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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.

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

How Solar Power Systems Can Help Your Business?

Solar power systems are not only relevant to governments and large utilities looking to procure solar power, but to commercial and industrial businesses too. Currently, solar PV systems are the cheapest form of available power, and prices are continuing to drop. It is no wonder that businesses are keen to get on the solar trend. But how, specifically, can industrial businesses benefit from solar power systems? 

Solar power systems can assist businesses - ABInbev

Solar power systems reduce operating costs

The first and most obvious advantage of installing a solar power system is cost saving. Because solar is such an affordable form of electricity, it is an easy way to reduce operating costs dramatically, particularly for industrial businesses that have consistent loads or run 7 days a week. Two factors make solar PV a good investment for industrial businesses: they instantly reduce operating costs, and the great solar irradiance in South Africa means that they can produce a substantial amount of energy.

How much will a solar PV system save industrial businesses? This largely depends on the type of business, times of power use, and other factors that may influence the cost of the solar electricity generated. For an estimation of how much your business could save with a solar solution, get in touch with us for a free analysis of your electricity tariff. 

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

Solar power systems can reduce diesel costs during load shedding and other power outages

Whilst most solar power systems are grid-tied, meaning that they do not operate during load shedding or other power outages, solar PV can greatly reduce the cost of diesel that might be required for backup power during an outage such as load shedding if this is taken into account whilst designing the system. 

Solar PV systems continue to generate power as long as it is light – and this applies to periods of load shedding during the day. However, solar inverters are designed to switch off during a grid outage, which serves as a safety mechanism for personnel that might be working on transmission lines during outages. 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 replicate a fake grid-tied scenario to “trick” the solar inverters into staying on. 

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. With these mechanisms in place, a solar PV system can continue to function seamlessly during load shedding, and thus reduce the costs of diesel and extend the life of on-site generators greatly. 

When does it make sense to go entirely off grid? If your business has a weak grid connection and thus has inadequate kVA supply, or it uses diesel roughly 20% of the time, it might be worthwhile to look at the cost-benefits of installing a solar PV microgrid with batteries. 

Solar power systems reduce carbon emissions

It goes without saying, but supplementing your business’s electricity supply with solar power is a great way to cut down on carbon emissions. In South Africa, the Carbon Tax was gazetted on 1 June 2019 – meaning that companies will have to take their carbon emissions into account when filing for their tax returns. According to the South African Revenue Service (SARS), the first phase of the carbon tax is R120 per ton of carbon dioxide equivalent emissions, which will increase annually by inflation plus 2% until 2022. 

There is a minimum threshold for emissions allowances in order to allow for businesses to transition to cleaner energy and invest in energy efficiency projects, but in general the carbon tax is here to stay – and if avoided, could save the business from tax expenses. 

In addition many large companies are heeding their stakeholders’ requests to be more responsible in the way that they do business. Global support of sustainable business practices have increased dramatically over the last few years, particularly in the manufacturing sector. In response to global consumer trends, a group of multinational corporations established the RE100 as a commitment  to going 100% renewable energy. One signatory of the RE100 is AB InBev, who recently entered into a multi-tiered Power Purchase Agreement with SOLA to supply their South African Breweries with 8.7 MW solar power systems. For them, the commitment to renewable energy is a no brainer – both in terms of cost savings and their sustainability commitments. 

Solar Power Systems - AB Inbev

By giving you a better overview, solar power systems can increase operational efficiency

Solar power systems are not only a way to reduce operational costs and lower carbon emissions, but they also provide an opportunity for businesses to evaluate and improve on their energy consumption habits. In order to correctly size a solar PV system, it is important to examine the load of the building, and with this will come insights into your energy consumption patterns. Is it possible to run some of the plant during the day when solar PV is at its cheapest? Are there additional energy efficiency measures that could assist with bringing your load during peak hours down? By encouraging a monthly overview of a business’s energy consumption, solar power systems can help to further energy savings even more. 

Solar power carport systems can provide cool, protected parking

Whilst many businesses in South Africa have ample roof space for housing solar power systems, solar power systems are perfect additions to parking lots and convert them into shady, protected carports. Solar carports are very similar to ground-mounted solar systems, but they have the added advantage of not requiring any additional land if a parking lot exists. What is more, because of global demand, these systems are becoming increasingly affordable. The solar carport at Old Mutual head office is an example of how a solar power systems can utilise existing space to create savings for businesses. 

