Posted in: Africa

How new methods of procuring solar electricity enable more access to affordable power

Intuitively, solar-generated electricity is cheap: the sun, after all, is a free resource, and compared to fossil-based energy such as coal and gas that require constant inputs, once installed, solar PV systems harness the sun’s energy for “free”, providing years of clean energy. So why has solar taken a while to become mainstream?

This is, in part, due to the costs of setting up a solar PV system. Because whilst the solar resource itself is free, there is still an initial cost of setting up the equipment which harnesses the sun. And while electricity grid tariffs are typically made up of ‘pay-as-you-go’ charges for monthly energy and power use, a solar PV electricity generator requires an upfront investment in equipment, which is then followed by minimal operational costs and zero fuel costs. This means that whilst the overall lifetime costs of solar PV are significantly lower than equivalent grid costs, the upfront investment has historically often exceeded the available capital of electricity consumers seeking alternatives.

However, this pattern is changing. For years, businesses with sensitive balance sheets that would not have cause to justify a large capex expenditure on an asset that doesn’t relate to their core business have struggled to justify the costs of a solar PV system – even if it would result in significant cost reductions over time. For this reason, new ways of procuring solar electricity have grown, and many businesses are now choosing to buy power from independent power producers (IPPs) who own and finance the solar assets on their behalf. 

Independent Power Producers (IPPs) gained some traction in the years of South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPP), which started in 2008 to see the first renewable energy integrated on to the main grid. Since 2008 a few trustworthy IPPs have stood the test of time and are able to provide Power Purchase Agreements (PPAs) that reliably smooth out the costs of a solar PV generator, making it more affordable and accessible to businesses. In addition, their owning of the solar PV asset removes the technical and operational risks that a business might face through ownership.

Several years ago, small-scale PPA agreements for typical businesses were inflexible and difficult to structure. As mentioned in the previous piece on how energy generation has changed, lower grid tariffs and higher solar equipment costs in the past reduced the financial benefit of solar for the end user. In addition to this, local solar companies were less experienced and technical risks were higher, increasing the costs of finance. Buying solar power from an IPP was akin to renting a house at above market rates, from a landlord who overpaid for the property and got an expensive bond from their bank.

But this has been fundamentally changed by the cost dynamics of the energy sector. Reputable IPPs now have the skills and experience to offer clean solar power at a substantial discount relative to the grid, even for commercial energy consumers. In addition to unlocking greater overall savings, the growing cost gap is enhancing the commercial flexibility of IPP services, and making solar electricity available to a wider pool of consumers. 
A typical PPA can now range from 5-20 years, with the most popular being somewhere around the 10 – 15 year mark. During that time, the offtaker (the company buying the power) and the IPP (the company providing the power), agree to pay for power and provide power, respectively, at an agreed tariff. It’s very similar to buying power from Eskom, except that the companies know upfront how much they’ll be spending on power – and how much that tariff will increase in the coming years. These solar procurement options enable customers with sensitive balance sheets to reduce costs immediately, without the risks of owning or running a solar PV system, and without the risks of unpredictable tariff increases over time.

How electricity generation has changed over the past 10 years – and what it bodes for our future

Alongside the global pandemic, electricity has been on many South African’s minds this year. And rightly so: South Africans can expect a 15% increase in their electricity costs from mid-2021, based on a recent court ruling which grants Eskom the right to recover operating costs through additional tariff escalations. This will mark more than a decade of average annual increases of 14%, relative to average inflation of just under 6%.

These escalations have fundamentally changed South Africa’s economy: the manufacturing and mining sectors have been particularly affected by the rising tariffs, and are doubly affected by the inconsistent supply caused by load shedding. South Africa’s electricity supply from the grid is subject to decreasing reliability, with 2020 already shaping up to be the worst on record for load shedding.

What South Africa is experiencing is not unique, but exposes the global trends that expose the high costs of maintaining an aging and centralised coal fleet. A decade ago, average Eskom tariffs were two times lower than they are today, and the costs of installing solar PV were two to three times higher. That situation is very different today: Eskom and municipal electricity tariffs are now substantially more expensive than solar PV installations on an average, lifetime cost basis. This is driving strong uptake of own-use solar generators, despite persistent policy and regulatory barriers.

This is because the electricity market has fundamentally changed over the last 10 years. The growing cost gap between the grid and solar PV means that the benefits of solar are more economically viable, even if the PV plants generate more power than required (for example on weekends, when a factory does not operate). 

