The future of energy production and supply is under the magnifying glass around the world, and African countries must answer the call to action now
Solar power is a unique form of energy because it can be applied in a multitude of ways, from a very small-generation capacity such as a few panels on a roof, to large-generation capacity projects of tens of thousands of panels making up a solar park – either with back-up power storage or without, and the ability to feed into the power grid.
The advantages of solar photovoltaic (PV) are as follows:
• It is quick to deploy – construction time is less than other forms of renewable energy;
• It is flexible in terms of plant size and location, making it sustainable for grid network integration;
• Operation and maintenance costs are minimal; and
• The environmental impact is minimal – there is no reliance on any fuel source except the sun, the majority of the parts are recyclable, and the carbon dioxide output is drastically decreased.
For Africa, these advantages provide the perfect solution, as solar is easily adapted to specific requirements and has no need for expensive grid infrastructure.
Being able to use power has two parts: generation, and transporting it to where it is used. Solar allows you to put generation right next to where you use it, negating the need for distribution infrastructure. The result is more flexible than a central power-generation point and, ultimately, quicker and cheaper to deploy.
Africa is fortunate, as she is rich in untapped potential renewable energy resources: In the south and north of the continent, solar and wind reign; while in the more central areas, there is hydroelectric potential with several major rivers such as the Congo.
Renewables are guaranteed to play a starring role in the future because they are able to offer a very stable, long-term guarantee of electricity price.
In a burgeoning economy – the target of most underdeveloped African countries and emerging markets such as South Africa and Egypt – it is unlikely that poverty alleviation will happen without energy. At the same time, economies cannot afford to build businesses while dependent on an increasingly volatile commodity.
Worldwide, pressure for coal to fire up power stations is increasing. In South Africa, coal suppliers are looking to export to India and China where they can expect better prices rather than supply locally to Eskom, the South African electricity public utility.
Rated as one of the largest emitters of carbon worldwide, South Africa needs to greatly reduce its emissions, and solar power is a critical tool that can be used to meet this goal.
Economies of scale have been reached in the solar PV industry, greatly reducing costs to levels where it now competes with other forms of renewable energy.
In South Africa, the Department of Energy’s second Integrated Resource Plan (IRP2) outlines the electrical energy future for the next 25 years. It is a road map for how the country will bring online new types of power generation such as wind and solar, and how these renewable sources will integrate into the overall generation mix.
In a country such as South Africa, the desire to be more environmentally conscious and not burden society with over-the-top costs is a difficult balancing act.
Since launching in Cape Town in late 2009, the South African subsidiary of French parent company, Solairedirect, has been focused primarily on large-scale grid-connected projects of more than one megawatt.
Following an initial start-up phase, during which the company established and trained a technical team, Solairedirect Southern Africa now offers a complete technical package to the specifier market, such as consulting engineers, builders and architects. After a successful introductory year to the local market, it is ready to tackle the increased demand for solar power in a broader context.
Solairedirect Southern Africa is prepared for the National Energy Regulator of South Africa (Nersa) to roll out its renewable energy feed-in tariff (Refit) programme.
As a complete solar power service provider, it looks forward to receiving its request for proposal and making grid-connected solar power a reality in South Africa.
Renewables will have a stabilising effect on demand and cost of energy over the next 20 to 30 years, and needs to take its place in Africa as part of the overall power solution. While it hardly features in the African energy mix at the moment, there are definite advantages and benefits.
In Germany, 30% of the electricity consumed is set to be coming from renewable energy sources by 2020. The model is already working successfully in the country and there is no reason that Africa cannot follow its lead.
Over time, society will be forced to move to using alternative energy sources – not in the next 20 years, but within our lifetimes; not only because of scarce supply but also to protect the environment.
South African PV market gears up to feed into national grid
South Africa’s severe shortage of generation capacity is possibly the biggest obstacle to the financial growth of the region and country.
The current situation in the country is that electricity tariffs are increasing rapidly to close the price gap – an average of 25% a year for the next three years.
There is a coal-fired build programme under way (the Medupi and Kusile power stations with about 4 400MW net output each) as part of Eskom’s expansion, but current tariffs do not allow real cost recovery.
Around 90% of South Africa’s electricity is generated by Eskom – of this, much comes from coal-fired power stations built in the 1970s
and 1980s.
and 1980s.
Very little baseload capacity has been delivered since the last major build programmes about 20 years ago, and reserve margins have slipped below internationally accepted norms of 15% to 20%.
An abundance of cheap coal, an oversupply of generation capacity during the apartheid era, and below-inflation tariff increases over many years have resulted in South Africa having one of the world’s cheapest electricity prices – of less than six US cents per kilowatt-hour.
