Over the last five years, solar PV has moved from a peripheral energy option to the fastest growing energy source in the world, and is predicted to stay that way. What has changed over the last five years, and what does the future look like?
LCOE: then and now
The debate around adopting solar PV, in 2013, remained largely around cost. Although already starting to look competitive, solar PV’s merit still needed to be largely proven and accepted – as argued Bloomberg New Energy Finance’s paper on PV economics. During 2011, for example, solar PV development stood at 28.5 GW, ten times as much as ten years earlier.In 2013, investing in solar still seemed somewhat risky – even though predictions were that it would become cheaper and more reliable than ever before. It’s potential and appeal as a renewable energy source (with no moving parts or emissions during generation) however, was widely acknowledged.
Fast-forward 5 years, we see a very different picture. According to a study by the International Renewable Energy Agency in 2018, renewable LCOE was the same cost, and at times significantly lower, than fossil-based generation – and the prices are predicted to drop even further. In fact, costs came so low that even with the optimistic predictions in 2012, they were inconceivable – the renewables market outperformed its predictors. It is now widely accepted that solar PV remains one of the cheapest forms of energy available.
From REIPPP to Rooftop: the South African market
In 2013, government had received its second round of IPP submissions as part of its world-renowned REIPPP programme. It’s competitive auction model meant that Independent Power Producers (IPPs) needed to be competitive to win projects – and it was hailed as one of the most successful public-private partnerships. In just the first round of submissions in 2012, the cost of solar PV dropped by 40%. In each successive round, the costs dropped further.
Unfortunately, due to state-utility mismanagement and state capture, Eskom’s blatant rejection of this perfectly set up procurement mechanism meant that the IPPs have all but died out. The REIPPP programme was halted, and its fate is yet to be seen (although recent political developments indicate that it will hopefully come back online – at least for the final round of projects).
Nevertheless, what the REIPPP programme did was bring the efficacy of renewables into the public eye – and into the eyes of business and property owners, who prized affordable, clean energy over the uncertainty of Eskom’s intermittent supply and tariff hikes. During 2016, it was estimated that 80 MW solar PV was installed on rooftop projects in South Africa, a figure 10 times higher than 5 years before.
When storage became a real player
5 years ago, although energy storage was part of the conversation, it certainly wasn’t centre stage. Market efforts remained on improving LCOE for solar PV, and storage technology was relatively new and less developed. In fact, despite the fact that storage frequently came up in energy conversations, it was still touted as too expensive to have any long term, significant impact. Even the overall efficacy of solar PV was questioned because of “the storage problem”.
The picture today is different – storage is a topic not only central to conversations about solar PV, but is viewed as less of a problem and more of an opportunity. Indeed the price of lithium-ion storage dropped by 24% in 2017 alone, and we’ve seen the first energy-storage conference in Africa take place at the end of 2017. Batteries and storage solutions now provide exciting opportunities for linking renewables to grid, peak-shaving and grid-flexibility.
Participants in South Africa’s first Energy storage conference. Source: EE publishers
We saw, ourselves, the immense power of storage through our Robben Island solar PV microgrid project. The microgrid now enables Robben Island to save on diesel fuel costs, whilst providing a superior and uninterrupted energy supply for the entire island. In fact, the potential of batteries to supplement both off-grid and grid-connected solutions is, I believe, one of the key areas we will see energy storage deployed in the coming years.
Over the past 5 years we have seen solar PV take centre stage as one of the most affordable, reliable and deployable forms of energy in the world. The expansion of the rooftop market – particularly in South Africa – has meant that businesses can benefit from clean, cheaper energy now more than ever before. Added to this, the development and accessibility of storage solutions now means that completely off-grid, or supplemented grid options, are now available. These developments have taken place rapidly, and continue to change the face of available energy options in the world. It will be exciting to see what the market brings in the next 5 years.
Dr Dom Wills is the CEO of SOLA Future Energy. The company is 5 years old on the 5 March 2018.