For private electricity consumers, solar electricity is typically used to offset daytime electricity consumption through ‘own-use’ or ‘embedded’ generators that service the electricity needs of the facility on-site. The uptake of embedded solar generation has exploded in South Africa, particularly amongst the retail and manufacturing sectors, because of the cost savings generated by the plants. Despite this, embedded generators are largely restricted from selling power into the grid, although it is looking hopeful that this might change

The fact that solar PV is so much more affordable than Eskom’s grid is also changing the way in which solar PV is consumed by large commercial and industrial facilities. For example, some facilities choose to oversize their solar PV system relative to on-site electricity demand in order to increase morning and afternoon solar electricity production, generate more power in winter, save more diesel during load shedding, reduce peak grid demand charges, and achieve higher overall reductions in grid electricity consumption. 


Other commercial and industrial facilities are opting to oversize their solar PV systems and store the excess affordable power in battery banks – something that, 10 years ago, would have been ludicrously expensive. However, with Eskom’s tariffs increasing the way they are, and with the reduction in the costs of energy storage components, the business case is starting to emerge. The advancement in electricity generation technology gives businesses more flexibility and options when it comes to their energy choices. Own-use solar – whether on or off grid – is an affordable and, by now, well-used option.

Load Shedding Solutions for Your Business

Load Shedding, unfortunately, has become a norm in South Africa. Even though load shedding takes place to stop the entire country from experiencing a permanent blackout (by the collapsing of the whole electricity supply grid), load shedding still has major negative effects on the economy in South Africa. 

Several reports now estimate that South Africa will experience severe load shedding for at least two more years. The frequency of load shedding, even during COVID 19’s economic standstill, indicates just how fragile Eskom’s fleet has become, and businesses have to find a solution to remain operational. The positive news is that a plethora of technology now exists which can help your business to find a solution to ending the nightmare of operational disturbances.

The causes of load shedding 

Load shedding happens when there is not enough electricity available to meet the demand of all customers. In order to maintain grid stability, the electricity utility supplier will interrupt the energy supply to certain areas on a rotational basis.  The winter-months are prone to load shedding, as it can be  caused by the higher demand for electricity during cold weather, which causes the power station stations to be overloaded and  struggle to  keep up with generating the needed electricity capacity.

According to Eskom and government officials, the solution is a capacity problem, requiring the construction of additional power stations and generators. However, the procurement of additional national capacity could be a lengthy process. In the meantime, there are alternative electricity solutions to help businesses during load shedding.

Various methods can be used to minimise the impact of load shedding, and below we suggest a few solutions businesses can use to see their operational disturbances be minimised. 

Solutions to load shedding

1. Uninterruptible power supply systems (UPS systems) 

A UPS is an electrical apparatus that provides emergency power to a load when the main power supply or utility power fails.

A UPS is the bare minimum when it comes to business operational management, as it allows for the safe, orderly shutdown of computers and connected equipment. The size and design of a UPS will determine how long it will supply power.

A UPS will only work if power banks are fully charged and on standby when needed. Unfortunately these are short term solutions, due to the fact that the power banks may run out of power before the electricity comes back on. This means that, once the UPS’s reserve has been depleted, there is no alternative supply of power, which might negatively impact productivity and affect day to day operating of the business.

2. Backup generator  

Many businesses have turned to backup generators to ensure the continuous supply of power. Generators typically use diesel or gas, and convert mechanical energy into electrical energy as the output. 

Gas generators can be used for residential emergency power supply and can last about 2 to 3 hours,  which may not be ideal for a business function. Diesel generators, on the other hand, can run for 20 – 30 hours, depending on their capacity.

However, with the ever increasing price of fuel, running a generator can become prohibitively expensive. The lifespan of a generator depends on its run hours – a generator that is used infrequently could last around 20 years. In a scenario of increased and consistent load shedding, generators may need to be replaced more frequently. 

In addition, it is important to consider the noise and fumes that a generator might emit, which can be an additional frustration to an already stressful working environment. 

Diesel generators on Robben Island

3. Grid-tied PV Solar system 

A solar PV system is composed of solar modules combined with an inverter and other electrical and mechanical hardware that use energy from the sun to generate electricity. PV systems can vary greatly in size, from small rooftop or portable systems to massive utility-scale generation plants. In South Africa, which has fantastic irradiation, solar PV tends to be the most affordable kind of power to generate.