Removal of Power Constraints Crucial for Post COVID-19 Recovery

This article originally appeared in the Daily Maverick Opinion Section.

It is difficult to understand why the main limitations to private power generation have not been removed, despite repeated pledges from government to that effect. There is a real danger that while grappling with the immediate crisis, policymakers will shelve the issue indefinitely.

Demand for electricity has plunged with the onset of South Africa’s COVID-19 lockdown, removing the threat of load shedding for its three-week duration. It could be several months before the economy is up and running normally again, but it would be a big mistake to forget the power constraints which plagued SA in the weeks before the pandemic struck.

When Moody’s downgraded SA on 27 March, it pointed out that unreliable electricity supply and its impact on the economy was one of the main reasons for the decision. The ratings agency also pointed out that a strategy to stabilise electricity production in the country has failed to materialise and that as a result, economic growth would remain low for years. Returning to a constrained electricity supply without an adequate government response is the last thing embattled businesses need after COVID-19. 

Against this background, it is difficult to understand why the main limitations to private power generation have not been removed, despite repeated pledges from government to that effect. There is a real danger that while grappling with the immediate crisis, policymakers will shelve the issue indefinitely. In addition, the National Energy Regulator (NERSA) has inexplicably halted all new licensing applications for the duration of the lockdown period. 

For connected projects larger than 1MW — which applies to most of the pent-up demand for corporate generation of electricity — a license is still required from NERSA even if the installation is for a customer’s own use, or established through a bilateral agreement involving only a customer and an independent power producer.

These onerous license application processes were intended for large, utility style power stations, hundreds of MWs in size, and each requires a public participation process with hearings. They have requirements which make the development of smaller project impractical. The official time for NERSA to issue these licenses is 120 days but in practice it takes far longer — with some cases so far taking as long as two years.

NERSA is theoretically able to process license applications, but in practice is inadequately resourced to handle the quantity of smaller applications that are now being made. This regulatory blockage is holding up the roll out of hundreds of MWs of electricity generation, which would be the fastest way to alleviate the power constraints which lead to load shedding. 

This point has been repeatedly made by independent bodies like the Minerals Council of SA, Business Unity SA, the South African Photovoltaic Industry Association, and the Council for Scientific and Industrial Research. It has been recognised by Minerals and Energy Minister Gwede Mantashe, who indicated at the mining Indaba in March 2020 that self-generation of any size would not require licensing. 

Companies in the private sector were hopeful that their pleas for the 1MW cap on licensing for their own electricity generation would be lifted to 10MW, which would include most of the projects they want to implement. And yet, when the eagerly awaited Schedule 2 of the Electricity Regulation Act was published on 26 March, the 1MW threshold for grid-connected facilities exempt from licensing was maintained. 

The shape of the national load profile – when and how much electricity is used – is important to Government because it affects which mix of electricity is most cost effective. Its preferable to have a load profile that allows for the maximum usage of the cheapest resources available to the country. From this angle, the control over who builds what generation is understandable, but even with this argument considered, the amount of solar power in South Africa still represents under 5% of installed capacity, and less than 2% of the consumed energy.

A 10MW solar generator represents 0.006% of annual electricity demand and 150 of such projects would need to be installed to reach 1% of the total demand. Lifting the license exemption threshold to 10MW will initially have negligible effect on the demand profile but a huge effect on lifting red tape in the way of more energy coming onstream and supporting small to medium size businesses. It is always possible for the state to monitor the uptake and lower the threshold for licences at a later stage if necessary.

As the chairperson of a solar PV company, the SOLA Group, I have seen many clients desperate to install larger solar plants than the 1 MVA limit to alleviate their electricity constraints and lower their costs. These projects are practically ready to be rolled out – and could be built within 8-12 months – if the licensing hurdle is removed. 

From my extensive experience in the solar PV industry in South Africa I estimate that, without such restrictions, solar PV companies could build 500 MWs within the next 12 – 18 months. The wasted opportunity due to these arbitrary licence requirements is obvious and destructive.

