of these disruptive technologies are often most visible and can make a notable difference.
Powertime, a French-founded prepaid electricity meter billing start-up based in South Africa, has shown particular promise by taking advantage of combining Information and Communication Technologies (ICTs) with electrical market liberalisation. The advantages of implementing prepaid metering systems as opposed to traditional post-paid metering systems has already shown its merit in a historically non-payment cultured suburb of the city of Johannesburg during 2016.
Despite the increased complexities introduced by prepaid metering from an urban electricity management perspective, the pros of the increased financial return arguably outweigh the cons of increased management complexity.
By placing the consumer back in power, prepaid electricity billing start-ups such as Powertime could possibly contribute to the digital disruption on an urban scale by being the largest suppliers of electricity, but owning no power plants themselves.
As a result of this digital disruption, the consumer once again becomes king, the city of Johannesburg their (city of) gold, and entrepreneurs (in addition to entrepreneurial initiatives) providing the much needed shine.
City of Johannesburg. (n.d.). Joburg: Johnnic Publishing Limited.
Van der Lingen, E. & Van Niekerk, G. (2015). Entrepreneurship Traits of Science, Engineering and Technology (SET) Students. SAJESMB - The Southern African Journal of Entrepreneurship and Small Business Management, 7(1).
This piece is the original writing of the author(s). The view points in the post is the author’s personal opinions and do not reflect IGLUS/EPFL’s viewpoints. The author(s) is the sole responsible person regarding the accuracy of the information presented in the post and will be liable for any potential copyright infringements.