However, typical solar PV systems are grid-tied, meaning that they would go down during load shedding. This is because, although the sun may continue to shine during a power outage, the inverters will automatically switch off in the event of a grid outage. An inverter is required for solar PV systems in South Africa, to convert the DC power generated by the modules to AC power, which is used in buildings and commercial operations. Inverters are designed to switch off in the event of a power outage, to ensure the safety of personnel that could be working on the grid during an outage.

Luckily, a simple “workaround” can ensure that during the day, a solar PV system can still remain operational during a power outage. As we explained in our previous post about load shedding, installing hardware and a simple generator/UPS system can ensure that inverters remain on during outages, and the solar PV system can continue to generate low-cost power during this time. Several SOLA customers have used this technology, such as Old Mutual Park. 

Old Mutual Solar Carport

Installing a solar PV system is a great cost effective way to get your business not having to deal with the crisis of load shedding in South Africa.

4. Off-grid solar PV system

An off-grid solar PV and battery system, also known as a stand-alone power system (SAPS), or solar PV microgrid, works by balancing several electricity sources, such as solar PV and batteries. Solar PV microgrids work by generating electricity from solar modules and using them to charge a battery via a charger controller.

An off-grid system works independently of a utility grid , which makes it an independent power generation source, ideal for remote or rural areas, such as the microgrid in Clanwilliam’s Cedar mill Mall.  However, with increased load shedding, this form of electricity generation is starting to make financial sense in urban areas too.

Although many companies may be reluctant to move off-grid,  solar PV microgrids are becoming the most long-term and cost effective solution for permanent power supply in South Africa. 

Cedar Mill Mall Solar PV Microgrid

Conclusion

With the prospect of load shedding being around for at least another three years, considering viable alternative sources of power is important for business. With the rising tariffs and other issues at Eskom, companies need to seek out the best alternative power generation options for their businesses. 

Now that we are ready to “reopen” our economy after the COVID 19 lockdown, load shedding will be a reality for many businesses. The good news is that there are lots of options for business owners to ensure continuous power – whether through a  UPS system, backup generators or solar PV systems. The options are there to help ease your mind with the effect that load shedding has caused to businesses.

Women in STEM: SOLA engineers share their experience

Women’s Day in South Africa commemorates the importance of women’s involvement in the struggle against apartheid, particularly the march against pass laws in 1956. As a company, SOLA is in the business of engineering, a sector in which women have been historically underrepresented. But SOLA is committed to diversity – and believes in the power of diverse thought to enhance the work that we do.  Today, we take a look at two women engineers at SOLA who are on their own mission to change the world.

Solar engineer at SOLA

Abi Majoka is an electrical engineer with four years of experience designing solar PV facilities. Her mother, an architect, was purportedly the reason that she decided on engineering as a career. “I was encouraged to make a change to the narrative that women can’t handle certain tasks,” says Abi. 

Role models are an important aspect of driving more women to choose male-dominated fields for their career path. Amelia Bergh, a mechanical engineer by training who started as an intern at SOLA, was lucky enough to have several strong female role models in her family. She believes that she was drawn to engineering through her interest in finding and solving problems.

Women solar engineers at SOLA


“Growing up on a farm…I very soon found myself interested in fixing each and every problem. Engineering was the best degree I could think of to back up this interest.” 

Since beginning her career as an intern at SOLA, Amelia has come to be responsible for several large-scale solar PV designs, including one for Prospecton Brewery in Durban, a 1.3 MW solar system that is one of the 8 MW fleet that SOLA built for ABinBev last year. Abi was also involved in this project, designing the 1.3 MW system at Polokwane Brewery in Limpopo. 

Solar PV engineering for AB InBev at Prospecton Brewery Durban
All hands on deck: Amelia with colleague Milano Singh on site at Prospecton Brewery, Durban

Despite their experience, both engineers are proudest of their first designs. “No one forgets their first labour,” Abi laughs, remembering her first design at SOLA, a 944 kWp system at Dainfern Mall in Fourways. Amelia’s first design, for the Western Cape Blood Service, also made a meaningful impact. “It was a small project but I am still very proud of it,” she adds. Indeed, a career in engineering means being able to tackle challenging problems and be rewarded by providing workable, cost-effective solutions. “In many cases, my work measurably improves the safety and/or quality of life for people,” Abi adds. 

But being a female engineer isn’t always easy. “Being outnumbered, on any front, is not enjoyable, and being a female engineering student or professional you are outnumbered 1/10 at a good time,” says Amelia. The effects of having few women in engineering fields are widespread and high impact – from the design of seatbelts meaning women are much more likely to die in car crashes to design of stoves that impact negatively on women’s health. Thus having a diversity of perspectives is important – particularly in engineering.  

