By Vally Padayachee

The electricity grid has significant economic and utilitarian value, while the value of a precious diamond is more driven by emotional appeal and market perception. 

This article delves into the intricate interplay between the energy sector and the electricity grid infrastructure, using the metaphorical phrase “the grid’s a diamond… stupid!” to emphasise the untapped potential and critical importance of optimising the grid system
especially now as it migrates or evolves into a high value smart grid that incorporates smart technologies and serves as a “backup 24/7/365.”

From a market value perspective that includes perception, psychology, and emotion, a diamond and an electricity grid can be compared in terms of how they are perceived, valued, and traded in the marketplace.

Key points of comparison

Perception

Diamonds are often perceived as symbols of luxury, wealth, and status. They are valued for their beauty, rarity, and durability.

The perception of diamonds as valuable and desirable assets is deeply ingrained in popular culture and societal norms.

Electricity grids, on the other hand, may be perceived more as essential infrastructure that enables the distribution of electricity for daily living, economic activities, and industrial processes.

While electricity grids are vital for modern society, they may not evoke the same level of emotional attachment or perceived value as diamonds under normal circumstances.

Psychology

The psychology of consumer behaviour plays a significant role in the market value of diamonds. People may be psychologically drawn to diamonds as symbols of love, commitment, or success.

The emotional appeal and prestige associated with diamonds can influence purchasing decisions and market prices.

In the case of electricity grids, psychological factors may be less pronounced in determining market value under normal circumstances. While consumers and businesses rely on electricity for various activities, the psychological impact of electricity grids on individuals may be more indirect compared to the personal significance attached to diamonds.

However, given the recent years of “aggro” and significant and robust levels of loadshedding, power outages and the hard ships to business and society in general and the negative impact on the economy it’s not surprising that from a psychological perspective people are now relieved and happy that Eskom loadshedding has stopped for +-120 days to date.

Emotional Value

Diamonds often evoke strong emotions due to their association with special occasions such as engagements, weddings, or anniversaries.

The emotional value of a diamond can be deeply personal and sentimental, contributing to its perceived worth in the market. While electricity grids may not evoke the same level of emotional attachment as diamonds, they play a crucial role in ensuring the functioning of modern society.

The reliability and availability of electricity from the grid can have a significant impact on people’s daily lives and emotional well-being and the economy.

Hence whilst diamonds and electricity grids have both similar and distinct market values characteristics and attributes that are shaped by perception, psychology, and emotion, they can be compared in terms of how they are valued, traded, and perceived in the marketplace.

The diamond and grid paradigm

Diamonds are often prized for their emotional appeal and symbolism, while electricity grids are essential for societal functioning and economic activities.

Both assets have unique characteristics that contribute to their market value and significance in the eyes of consumers and investors.

The “diamond nature” characteristics and attributes of the electricity grid must be enhanced, marketed as such and accordingly reflected in how the grid gets priced and sold now as it evolves to a smart grid that incorporates smart technologies and serves as a “backup 24/7/365” for renewables when the sun does not shine, and the wind does not blow.

The value of the grid in these circumstances must therefore reflect as a collective an accounting value model, an economic value model and a market perception values model or characteristics.

Specifically, the pricing model for the various grid related products and services must and should migrate from the current “kWh (energy)” commodity type electricity utility business model with an opaque non transparent “lumped-up” tariff model and be replaced with a grid services business model.

The author calls or terms this migration the “diamond grid survival and recovery economic model” for Eskom and the municipalities.

This is part 1 of a three-part series by Vally Padayachee on the electricity grid.