For the sake of saving businesses and creating jobs post COVID-19, I urge government to:

  • Lift the threshold on requirement for a generation license from 1MW to 10MW until the embedded generation allocation in SA’s new Integrated Resource Plan has been reached.
  • Require that these projects are registered with NERSA upon their commercial operation date through submission of an independent certificate of compliance against which the allocation to embedded generation can be measured, and keep the database of installed MWs public and updated.
  • Ensure that NERSA is provided with, or creates, clear guidelines as to the technical standards that must be met to obtain a generation license for generation projects above 10MW in size.
  • Provide NERSA with the resources, both through budget and staff, to evaluate the applications in a meaningful, prompt and scientific way.
  • Return to processing and receiving licence applications during the lockdown.

The business case for installing embedded power generation remains for the private sector, and the economy will once again start moving when the impact of the pandemic subsides. It would be tragic if its potential to recover is thwarted by continued electricity shortages. 

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. 

Solar and wind energy could set South Africa on track for the world’s cheapest electricity

This article originally appeared in the Daily Maverick Opinion Section.

It’s a no-brainer — a move to renewable energy will not only boost the economy and create jobs, it is also the path to providing South Africa with potentially the cheapest electricity in the world given our natural wind and solar resources.

Energy was never this difficult. Energy came from coal in the ground, burnt somewhere, put in a turbine, wires were connected, and cheap energy flowed for many years. However, this was never going to last long, because the amount of coal that forms in a year was being burnt in a minute. The world has now realised that this is unsustainable behaviour, and we’re faced with a set of future alternatives: hydro, nuclear, wind, solar, biomass, coal — each with a sidecar of complexity, and we need to make some decisions.

Ten years ago, the general public didn’t know what a kilowatt-hour (kWh) was, what it cost, where it came from; they didn’t know how many litres of water were spent in a flush or shower, how many dams we had or how many megalitres we use per day.

That’s changed. We’re more knowledgeable now. Why? Because we’ve felt the effects. Electricity is expensive and we’ve even run out of it (many times). We’ve been on water restrictions for years, and Cape Town came close to being the first major city in the world to run out. Authorities are having to find alternative methods to abstract water, domestically and regionally. Unemployment is a major contributor to poverty and addiction, and we witness frequent protests against injustice.

Knowledge, however, can help us to solve problems. If the problem at hand is to solve the electricity crisis, we need deep understanding to find the least cost kWh and invest in the technologies that will deliver that. The “least cost” does not only refer to the financial cost, but also the environmental and social cost. The industry has been poor at recognising the entrenchment of communities reliant on the electricity sector and ensuring that reform is done fairly.

In the long wait for the IRP 2019 to be gazetted, many people have missed a recent study published in the international journal, ScienceDirect, which took a bold step forward in modelling a best electricity policy scenario based on cost, water and employment. The strength of this peer-reviewed article is that it is founded on solid scientific data. And while a cold approach to kWhs might not reflect every sensitivity in our country, the study did pay attention to the largest social item on our agenda: jobs.

The paper, titled Pathway towards achieving 100% renewable electricity by 2050 for South Africa, modelled the costs of renewable and non-renewable electricity generation pathways in South Africa, taking into consideration South Africa’s current energy requirements, the expected population growth, and costs of electricity. The paper highlighted the possible scenarios for South Africa’s electricity future — whether we stay on the Current Policy Scenario, highly reliant on coal — or go aggressively into renewable energy (what the authors term the “Best Policy Scenario”).

Their suggested “Best Policy Scenario” (BPS) includes 71% of overall electricity production coming from solar PV and 22% by wind by 2050. In addition to this, storage technologies, transmission grids and gas power plants would be utilised to provide the elements of consistency for a stable electricity supply.

The BPS is 25% cheaper than the current policy scenario, and this doesn’t take into account the additional benefits of electricity being virtually 100% renewable, such as the reduction in the detrimental effects of carbon and other poisonous gases in Earth’s atmosphere, the distributed nature of the employment, and the lower risk in the technologies.

If you put a cost saving to these benefits, particularly the greenhouse gas emissions, then the 100% renewables case becomes more than 50% cheaper than the Current Policy Scenario.