Being in the minority can also manifest in day-to-day work scenarios for women in engineering. “I have to constantly show my strength and ability to execute tasks that are not ‘womanlike’,” Abi states. Amelia agrees. “Being a woman in our industry definitely gets people thinking. I am gaining momentum on my experience and am proud to be showing everyone that a woman can do it too,” she adds.

SOLA has always been committed to diversity, formalising their policy in this regard in 2019 and solidifying diversity as one of their core values. Whilst there is a long way to go, the rewards serve everyone, both internal employees and clients alike. “We are lucky enough to have quite a few supportive women within our company which I turn to when I am wanting to chat to a female,” Amelia adds.

What advice do Abi and Amelia have for other women who would like to start their careers in male-dominated fields? “Don’t settle for a work environment that does not support your growth and give you opportunities to expand your knowledge,” says Amelia. “Make sure to surround yourself with people that see past your gender and are proud to have you in their team.” Abi puts it more simply. “Show up and be relevant. We can do it!”

If you are a female engineer or interested in becoming an engineer, have a look at this list of resources for female engineers. Also, keep an eye on SOLA’s social media and careers page for job opportunities. 

Mining in africa

Why remote mines in Africa should be considering energy storage

There is no doubt that solar PV is the cheapest form of electricity generation globally. However, how does its application apply to remote mining operations? Africa is blessed with great solar resource, as well as mineral and metal resources – making mining an important industry on the continent. But remotely-located mining operations often mean that energy generation is an important concern. 

If a mining operation is located close to a utility grid, there could be an option to commission a new power line or grid connection to the mine. Whilst this may seem like an appealing option, there are many uncertainties in the creation of a new power line, and even in connecting to an existing one. How long will the powerline take to build? How will it be maintained and/or repaired when necessary? What would the costs be of such a connection? These questions need to be asked in conjunction with the political, regulatory and logistical risk considerations in taking on such an intervention. There is also the risk of the existing grid or utility being unreliable with frequent outages. 

Another consideration is the risk of using an outmoded form of technology, and what the implications of this might be for the future of your mining operation. Using mobile technology as an example, Africa has been able to leapfrog fixed line telecommunications straight to mobile phones, which has improved livelihoods on the continent substantially. A similar argument can be made for the fixed line electricity grid: decentralised electricity supply enable the opportunity to leapfrog outdated technology and maintenance that comes with fixed power lines to provide decentralised, reliable power. 

As such, many mines in Africa do rely on decentralised power, either in the form of diesel or solar PV. In addition to these decentralised power generation sources, battery storage is a great option to reduce costs and risks of power supply. 

Lithium Ion Battery Storage solar PV microgrid

The most common go-to option for remote mining solutions is diesel generation, due to its portability and reliability for remote mining operations. However, diesel is a costly option. Typically, diesel costs in African gold mining countries are around US$1 per litre of diesel – which translates to US 30c per kWh. This is in comparison to US 5c per kWh of solar PV electricity. Another consideration is the transportation of diesel to the mine site, which ironically is burning diesel to, in turn, burn more diesel. Despite the greenhouse gas emissions implications of this, it also adds an unnecessary layer of costs to the mining operation.

But is there another way? As mentioned above, many remote mines in Africa, whilst distanced to the utility grid and/or high-voltage grid connections, have fantastic solar resource. With the affordability of solar PV solutions, it makes sense to explore a solar PV system for mining operations in Africa. However, to provide power after hours and/or during the early hours of morning or late hours of evening, solar PV needs to be used in conjunction with a backup supply to keep the energy supply consistent. This might take the form of diesel generators, but energy storage – particularly in the form of lithium-ion batteries – is quickly becoming a less risky option. This is, in part, to the falling costs of energy storage technology. 

With costs of storage rapidly decreasing, energy storage provides a much more stable cost profile than grid-powered or diesel generated electricity, which both have unknown future cost fluctuations and risks. Similarly, the increased interest in electric vehicles, as well as global uptake of off-grid electricity, have sparked a sharp decline in battery costs.  

In addition, battery manufacturing capacity is expected to increase significantly by 2021 from just under 150 GWh/year in 2018 to 350 GWh/year in 2021, with the bulk of manufacturing taking place in China and the US. A similar forecast predicts an increase in manufacturing capacity from 350 GWh/year, to ~700 GWh/year. Similarly, the average battery plant manufacturing size has increased significantly, from around 10 GWh/year to just under 30 GWh/year. 

