Transformation Ahead for Energy Sector

“The energy sector will go through a big transformation that is going to surprise all of us and the energy sector will finally become ‘cool’!”

Exclusive interview with Dr Maher Chebbo, General Manager Energy & Natural Resources (EMEA & MEE) SAP, a gold sponsor at the upcoming African Utility Week in Cape Town in May.

1)    Let’s start with some background on SAP, there is a proud history there?
SAP (initially meaning Systems, Applications and Products) established itself on the African Continent in 1982, initially only operating in South Africa. After securing its first African customer outside of South Africa in 1996, SAP continued to grow and expand in the rest of Africa. SAP Africa announced an aggressive growth plan in 2014 and has established hubs in Kenya, Nigeria, Angola and Morocco. SAP has over the years invested heavily in the Energy, Utilities & Infrastructure space as we see this as a cornerstone of Africa’s development and continued economic growth. Some of the largest Utilities in Africa are SAP customers and use SAP solutions to manage their internal operations and asset maintenance.  The ENR (Energy and Natural Resources) Industry, covering Utilities, Oil & Gas, Mill & Mining and Chemicals, forms an integral part of the SAP Africa growth strategy and we continue to build a solid partner ecosystem that can support us in deploying SAP at various African Utilities.

2)      Any particular projects in the energy sector that you are very excited about currently?
SAP Africa is passionate about multiple projects in Africa at present! In some instances, what excites us is the impact and efficiency these customers will gain in operations and their supply chain, thereby ensuring that savings from newly gained efficiencies can be ploughed back into growth.

It is also exciting to see our customers’ new-found focus on the “Utility of the Future”, including innovations around billing, customer experience, and the use of the Internet of Things. This is largely focused on Operational Technology(OT), SCADA & related data, which is combined with IT Asset Management information.  SAP partners extensively with the OT technology providers to provide value to our customers, to drastically improve real-time insights into their business performance.

One example of this is that most African Utilities are still facing major breakdowns, as result of old infrastructure which effects energy security. New technology now makes it possible to move from the traditional planned maintenance to predictive maintenance, where information gathered from sensors is used to determine the health of assets and the need for maintenance.

Many have only embarked on the journey but have shown foresight in where they want to be. Unfortunately, we are under NDA and do not have authorisation to mention names for many of our customers in Africa at present. Inspirational customer success stories are however frequently shared with the media in Africa and can be found on our external SAP Africa News Centre: https://news.sap.com/africa

3)      Where in Africa are you focusing for growth? And in which sectors in the industry?
SAP is investing in all Energy & Natural Resource Industries (Utilities, Oil & Gas, Mill & Mining & Chemicals) and in all African regions (South Africa, Sub-Saharan, Lusophone, North Africa, East and West Africa). We have studied the full map of the 53 African countries where we have identified the regions of high, medium and lower opportunities for transformation in each of the 4 industries. For instance, in Utilities we considered that all countries are potentially capable to transform and use the power of Digital, to improve their Energy Value Chain, because every country has an Electricity, Gas or Water Champion.

Regarding the investors, my answer would be “partially investor-friendly”. Most African companies are already working with, or considering working with IPPs (Independent Power Producers), which focuses mainly in the generation area. Another area where we see lots of investment happening is in the smart meter and pre-paid meter areas as well as the overall SmartGrids for the mid-term.  The willingness to adopt technology is noticeable as is the vision around improving the lives of citizens and ensuring continued growth. However, in my personal view there are two key factors that impede it:
1.)    Corruption: this remains an issue across the continent and large & complex projects provide mechanisms that make it relatively easy to funnel smaller amounts around without notice
2.)    Maturity & longer-term insight: The decisions through the public sector at times can be more short-term focused in terms of ensuring immediate visibility or short term cost-saving/advantage rather than the longer term holistic approach. This often depends on the level of independence of a utility and effective political influence.

4)      What surprises you about the Energy Sector? 
The Energy Sector has been always conservative and in some regions like Europe, where Electricity is available to anyone anytime at affordable prices, it has been considered as a commodity. What surprises me about the Energy Sector is the number of High Tech Gurus who evolved in their career to become Energy Gurus. Elon Musk, the Chairman of Tesla has never been in Automotive or Battery Energy. He is a Computer Science expert. Does anybody else have such a disruptive vision for the Energy, Storage and Electro Mobility sector?