In addition, the cost reductions in Levelised Cost of Electricity (LCOE) are not the only benefit of this pathway. In addition to their findings on LCOE, the authors assert that the low-carbon pathway will also decrease water consumption by 87% by 2030, and by 99% by 2050, compared to the baseline — which would remain in the Current Policy Scenario.

From an employment perspective, the renewables-rich BPS will grow the jobs created by the energy sector dramatically, almost doubling to 408,000 by 2035 and tapering off to 278,000 by 2050 as construction jobs stabilise. In the Current Policy Scenario, fewer jobs are created, never rising higher than the 200,000 mark, and decreasing to 184,000 jobs in 2050.

What about coal and nuclear?

The arguments to retain a coal-heavy electricity supply are becoming thinner, particularly given the overwhelming evidence toward coal’s contribution to greenhouse gas emissions that cause climate change and the fact that South Africa is one of the world’s worst emitters of CO2, clocking in just behind huge economies like China and the US.

The authors assert that coal and nuclear should be phased out in the BPS, adding that new investments in coal and nuclear could be at risk of becoming stranded assets as more banks tend to opt out of investing in non-renewable technologies.

On nuclear energy, the authors assert that, “results for the fully renewable end-point scenarios indicate that there is no need for high cost and high-risk nuclear energy in the future South African electricity mix”.

From the study, it is clear that South Africa has an important policy decision to make: one that will steer its future toward low-cost, low-carbon electricity that will create jobs and reduce freshwater consumption. It is an option that would be to the benefit of all South Africans — and the world at large.

The “side” benefit is that in this scenario, due to our significant wind and solar resources, we’d probably have the cheapest electricity in the world, adding a strong element of competitiveness to our economy, which we’re also trying to grow. Now more than ever, we need to do the right thing. It’s clear as day.

Industrial solar installations – dos and don’ts for facilities managers

If you run an industrial facility you’ll be well aware of the benefits of grid-tied solar PV solutions. Running cheaper and more efficiently than utility-provided power (such as Eskom), solar PV provides substantial savings for industrial facilities as a source of reliable alternative power. However, there are many solar companies purporting the benefits of solar power, and not all facilities managers are able to discern the best option for their facility. The below guide highlights 5 dos and don’ts for facilities managers to ensure that the procurement of solar is an effortless one.

Do: Practice due diligence when procuring solar PV.

Procuring solar PV is a 25 year decision. If chosen correctly, solar PV can provide 25 years of affordable and clean energy to your industrial plant. As such, it is important that the procurement process is done thoroughly and due diligence is practiced. It can be easy to rush into buying solar – particularly when the savings look promising. However, practicing due diligence when procuring solar will pay off in the long run. Start by asking a few simple questions about the solar PV procurement.

  • What is the objective of the PV system? If you are using it to save money, are you looking to make operational savings through a Power Purchase Agreement, or add value to your building through acquiring a solar asset? Perhaps a bit of both?
  • If you are looking to buy a solar system outright, do you have sufficient finance to do this? Is a PPA a better option for your business?
  • What is your typical energy load, and how much of it occurs during the day? Setting up metering can really help in determining what the right sized solar PV system would look like. 
  • Where would you place the solar PV system? Although wheeling arrangements allow power to be generated in a remote solar PV facility, the majority of small-scale embedded generation (SSEG) occurs on site. Having either a stable roof or a suitable piece of land is an important consideration when writing up your request for solar quotation.

Do: Get a reputable company to carry out your industrial solar installation

The most important part of your decision will be based on getting a reputable company to build the industrial solar installation. This means choosing a company with a solid track record of solar projects, particularly in industrial facilities. The chosen company should be able to get good prices on high-quality solar components such as modules; design efficiently and thoroughly, and carry out construction safely and within the budget and timeline. 

