Solar Microgrids and Battery Storage

Achieving electricity cost reductions through energy storage

Achieving electricity cost reductions through energy storage: what Business needs to know

Energy storage represents the major opportunity for the electricity sector, as affordable energy storage promises to solve the intermittency issues that occur with cheap renewable power such as solar PV and wind energy. Over the past few years, rapid declines in the cost of energy storage technologies, such as lithium-ion batteries, have made the topic of energy storage enter mainstream conversations. However, does energy storage as it currently stands translate into cost savings for business? 

From electric vehicles to large-scale utility batteries: the global market context

The popularity of electric vehicle (EV) technology in many ways has facilitated rapid growth in the energy storage services market, driving down the costs of Lithium-ion batteries and associated technology. Daniel Goldstuck, head of Energy Storage and Microgrid Services at SOLA, believes that the progression of storage products and services can be clearly seen in the increasing presence of battery suppliers and other industry service providers at conferences, who tout their ability to provide reliable, high-tech solutions to intermittency battles. In addition, the mushrooming of utility-scale battery programmes globally indicates that interest in energy storage is entering the large-scale energy services market, leading potential clients to see energy storage as a potential solution to some of their needs. “The procurement of large-scale transmission assets ‘in front of the meter’ shows that utilities are starting to use energy storage to provide a number of services, including frequency response, renewables smoothing, and transmission deferral,” Goldstuck asserts. 

The uptake of such solutions is expanding globally. California, for example, has over 1 GW of storage solutions installed, and the state also provides rebates for residential storage systems. In Africa, Microgrids that combine energy-storage technology with clean energy generation are lauded for their ability to provide stable power to communities with weak or no grid access. Pico-grids, or home solar kits, are also increasingly seen as ways to assist rural homesteads and villages with electricity provision. 

However, the application of microgrids and energy storage solutions do not only apply to rural and utility scale efforts, but also to the large segment of commercial and industrial energy consumers in between. Rurally-located mining operations, for example, can benefit from energy storage applications that link to cheap and reliable renewables, moving operations to electricity that is less cost- and carbon- intensive than diesel.

storage and solar PV: a perfect match

Solar PV is the cheapest form of energy in most countries globally. This is because it is solar power is an abundant renewable resource, the technology to harness it is relatively cheap to install, and it lasts for 20-plus years. However, solar PV is most abundant in the middle of the day, and starts to wane during “peak” energy hours such as early morning and evening. When combined with energy storage, the abundant, cheap electricity generated by the sun during midday can be stored and deployed during these peak usage times. Because storage is also programmable, it can be deployed when most needed – preventing wastage and increasing the economic value of each kWh stored. 

However, this programmable aspect of microgrids also make them more expensive than the typical grid-tied solar PV facility. “Solar PV and storage microgrids need to function seamlessly, so that power is not interrupted, and battery life needs to be managed carefully in order to ensure their longevity. This takes quite specific and extensive engineering to get right,” Goldstuck adds. 

Issues such as cycling the battery every day can affect the warranty of the product, depending on the type of battery and warranty arrangement. Energy throughput of the battery has the largest impact on the life of the battery, and therefore the warranty. Unlike solar modules that have a 25 year lifespan and relatively low operations and maintenance requirements, batteries need to be very carefully sized and configured, taking into account things like days with low-irradiance or cloud cover, where batteries may be put under pressure.

Although renewables and energy storage solutions are a perfect combination in a world headed towards increased renewables, the above factors mean that at the moment, the combination of solar PV and batteries into microgrids is more costly than straight grid-tied solar PV.

When does storage make sense economically?

However, the business case for storage and microgrid solutions is very clear for certain business sectors. “Rurally located agro-processing units such as medicinal cannabis farms are particularly well-positioned to make use of renewable energy storage microgrids,” contends Goldstuck. “They require consistent, large amounts of reliable electricity in order to power greenhouses and other farming equipment – yet are often situated on constrained grid networks and may rely heavily on diesel to run effectively,” he adds.

Diesel is expensive, both monetarily and environmentally, and yet diesel generators are widely used to power remote facilities. Diesel generators have even been used in South Africa to maintain the grid supply whilst there was constraint to major power stations. And despite energy storage solutions still being pricier than solar PV, diesel is still more expensive than the combination of both. Given that diesel is so expensive, the business case for implementing a clean-energy microgrid is particularly good  in relation to diesel saved.  

In contrast, storage for grid-tied facilities seeking a tariff-optimization solution generally requires closer analysis to determine the business case. “In South Africa, only a few tariff structures are currently at the price point to justify adding a storage asset. This is rapidly changing as the cost of storage decreases, and the costs of centralised electricity supply increases,” adds Goldstuck.