In conjunction with increased global demand and manufacturing capability, the costs of lithium-ion batteries have decreased significantly from 2013 – 2019, from around US$ 446 per kWh in 2013 to US$ 112 per kWh in 2019. 

Should the application of a solar PV and battery storage microgrid system be unfeasible for a mining operation, battery storage can still assist mining operations to save money by extending the life of generators by creating spinning reserve. This can create a ~2% diesel saving – or 2 MVA of batteries of spinning reserve could save ~260 000 litres of diesel.

A solar PV and energy storage microgrid ensures the control of power and energy sources. A high concentration of renewable energy, such as solar PV, in conjunction with storage, enables complete control of energy costs, eliminating logistics risks and price fluctuations. There are also various financing options available, such as buying the system outright or entering into a power purchase agreement. 
As mentioned, solar PV on the African continent is a no brainer. However, for remote mines, it may be necessary to install solar PV alongside battery storage solutions. Whilst solar PV saves money, energy storage solutions solve a few problems: they provide consistent energy supply and handle load changes, and also ensure that the costs of supplying power to the mining operation are known. This reduces much of the risk of electricity supply for both planned and existing mining operations.

Three ways to future proof your business in light of COVID-19

We are now into our third month of lockdown, and are starting to see the widespread economic impact of the COVID 19 pandemic. In South Africa, lockdown restrictions have eased a little, with most sectors returning to work and strict health protocols in place. However, we are far from where we were at the beginning of March, when COVID 19 seemed only like a remote possibility. It now seems like we might be entering the worst economic recession since the Second World War. In light of this, how will businesses prepare for the already uncertain future?

A recession worse than last year

According to the South African Reserve Bank, the South African economy  is expected to contract by 7% in 2020. Many sectors have been hard hit, with sectors such as manufacturing being particularly affected. Manufacturing itself was already struggling before the pandemic hit:  in February it reported a 2.1% year-on-year decrease in production volumes. The loss of production during the lockdown has further slowed some manufacturing sectors, such as the automotive industry, making their future uncertain. 

The struggling sectors, combined with the the fact that many South African’s have lost their jobs and will be spending little in the economy. Initial research shows that up to 14% of South African consumers have lost their jobs, with a further 37% saying that their work hours have been reduced. Many of them will be forced to cut expenditures dramatically in order to make ends meet, further shrinking the economy.

Since a recession seems inevitable, how can businesses weather the storm? The following are three suggestions. 

  1. Look critically at your business strategy

Those businesses that are flexible in either their operations or their offering will be the most likely to survive economic recession. We’ve seen this first hand: the closure of businesses that were successful but unable to adapt to the lockdown situation, and the success of businesses that make the most of the opportunity. Because no one saw this coming, it is those businesses that quickly adapted that got this aspect right. 

During a recession, essential, basic-needs items remain, whilst luxury, non-essential items are prioritised less by consumers. Pivoting your business strategy in order to meet the needs of consumers is important. In a business that focuses on industrial manufacturing, see if there are opportunities for operational efficiencies, such as making a basic necessity from the by-product of an industrial process, such as South African Breweries changing their manufacturing processes during the nationwide alcohol ban to produce much-needed hand sanitizer.

Rethinking business strategy is important for remaining profitable during a recession
  1. Cut operational expenditure

Cash flow is an essential to surviving a recession, and the reason that even profitable companies go under: without the cash to pay off operating expenses or salaries, businesses can quickly become bankrupt. One way to cut expenses, before the difficult decisions to retrench staff members, is to start with operational costs. In manufacturing and other industries, the easiest way to cut these expenses is to look to utilities – electricity and water – to ensure they are not spending more than necessary on these items. 

Start by evaluating the business for any potential inefficiencies: is it possible to shift production slightly later, to avoid peak hours? Can you implement a staggered start up of the plant, to avoid kVA surges and the associated costs? Have you made sure that energy inefficient lighting and heating have been taken care of? Once these factors have been examined, it is easier to identify how to proceed with reducing operating costs. 

One way that is very helpful to cut operating costs is through procuring solar PV electricity through a Power Purchase Agreement or PPA. This allows your business to benefit from lower electricity tariffs during the sunlight hours, and can be particularly beneficial if you can shift the bulk of production to happen during the day when the sun is shining. The one great thing about solar PV is that, even in the context of a global recession, prices are predicted to continue rapidly dropping.  