High Tech, Equipment Hardware providers, Consumer Electronics, Automotive, Manufacturing, Cities and many other sectors will be focusing more and more on innovative energy solutions. They will be promoting the “Energy Efficient inside” as a DNA.

5)      What’s your vision for this sector?
The Energy Sector will go through a big transformation that is going to surprise all of us:
–    In Oil & Gas, after the drop of the Oil price, the largest players in the world have started to transform their processes and focus on how to achieve more with less and to reuse all digital best practices, to stay committed to their targets announced to their investors.
–    Electricity has been liberalized in Europe and unbundled in many countries in the world, also in Africa. This is the first step for intense competition to come which will accelerate innovation. This is also what happened in the Telecommunications industry.
–    To safeguard Energy independence and meet Energy Efficiency, GH and Renewables targets, Energy companies are bound to accelerate their transformation into SmartGrids, which will introduce new technologies based on Internet of Things (IOT), Big Data, Predictive Analytics and 5G. This will enable Energy Providers to communicate both ways with their customers, improving the quality and value of service.
–    The Energy Sector will become finally “Cool”!

6)      What are the main challenges in the industry at the moment in your view? 
The biggest challenge often faced is finding the funding or finding funding under the right conditions. Because of regulatory requirements, and to ensure that electricity prices stay affordable, it is very difficult to attract private investors. The second challenge often faced is political influence, given the importance of power both to economic growth and private individuals.

This, however, is not necessarily always a negative influence. In Kenya, for example, President Uhuru Kenyatta has set highly ambitious targets and is making huge inroads into expanding both the generation capacity as well as the rural expansion.  In Ethiopia, the country is going through an ambitious plan to transform the overall energy sector. In Senegal, the Electricity Sector will start a new era of process automation, Smart Metering and Customer Information System. In Morocco, the Electricity and Water Sectors have been investing into automating their processes and they are putting in place pre-payment solutions. What is interesting is that, when power projects commence, huge focus tend to be around design-planning, with less emphasis placed on the customer-facing front-end.

What I mean by this is that projects don’t necessarily initially focus on how to ensure accurate billing or that all requirements (pre & post-paid, commercial vs private, price-setting/flexibility depending conditions such as off-peak hours, excess capacity, cross border transactions) are met.  Ensuring proper focus and planning around end-customer requirements remains key and is imperative to ensure quick collection, to settle the costs of projects and enable re-investment. From a global project perspective, there are very often ways in which SAP can ensure improved efficiency through holistic value-chain review and the implementation of SAP solutions to provide full transparency and support various other processes and procedures, including fraud management (technical & non-technical loss monitoring and prevention), analytic visibility to optimise power generation and limit excess, improve supply chain efficiencies, significantly simplify and reduce maintenance costs and improve customer satisfaction.

7) You are a gold sponsor at African Utility Week this year, tell us more about your contribution to the event (speakers at conference, workshops etc.) and what your message will be?
I look forward to sharing the SAP view on how new technologies will shape the future of Utilities and enable these organisations to remain relevant and thrive in the digital future. I also look forward to engage with key players in the Utilities market, to collaboratively discuss how SAP Africa can support their vision and contribute to the African market in a significant manner.  SAP Africa is adamant on contributing to the regional economic growth of Africa.

The SAP Africa message is that organisations need to focus on becoming a relevant Digital Utility of the future. SAP will focus on how new technology and big data can be used to significantly improve efficiencies and how the performance of Utilities Infrastructure can be optimised, to prolong the asset life span, maximise energy production, minimise downtime and reduce maintenance cost.

SAP’s participation in key events like African Utility Week is aimed at communicating directly with the market, to demonstrate our commitment to the transformation of the Energy sector and to provide value and socio-economic benefits, while creating jobs. Public Speeches about our technology and our vision of the Energy sector, particularly inspired from our thought leadership at the European Commission Energy Transformation Committees, has one single objective: reuse Best Practices, get things done fast, transform the life of people and change the Energy face of Africa.

8)    Anything you would like to add?
More than 4,500 Utilities companies in 123 countries are innovating with SAP Solutions. 45 of the top 50 Utilities Companies in the world run SAP solutions. Through our expertise and the relationships with our Partners, we have the knowledge, the know-how and expertise, to support Utilities of all sizes in Africa, with the vision of reducing the complexities within their business and joining them on the journey to their digital future! This digital journey will help them to save costs, setup new business models and provide socio-economic recurrent benefits.