If you’re opting for a solar PPA option – where you don’t own the solar PV facility but simply buy the energy that it generates – you’ll want to ensure that the company you choose has sufficient available finance to build and maintain the system. Making sure that the company has credentials to stick around for the full term of the PPA is important.  Make sure that the solar PV service provider can meet basic requirements, such as:

  • Design credentials. Does the company have the relevant design experience and credentials to effectively design a PV system for your site? 
  • Adherence to minimum standards. In South Africa, this includes adherence to all relevant SANS codes, and ensuring that items such as wind load calculations are carried out according to SANS standards
  • Compliance with Municipal and National electricity standards municipal/eskom standards, including carrying out the relevant application processes to ensure that the PV system is legally compliant (such as Small Scale Embedded Generation (SSEG) applications)
  • Ensuring that a Practicing Engineer (Pr. Eng) is able to sign off on the system design and construction, yield estimation accuracy, 
  • Qualified site supervision, and construction that complies with all Occupational Health and Safety standards
Industrial Solar Installations SOLA

Do: Compare Apples with Apples

Getting comparative quotes is always recommended: it helps you to compare different solar PV companies and pricing, which helps to make a better decision. However, make sure to compare apples with apples when comparing quotes. It is important to consider that different PV companies structure their pricing in different ways, so be sure you understand exactly what each company is offering before comparing their pricing. 

When comparing proposals from various companies, consider the following: 

  • Equipment selection: the selection of tier 1, quality equipment will likely push the price up slightly, but it will mean that the system is better able to perform over its 25 year lifespan.
  • Inverter and panel derating characteristics: the derating of inverters and panels will affect the ability of the PV system to produce power over time
  • The sizing of the PV system: Is is optimally sized in order to meet your load requirements? A system that is too large or too small won’t save you the optimal amount of money. A slightly higher AC-DC ration will also affect price.
  • Lifetime savings and guaranteed savings: make sure you compare these two metrics, as the initial EPC price might differ but offer more in the way of lifetime savings, etc.  
  • Total guarantee/warranty package, insurance and liability: what parts of the system are insured and have warranties? This will affect the costs of upkeep and maintenance of the system. 

If you are thinking of entering into a solar Power Purchase Agreement (eg. buying solar energy directly), consider the following when comparing quotes:

  • The length of the PPA. Generally, the longer the PPA, the more affordable the tariffs will be. The length of the PPA will need to suit your business’s needs over the long term, considering things like whether the business would like to take ownership of the PV system.
  • The tariff escalation. At a first glance, a PPA tariff might appear higher, but it will have a lower escalation throughout the length of the PPA. Understanding the escalation is important to consider
  • Any upfront payments – again, a lower tariff might be because of a large upfront payment, so it is important to consider when comparing quotes. This is also the case with any bullet payments during the term or at the end of the PPA. 
  • Whether insurance and part replacement is included in the tariff. Again, a lower tariff might have excluded these items, making the costs more over the long run.
  • Forex – how forex is calculated and included on the agreement will affect the price. 

Don’t: Delay the solar procurement process

As much as it is important to practice due diligence when procuring solar PV, delaying the process unnecessarily is also seriously detrimental to the solar PV process. Solar PV savings start from day 1 – meaning that delaying the process is also delaying the cost savings. If the process is delayed, there could be unnecessary complications and expenses, such as 

  • Availability of the construction team and build schedule – most companies have tight timelines and their availability could mean that the process is further delayed if your project is not booked into the build schedule timeously.
  • SSEG applications – delaying choosing a solar PV provider can result in a delayed SSEG application, which can result in delays to switching the PV system on (and thus benefiting from the clean energy that it provides!)
  • Structural assessments – delaying the procurement process can also affect the structural assessment process, which is an essential part of rooftop solar PV systems. This can result in an overall delay of constructing the project. 

Dont: forget to calculate your cost savings through solar – both monetary and environmental 

At the end of the day, the solar PV system will save your business significantly in terms of operational costs. However, there is also significant benefit in terms of environmental savings. Keeping track of the carbon emissions savings is an important way to acknowledge the value of the solar PV system. 

Making sure that you have a competent Operations and Maintenance Service Partner will ensure that you can keep track of the relevant cost savings on a monthly basis and ensure that the plant is performing optimally. This can help to diagnose and solve any issues early, saving money for your operations.

If you have opted for a solar PPA, ensure that your partner provides you with carbon emissions savings with your monthly invoice, so that you can use the data when calculating your overall carbon savings. Solar PV is a choice that not only saves money – it is a conscious choice that ultimately will sustain generations to come. It’s something to be proud of, and use in your marketing strategy.

In conclusion, solar installations are useful for industrial facilities. Saving costs and carbon, they are a surefire way to increase cost savings. Following the above dos and don’ts will ensure that your solar installation is ultimately the right fit for your business.