  1. Make sure your staff are engaged

Although there has been much written about employee engagement over the last few years, this “buzzword” does translate to the bottom line. A study conducted globally found that companies with highly engaged staff members had 17 % returns than those with low engagement levels. Therefore, in a recession where the bottom line is under threat, ensuring that employees are engaged could have a significant financial impact. (This also translates to employee turnover, by the way – about 40% of employees at low-engagement firms were likely to be looking elsewhere for jobs).

So how do companies create high employee engagement? This goes beyond basic employee wellness interventions, and translates back to genuine employer-employee value. If your employees believe that you are genuine about investing in them, they will be more likely to invest themselves in their job, which will translate into financial returns.

Employee engagement for solar PV
Solar for mining operations

Solar PV Microgrids for Mining: cost-cutting meets sustainability

The mining sector is one of the most important economic contributors to the African economy. However, mining is also facing several challenges – particularly with regards to sustainability and cost-saving. Mining operations are increasingly turning to solar PV microgrids as a reliable and sustainable alternative energy option.

Cost-cutting competitiveness

A 2019 Mckinsey review on measures to invigorate the South African mining industry identified cost-cutting competitiveness as a key factor. As an energy-intensive industry with a projected increase in energy consumption of 36% by 2035, the mining sector is looking to renewable energy, and particularly solar, as a significant cost-saving solution. This is evident in the agenda set for the 2020 Investing in Africa Mining Indaba taking place in Cape Town at the beginning of February, where industry experts will lead the conversation on the economic and societal benefits of renewable energy in mining.

A shift in industry thinking

proactive mitigation of ESG risks creates long term shareholder value.

Speaking to Engineering News & Mining Weekly Tom Quinn, an organiser of Mining Indaba, emphasised that:

‘It is now absolutely necessary for mining companies to have ongoing engagement with their investors and with the communities in which they operate in order to mitigate the risk of investor or community backlash from a lack of sustainable practices.’

This shift in industry thinking is aided by the economic benefits associated with using renewables such as solar PV microgrids to supplement more traditional energy sources. It is now widely accepted that maintaining a Triple Bottom Line is key to responsible investment. IFC’s Global Head of Mining Namrata Thaper advises that:

‘[E]xperience has shown that proactive mitigation of ESG risks creates long term shareholder value. This value is created by ensuring alignment between stakeholders and thereby reducing the likelihood of disagreements between stakeholders, which can lead to cancellation of concessions by government, labour unrest and strikes, community blocking or stopping of operations and more which are all events that can negatively impact financial performance…’

Renewable trends

‘The most advanced options… are hybrid systems that integrate solar, wind and batteries with diesel, gas or heavy fuel oil generators, without compromising reliability or power quality.’

For the mining industry, who rely heavily on consistent, uninterrupted power, the key energy trends to watch in 2020 are hybrid power, advances in renewables technology, variable power usage, intelligent seamless integration and meaningful cost savings.

Climate change, loadshedding and the fluctuating diesel price

However it is not just Triple Bottom Line reporting that is pushing mining companies to seek renewable energy solutions. Threats to productivity in the southern African region include unplanned breakdowns at state-run electricity utility Eskom, the fluctuating diesel price and supply disruption risks in the SADC region. The reliability of solar PV microgrids can mitigate these risks significantly.

On a global scale interruptions to energy production as a result of violent weather conditions caused by climate change has resulted in a growing shift to renewable energy. In response to this new challenge, businesses are focused on ramping up energy efficiency and reducing carbon emissions. Spencer Glendon, a senior fellow at Woods Hole Research Center cautions that climate change may be altering the economics of long-term infrastructure investment. It is crucial to ensure that one’s power supply is independent of at risk utility plants.

Solar PV microgrids offer a hybrid solution to these obstacles. In cases of remote locations, weak grid supply and reliance on diesel, there is an optimal business case for mines to use a solar PV microgrid. This typically combines a backup generator with batteries and solar to ensure a seamless transition and no interruption of power.

Positive outlook for solar PV globally and locally

‘the world’s total renewables-based power capacity will grow by 50% between 2019 and 2024’

The International Energy Agency’s (IEA’s) 2019 renewable energy market forecast for solar PV states that ‘the world’s total renewables-based power capacity will grow by 50% between 2019 and 2024’. Thus as there is a global transition to a varied renewable power sources the southern African region will find itself at a competitive advantage due to its strong irradiance levels (South Africa average more than 2 500 hours of sunshine per year). As a result of falling costs of solar PV and batteries worldwide, microgrids are now accepted as a reliable and cost-effective solution for industrial power generation.