Energy storage economics cheat sheet

As a rule of thumb, energy storage microgrid solutions will make economic sense if they prevent at least 30% of the facility’s current or proposed diesel usage. Such cases are typically:

  1. Facilities on a weak or constrained grid network that need additional power to function
  2. Facilities without electricity grid access
  3. Facilities requiring consistent power that the grid is not able to provide for at least 30% of the time. 

Based on the above criteria, the following industries lend themselves particularly well to solar PV and energy storage microgrids:

  1. Islands without electricity grid access, or where the grid itself is powered by diesel (such as Robben Island)
  2. Game lodges or hotels that do not have access to the grid
  3. Large developments in rural settings that require more power than the grid can provide (such as the Cedar Mill Mall development)
  4. Mining operations situated remotely
  5. Farms that have extensive greenhousing requirements such as Medicinal Cannabis facilities 
  6. On-grid buildings experiencing outages for more than 30% of the time.

In conclusion, Goldstuck admits that there is a long way to go before large-scale energy storage solutions can be broadly implemented. However, he remains optimistic. “We’re just scratching the surface of what’s possible in terms of storing the abundant renewable resources we have available. In the years to come, energy storage solutions will become widespread options for commercial and industrial facilities”.

Solar Microgrids and Battery Storage


How to prevent loadshedding in commercial buildings

3 Options to proof your commercial and industrial building from load shedding

The nationwide spate of load shedding in South Africa is not just a highly frustrating situation for individuals: it is a hindrance to businesses and the economy in general. As South Africa starts to approach level 5 and 6 load shedding scenarios, it is important to look at the alternatives available to businesses around the country in order to prevent the loss of productivity across the board. At the same time, various different alternative sources of power should be evaluated based on their cost-effectiveness and environmental impact. The following article explores various load shedding prevention methods for commercial and industrial buildings.

Option 1: Using backup diesel generator

Option 2: Retrofitting a grid-tied solar PV system

Option 3: Going off grid using a solar PV/battery microgrid


Option 1: Using backup generators

This commonly used form of commercial backup power consists of diesel gensets that switch on when the power goes off. This is a good option for ad-hoc power cuts in places that cannot afford to lose power, such as hospitals, convention centres and large retail centres.

Before relying on a diesel backup generator, though, the system should be tested with the total load of the building to make sure that it is able to take the full electricity load. If it not possible for the gensets to handle the building’s entire load, an “emergency” scenario – where nothing but the critical systems are backed up – should be tested. An Automatic Transfer Switch (ATS) will be needed to ensure that when the power goes off, the diesel generators are initiated.

Within Eskom’s current loadshedding trajectory, using backup diesel generators is likely to be very expensive, depending on the load size of the building. Diesel itself is much more expensive per kWh than typical Eskom tariffs, and even more expensive when compared with the costs per kWh of solar PV. When evaluating the efficacy of installing diesel gensets, the following questions should be asked:

  1. How many hours per day will the genset(s) be required?
  2. How many litres of diesel are likely to be required?
  3. What are the ongoing maintenance requirements of consistently using diesel generators?
Robben Island has historically used diesel generators to provide the power needed on the island.
Robben Island has historically used diesel generators to provide the power needed on the island.

Option 2: Retrofitting a grid-tied solar PV system

In South Africa, many commercial buildings – hospitals, retail centres, distribution centres, etc – have grid-tied solar PV systems that supply power from the sun during the day. These relatively simple systems are tied to the grid, so they do not provide 100% of the offtaker energy requirement but rather supplement it. Unfortunately, grid-tied solar PV systems do not automatically prevent a building from experiencing load shedding.

Because solar generates Direct Current (DC) power, this needs to be converted into Alternating Current (AC) to be used in buildings as electricity. In order for a solar system to produce usable electricity, therefore, a solar inverter is required. However solar inverters are designed to switch off during a grid outage.

Why is this? For grid-tied solar PV systems, this serves as a vital safety mechanism for personnel that might be working on transmission lines during outages. With solar inverters off, buildings with solar PV systems are prevented from generating power during a grid outage and potentially exporting power to the national grid, which could be fatal for maintenance personnel.

Solar inverters are designed according to international safety standards that require this functionality, which means that grid-tied inverters cannot operate in off-grid conditions. As such, when Eskom goes down, most solar systems do, too.

However, this does not mean that large buildings with solar PV systems do not have options for load shedding. With careful engineering, It is possible to form one’s own “microgrid”, by replicating a fake grid-tied scenario to “trick” the solar inverters into staying on. This requires the use of a generator or battery, and specialised control equipment.

In order to retrofit a grid-tied solar system to operate during load shedding, two essential steps need to be taken. Firstly, the system needs to be isolated from the grid to prevent any exporting of power that could affect the safety of maintenance personnel. Secondly, a voltage forming source is required, in order to provide a reference voltage and frequency to the solar inverter.