By 2013, South Africans will be paying on average more than R1 per kilowatt-hour for electricity. Meanwhile, the average price of PV modules has halved since 2008.
Currently, the average annual solar resource available across most of southern Africa averages 2 000kWh per square metre. The possible load factor for a solar PV installation in this part of the world is 25% to 30%, with a 90% supply predictability.
After the announcement of Nersa’s Refit programme, a reforming regulatory environment exists, which will facilitate independent power production of both “brown” and renewable energy.
Nersa began a study on Refit in 2007 in response to the government’s target of 10 000 gigawatt-hours from renewable sources by 2013.
The Refit Phase 1 consultation paper was issued in December 2008, with hearings in early 2009. The Refit Phase 1 guideline document was approved and published by Nersa in March 2009, but a tariff for PV systems (less than one megawatt) of R4.48/kWh was only included in the Refit Phase 2 consultation paper in July 2009.
The Refit Phase 2 guideline document was approved and published by Nersa in October last year, with the final PV tariff at R3.94/kWh.
In February, the Refit Project Selection Criteria paper was published, which contained proposed caps on various technologies per year from 2011 to 2013.
PV was included under “Other Refit Phase 2” technologies, with an indicative cap of 150MW per annum.
Various public consultations were held and interested parties were invited to submit written submissions; however, no further written correspondence has been published.
Smunda Mokoena, chief executive officer of Nersa, briefed the Parliamentary Monitoring Committee in August, confirming that tariffs would be indexed to the consumer price index and reviewed every year for the first five years, and every third year thereafter.
He said that power purchase agreements would stand for a period of 20 years, with independent power producers retaining all rights to all clean development mechanism benefits.
Mokoena added that Nersa is finalising the selection criteria rules and would shortly submit the finalised document to the Department of Energy and National Treasury for approval.
He said Nersa anticipated that the system operator or buyer would issue a request for qualification and shortly thereafter a request for proposals from qualified bidders – a process he was confident would start before the end of 2010.
Looking forward for South Africa’s renewable energy programme, we can expect an extensive public consultation process to take place, with fully modelled base case scenarios completed and the final draft of IRP2 promulgated in November last year.
It is understood that the initial base case being considered for renewable energy is as follows:
• Wind: 500MW by 2013, 1 000MW per annum thereafter;
• CSP: 500MW per annum from 2018; and
• PV: 100MW per annum from 2018
This is subject to further consideration and lobbying from the PV sector.
In South Africa, however, the long legislative process to make independent power generation is complete. The implementation of a capped feed-in tariff system is expected by the end of this year and, in the short term, the PV market is expected to be around 100MW per year, with the mid- to long-term numbers likely to be higher.
The advantages of solar PV are that as energy demand rises, it is quick to deploy, with construction time less than other forms of renewable energy. It offers predictable output from proven technology; it is flexible in terms of plant size and location, making it suitable for grid network integration.
The environmental impact is minimal, with no reliance on any fuel source except the sun, and the majority of the parts are recyclable at the end of their working life, with the CO2 output decreasing dramatically.
Operation and maintenance costs are minimal, with no need for fuel or water to run.
Renewables companies in South Africa are lobbying the government, building links with business and labour organisations and informing people of the economic and environmental benefits of using green energy for electricity generation. But are they contributing to the country’s economic upliftment?
Investment in renewable energy and energy efficiency is important to reduce the negative economic, social and environmental impacts of energy production and consumption in South Africa; but while many companies are talking about investing, Solairedirect Southern Africa has put its money where its mouth is.
The government has stated that it wants to see a greater investment by the private sector in independent and, more specifically, renewable power producers – but to what extent will South Africa’s working class benefit from this?
It would be a pity if the Refit programme simply served to provide foreign companies with a new market for their products. I have no doubt our government has the intention to use this programme to stimulate a local renewables industry, but if not managed correctly, it may simply help create and/or protect manufacturing jobs in foreign countries, rather than stimulate the creation thereof in South Africa.
Take the example of how the Indian government is going about implementing renewable energy policy: it demands a minimum local content in order to qualify for incentives when it comes to the solar PV sector, thereby ensuring incentives paid for by the Indian government – and indirectly by the Indian people – result in job creation for the Indian people.
While I believe this stance is too extreme in South Africa, given the limited local production capacity, we would certainly like to see projects that use locally produced products given preference over those that import.
Ryan Hammond
Managing director
SolaireDirect Southern Africa
About Solairedirect Southern Africa
Solairedirect Southern Africa is a subsidiary of the Solairedirect Group in France. The group has sister companies in India, Morocco and Chile.
The company manufactures and develops solar PV modules at its facility in Bellville, Cape Town.
It provides full product design and operating services to all market sectors.