The added benefits of third party financing

Financed solutions allows mining facilities to achieve immediate savings with no initial capex outlay. A solar Power Purchase Agreement (PPA) enables businesses to pay off and maintain their own solar energy systems at no upfront costs, while enjoying the immediate benefit of cost savings. Solar PV microgrids are increasingly the option of choice when looking to adopt a reliable, affordable, and sustainable energy solution.

Solar Power Systems - Alrode Brewery in Alberton - industrial solar power system

AB InBev bolster breweries with 8.7 MW renewable energy from SOLA

Renewable energy solutions are a quick and efficient way for South Africa to reduce energy demand on Eskom’s constrained grid, and solutions are being supported by businesses who see the value of embedded electricity solutions for their supply chains. 

This is according to Chris Haw, Chairperson of the SOLA Group, who in 2018 signed seven multi-tiered Power Purchase Agreements (PPA) with AB InBev Africa that are seeing large solar power plants built across seven major breweries in South Africa.

The Power Purchase Agreements will total around 8.7 MW DC capacity. Of this, 2.6 MW have already reached practical completion with the remaining projects in advanced stages of construction.

“Not only is solar a viable and cost-effective option for us, it aligns to our global sustainability strategy, which entails going 100% renewable by 2025,” says Taryn Rosekilly, Vice President of Procurement and Sustainability at SAB and AB InBev Africa.

ABin Bev Breweries will now be powered with solar energy

The bold step taken by AB InBev Africa highlights the private sector’s strong drive towards reducing carbon emissions and procuring renewable energy solutions.

Gugulethu Nogaya, the Renewable Energy Procurement Manager at AB InBev Africa explains that “procuring renewable energy is part of our sustainability objectives set at a global level. Our global renewable energy commitment is to ensure that 50% of our purchased electricity will come from renewable energy sources by 2020, and 100% by 2025”. 

Nogaya points out that the company has achieved its 50 % target ahead of schedule. “We are currently on track to achieve our 100 % target, with the PPA being an instrumental first step in ensuring our African business is on track to achieve the 2025 ambition.”  

Nogaya adds that “in order to meet the AB InBev 100 % target in South Africa, it will require solar renewable energy facilities to the total of 191 MW.” 

Jonathan Skeen, Gauteng MD and Gugulethu Nogaya, Renewable Energy Procurement Manager, at the launch of AB InBev's renewable electricity and electric truck launch

According to the International Energy Agency, distributed solar PV systems in homes and Commercial and Industrial buildings have almost tripled since 2014. It predicts that distributed energy will grow as much as onshore wind by 2024, making up half of all new solar PV capacity. 

This is likely due to the flexibility and affordability of PV plants compared to other forms of energy generation. The rollout of large-scale solar PV systems takes much less time than other generation technologies. 

There is also a greater demand and expectation that businesses take more responsibility for the way in which they operate. Providing renewable energy allows businesses to meet their sustainability targets whilst taking pressure off of Eskom’s load.

The PPA between AB InBev Africa and the SOLA Group is allowing solar PV to be rolled out without AB InBev incurring capital costs. Instead, the company will purchase its power requirement directly from SOLA, with the remainder coming from Eskom and local municipalities. 

In 2019, SOLA secured R400 M with partners from African Infrastructure Investment Managers (AIIM) and Nedbank in order to fund projects such as the AB InBev Africa solar facilities.

“Embedded electricity generation – particularly solar PV – can quickly address Eskom’s supply shortfall,” states Haw. “For large Commercial and Industrial companies, procuring renewable power enables saving costs whilst also reducing their carbon footprints.” 

The solar PV plants for AB InBev Africa span across seven different sites in various areas of the country, including the Western Cape, Limpopo, Gauteng, KwaZulu-Natal and the Eastern Cape. 

“Combined, the plants will consist of over 23 000 solar panels. The construction of the projects will create 175 jobs, in addition to SOLA’s 56 permanent positions,” points out Haw. 

AB InBev Africa is one of the largest industrial business in South Africa, making the conversion of their sites to solar significant. “The PV systems will produce close to 14 GWh of electricity per year – the equivalent of taking over 2000 cars off the roads. This is exactly the type of clean energy procurement that we need to see more companies committing to,” concludes Haw. 

SOLA starts 2020 by reaching 100 GWh target

SOLA has officially met its goal to generate over 100 000 000 kWh of clean energy by 2020 –  with a day to spare. 

The group set the target to reach 100 GWh of clean energy by 2020 as a goal when its C&I division started in 2014. And with just one day to spare, the target was met on 30 December 2019. 