Therefore, to prevent a grid-tied solar PV system from going out during a power outage, the following is required:

  1. Hardware that can disconnect the main supply from the grid, effectively isolating the building/facility from the grid.
  2. A diesel generator or battery bank that can provide backup power for the entire facility and provide the necessary voltage and frequency reference to the solar inverters.

These two points require careful engineering and a proper control system to manage the change-over, the dispatching of generators/batteries, and synchronisation of the solar inverters. It also has to oversee resynchronisation to the grid once the grid is available again. This can be automated and should not need any human input. Further, the system would need to be sized correctly in order not to trip under various loading scenarios.

With these two mechanisms in place, there would be a short down-time after an unexpected grid outage, due to the system having to switch itself on and switch to off-grid mode. Once switched over, however, the solar powered electricity which is being generated can be distributed throughout the building.

In order to avoid an outage entirely, it is possible to either isolate from the grid before an expected outage, or have an uninterruptible power supply (UPS) capable of providing continuous, uninterrupted power during an outage.

solar could help Africa's economy to grow

Option 3: Going off-grid: Using solar PV, batteries and Generators to go off-grid

Taking a commercial building off the grid entirely is another, although slightly pricier, option. Solar PV systems, when combined with energy storage, can store excess solar power produced during the day and distribute this later when needed. Solar PV is now one of the cheapest forms of energy, and its distributed nature means it’s perfect for use at source, where it is needed.

However, the costs of batteries and the sophisticated engineering of microgrid systems needs to be evaluated against the building’s requirements. Perhaps, a commercial or retail building operator does not mind paying a premium if that means consistent, clean power. (Microgrids also have particular relevance to supplying power in weak-grid scenarios – such as the one in Cedar Mill Mall which supplements the grid’s 250 kVA with an additional 250 kVA of power).

If your commercial or industrial building is currently using its diesel generators around 30% of the time, the business case for a solar PV and battery combined microgrid will likely look feasible. In a typical stage 4 load shedding scenario, power cuts generally occur for around 7 hours per day. Given the assumption that the energy load in the building is similar throughout the day and that diesel generators are being used to supply power consistently when the grid goes down, this would equate to around 30% of the total electricity consumption – making it a worthwhile investigation.

Whether it is a backup generator, installing a solar PV system with a backup generator or battery, or going entirely off-grid, there are options for commercial and industrial buildings in South Africa to prevent the damage that load shedding can do to business.

Cedar Mill Mall goes solar
Cedar Mill Mall in Clanwilliam is an islandable on-grid microgrid

A reflection on South Africa’s energy landscape in 2018

South Africa’s renewable energy sector received a new lease on life in 2018, after years of uncertainty and lack of movement.

With the Ramaphosa government signing nearly R56 billion worth in contracts with 27 independent renewable energy producers during 2018, the way forward, notwithstanding legislative and business challenges, is looking much brighter.

Significant progress has been made in the private sector in adopting renewable energy as a viable and consistent energy supply, often beating the costs of Eskom-supplied power.

We believe that more businesses will make use of renewable energy sources either to supplement their power, or for their primary electricity supply, as batteries and solar PV costs continue to fall.

Robben Island is saving millions of rands on its electricity bill though its microgrid. Earlier this year, Cedar Mill Mall in Clanwilliam opened its doors after Eskom told the developers it could not provide the power needed to supply the large building. These project show that despite inertia and a struggling economy, South African business can still benefit from renewable energy.

Uptake is particularly impressive in the retail sector, with malls catching on to the value of solar to produce low cost power during their busiest hours of operations. Ilse Swanepoel, Head of Utilities at Redefine Properties, whose solar PV fleet produces about 35 754 600 kWh per annum, stated “Solar is no longer niche and is a well-entrenched renewable energy source underpinning the achievement of green-building goals. Demand has grown in recent years, with many large blue chip tenants prioritising their own sustainability efforts, expecting the developer to dovetail and help achieve their objectives.”

This is encouraging. However, uptake in renewable energy should not just be supported by the private sector. For the economy to benefit from renewable energy’s reduced costs, the contracts signed by the government with the 27 independent renewable energy producers must translate into action that is sustainable, consistent and measurable.

Independent Power Producers (IPPs) have reportedly created 35 702 jobs and have spent R766 million on education, health, social welfare and enterprise development, according to figures provided by the ministry.

I’m optimistic about the renewable energy sector, given the government’s willingness in 2018 to acknowledge and engage with alternative energy suppliers, which were on hold for several years. REIPPP’s Round 5 is crucial in terms of accelerating the government’s transformation plan as it is set to bring about higher levels of transformation, localisation and community upliftment requirements.

