Lition and NESA Capital: Update

After a few months of working together and exploring opportunities, we are happy to give a brief update about our progress with Nesa Capital.

The Energy Sector in South Africa

We’ve gained better insight into the context in which this project is taking steps forward. It is clearly very promising. South Africa has major problems when it comes to its energy infrastructure, due to its pre-apartheid structural setup where only a small minority had access to electricity. After the 1990s, a larger portion of the population joined the electricity service and the grid was quickly overloaded. The structural problems were never fixed and this imbalance causes enormous economic costs today.

Blackouts are something that people in South Africa know very well. To the point that the most downloaded app in that region is one that gives information and forecasts about future power outages. Therefore, the need for a stable grid infrastructure is a priority in the agenda of the South African Government, who up until now, sadly, has failed to fix it. The National Treasury’s most recent attempt to intervene was a proposal to Eskom Holdings SOC Ltd., the state-owned utility that supplies 95% of the power in South Africa, to sell some of it’s plants in order to reduce a portion of their large debts.

Lition & NESA

We’ve worked together with Nesa Capital to identify the very first solar and wind power companies in South Africa who will run a pilot project involving Lition’s sidechain solution. This development is crucial in our aim to create an ecosystem of small power producers that can sell and deliver electricity in a cheaper and more efficient way within certain limited regions. Each energy producer will run a node on a South African-specific sidechain to streamline cross-business transactions as well as the P2P platform where customers can easily buy energy and thus also lowering the access barrier.

This will serve to avoid infrastructure-overload and ensure a more distributed and robust power generation network. Integrating distributed generation (DG) into the grid is the solution that the country should and currently is looking at to solve the drawbacks of its current central generation (CG).

Central and Distributed Generation (CG and DG)

Energy produced in a central way (CG or Central Generation) is a concept where power plants deliver bulk power. Usually huge fossil-fired coal or gas boilers are used, which produce steam that drives turbine generators. These enormous plants and infrastructures require costly management and are often unreliable and unstable due to unforeseeable events. Therefore, central generation’s lack of efficiency as well as the negative environmental impact is leading to a shift towards renewable and distributed energy.

Central generation still needs to exist in the energy mix of South Africa, but it is equally important that it is sustained and integrated with distributed generation and transmission. Therefore, the work that Lition is doing with NESA Capital is of great importance and we are very proud to deliver sound technology and business expertise to the cause.