100 000 000 kWh of clean energy in South Africa, where the carbon factor is quite high because of a coal-based electricity system, equates to saving around 92 590 tons of carbon emissions equivalents (CO2eq). This amount of CO2eq can be likened to taking 20 000 cars off the roads for a year, or avoiding 400 million litres of petrol, or powering 11 000 middle-class houses for a year, or planting 1.5 million trees, 10 years ago.

With wildfires currently raging across Australia, people dying of pollution-related causes in Mpumalanga, and our own Eskom struggling to keep the lights on, it is important to unpack the significance of this goal: we need to bolster the production of clean energy globally. And whilst 100 GWh is just a fraction of South Africa’s overall energy production, it is an important start in painting a better future for the country, and perhaps even the continent. 

Capella Stella – North West Province – South Africa

Can urban high-energy consumers benefit from solar PV?

It’s no surprise that high energy consumers are those that might benefit the most from renewable energy. In South Africa in particular, the coal-based electricity system means that large energy consumers carry large carbon footprints, which can undermine sustainability efforts and targets. But simply adding a few solar panels is not necessarily the answer either. 

That’s because renewable energy – in particular solar – needs space in order to effectively produce the necessary energy. For large energy consumers, the required space can be substantial – requiring a large solar farm situated in an area with excellent irradiance (solar resource). Whilst it does sometimes happen that the energy consumer is situated in an area with large land and good irradiance, this is not always the case. 

Open energy markets allow the trading of energy from different sources of production – either governmental, such as an Eskom-owned and operated coal-powered generation plant – or independent power producers (IPPs) – typically solar, wind, gas, and so forth. When energy is at its cheapest – as solar is during mid-day – consumers can buy this power and benefit from the associated cost savings. This is the type of energy market which is common overseas in places like California, where a central body facilitates the provision of power from various different sources. 

In South Africa, we are not yet at an open energy market situation. Energy is still provided almost exclusively by Eskom, with a few IPPs contributing to Eskom’s grid. But wheeling of power – forming an arrangement between an IPP and a commercial offtaker to use power via Eskom’s grid – is a possible workaround for large energy consumers. This fits with global trends that show that businesses are taking a more active role about procuring the type of power they want, according to Bloomberg.

Wheeling is essentially like a remote Power Purchase Agreement – it is a way for a corporate consumer of energy to procure electricity from an independent party. But unlike typical PPAs, wheeling enables larger amounts of power to be transferred, because the generation source – such as a solar PV system – doesn’t have to be situated geographically close to the offtaker. 

This means that a large solar farm – producing several MW of power in the highest solar resource areas of the country- could generate electricity for a high-energy consumer on the other side of the country, using the national electricity grid.

In South Africa, wheeling currently involves amending the System of Use Agreement from Eskom to stipulate that the energy can be wheeled – or generated in one source and consumed in another. The actual energy generated by the plant does not get transferred physically to the consumer, but electricity meters at either end (both at the producer and consumer) measure how much energy was generated and consumed and will be accounted for, respectively. 

The industries that can benefit from wheeling include large corporate energy consumers, such as mining operations, smelters, or data centres. All of these operations are suitable for wheeling because they are large energy consumers, but may have neither the space nor the inclination to build a large solar plant located at their operations. Wheeling agreements can ensure that they meet their sustainability targets, by reducing their carbon emissions, and cut operating costs, by procuring cheaper power when this is available.  

So wheeling can help to facilitate energy markets by allowing IPPs to produce affordable, clean power and sell it directly to corporate consumer, helping the latter to reduce costs and carbon emissions. Is there a catch?

There are a few different aspects of a wheeling agreement that can influence the tariff costs. Firstly, there are the wheeling fees, which Eskom charges in order to recoup the costs of utilising their grid to distribute power. These costs mean that economies of scale are still needed in order to make the tariff an affordable one – making wheeling suitable for very large consumers of energy only. 

Secondly, the regulatory environment can take time to navigate. In South Africa, Eskom has a wheeling framework that enables wheeling, but these agreements are still subject to approval by the National Energy Regulator, Nersa, who need to give overall permission for the arrangement. Navigating the two entities can take time, and therefore wheeling agreements typically take a while to come online. 

Nevertheless, wheeling of power has great potential to assist large energy consumers to optimise their energy loads and provide cost savings, whilst also reducing pressure on Eskom. Wheeling means that Independent Power Producers can supplement the grid and provide clean electricity to those companies that wish to procure it.