In addition to this, the successful implementation of the Small IPP programme, aimed at smaller scale projects with a focus on SMMEs, high black ownership and local supply chains is exactly what the renewable sector needs. Going forward, we will need to work closer with all role-players as we better understand the sector and its ability to grow and develop South Africa.


Solar will be a boost for SA's economy

One of the most significant documents is the government’s draft Integrated Resource Plan (IRP), which outlines the way for South Africa to meet its growing national electricity demands by 2030.

The IRP was released for public comment in August. The construction industry (with its high electricity costs it incurs) has already welcomed the IRP, with some saying it could revive the industry. It has also been praised for its proposed increased allocation to renewable energy and the phasing out of coal and the pursuit of the ‘least cost option’ which rules out nuclear at least until 2030.

However, the IRP still lacks in clarity and allocation for embedded generation – which is one of the fastest growing energy sources and key to reducing corporate energy costs. A future-facing IRP takes into account not only the cheapest form of energy, but also the changes in the energy environmental happening globally. Coal-based, heavily centralised energy systems are fast becoming redundant with the introduction of smarter technology.

South Africa is no exception in this picture, with state utility Eskom plagued with difficulties in 2018. Still, Nersa’s (National Energy Regulator of South Africa) announcement giving Eskom the go-ahead to recover R32.7 billion (already approved as part of its adjudication of three separate Regulatory Clearing Accounts), will result in further tariff increases.

Embattled state utility Eskom

This will encourage businesses to look at alternative, consistent and cheaper forms of electricity – resulting in less income for Eskom and municipalities that rely on selling power through their grid.

Nersa continues to agree to Eskom’s requests for increasing tariffs. The embattled parastatal has again asked the regulator to push up tariffs – this time a 15% tariff increase per year over three years – this is on top of a 4.41% price increase Nersa has already granted Eskom. This proves to be one of the many reasons why a balanced energy mix should be put in place.

Another piece of legislation crucial to the sector is the so-called Carbon Tax (revised Draft Regulation on the Carbon offset), which Treasury published on 12 November for a second round of public comment.

Small and medium-scale renewable energy projects with a generating capacity of up to 50MW have been listed by Treasury as eligible for carbon offsets, but Nersa’s regulations might hinder national uptake.

Renewable energy trading, embedded generation and renewable IPPs needs to be supported by South Africans. Renewable energy solutions have the potential to jumpstart our economy; legislation is a step in the right direction. It will be interesting to see how the energy sector will develop in 2019.

solar could help Africa's economy to grow

SOLA’s Robben Island Project wins SANEA Project of the Year Award

SOLA Future Energy has won SANEA’s Energy Project of the Year Award. The award, which recognises an energy project that has brought significant recognition internationally to South Africa’s energy environment, was given to SOLA for their design and build of Robben Island’s Microgrid – a project funded by the Department of Tourism.

The award was given based on the project meeting a stringent set of criteria, including:

  • Leadership
  • Innovation
  • Initiative
  • Role model
  • Visionary qualities
  • International recognition
  • Contribution has had impact in South Africa

The Microgrid has assisted Robben Island, historically a grim landmark of isolation and oppression, to evolve into a space for critical dialogue, remembrance, education, tourism and conservation.

The installation of a state-of-the-art microgrid on Robben Island is the largest combined solar and lithium-ion storage facility in South Africa. The Department of Tourism had set aside funding for a microgrid project with solar photovoltaic systems (PV) to improve both the island’s image and function. SOLA Future Energy was awarded the contract to design and install a PV farm comprising nearly two thousand high-efficiency modules that would generate in excess of 666 kWp.

The Robben Island Solar project is a prime example of a technologically innovative and sustainable initiative.

Since adopting a green energy system, the island has already produced 650 000 kWh of solar energy – an average of 3250 kwh per day – which has significantly reduced its reliance on traditional diesel generators, a noisy and expensive feature of the old system.

In the past, diesel had to be transported by ship from the mainland, primarily to desalinate the island’s water supply. The cost of purchasing and transporting the diesel formed a substantial portion of the island’s operating budget. From a financial perspective, the solar plant is estimated to save the island over R6 000 000 in energy costs each year. The initial cost of installing the solar plant is likely to be paid off within four years. The snowball effect of the reduced spend on fuel is, at this stage, difficult to quantify. However, the savings could be used to upgrade existing infrastructure and create jobs on the island.

Over and above the financial considerations, the noise and dust emanating from these generators were not creating a tourist-friendly environment. In terms of carbon emissions, the solar farm is expected to reduce the CO2 emissions of the island by 860 Tons per annum.

Mmekutmfon Essien, Senior Project Manager at SOLA Future Energy, receives award from the Chairperson of SANEA

Mmekutmfon Essien, Senior Project Manager at SOLA Future Energy, receives award from the Chairperson of SANEA