Overview of Solar PV in South Africa

Dr Christopher Haw

May 2013

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Structure of my talk

1. Introduction

2. Global and local trends and forecasts

3. Commercial “end-use” market issues

4. Addressing PV critisisms

5. Conclusions

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Introduction to me

• Spokesperson & co-founder (SAPVIA)

• Director –

– Konkoonsies 10MW solar PV facility

– Aurora Power Solutions

– SOLA

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100 Members and

growing…

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SAVPIA

� Represents industry at a national and provincial level

� Informs its members of the latest trends and

regulatory developments

� Promotes a higher penetration of the technology

� Facilitates business to business contacts among

industry stakeholders

NOTE: SAPVIA will be launching an independent

research report (F&S, ARUP)

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A stark reality…

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1000

2000

3000

4000

5000

1950 2000 2050 2100

Worldwide possible coal production

M toe

OECD North America

China

LA

OECD Pacific

Africa

OECD Europe

SouthAsia

East Asia

FSU

subbituminous

subbituminous

subbitum inousbitum

inous

bituminous

bitum inous

bitum inous

bitum inous

lignitelignite

lignite

lignite

lignite

lignite

bitum inous

Year

WEO 2006: Reference scenario

W EO 2006: Alternative policy scenario

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Global PV Capacities –

source- EPIA

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Global predicted trends –

source EPIA

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Utility vs Embedded scale

prediction

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Eskom’s pilot SOP program for small scale embedded renewable energy achieved

its 20MW target within 9 months. Approximately 75% of that is PV.

• New determination of 3200MW renewables for next three years

• 1000MW per year to be procured through REIPPP, estimated 300MW of PV

• Small projects program of 100MW (majority of which will likely be PV)

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Distinct Market Segments

• Utility scale ground mounted (REIPPP)

– Program on track

– Risks still exist in “desperate” projects low-balling

– Will be dominated by international utilities

• Embedded or small scale generation

– Has greater opportunity for job creation, local content and local economic development

– Still has barriers to overcome which need political support

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Global Trends

EPIA Market Outlook 2013-2017:

“In the coming years, deployment strategies will depend much more on the capacity of PV power to actively participate in the electricity system”

“several key markets are already entering the transition phasefrom an investor-driven market to an energy savings-driven market in

the building segments (residential, commercial and industrial).”

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• What are the barriers and opportunities to

solar PV for “end-use consumers” in South

Africa?

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Opportunities

• Great solar resource

• Rising energy prices

• Technology prices dropping

• Smart grid technology increasing

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Barriers

• Municipal and National revenue loss

• Utility lack of control over demand profile

• No bi-directional energy flow restricts size

• Market awareness and uptake

• Wheeling costs

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Case Study –Office Centre,

Cape Town

• Installation and operation of a 700kW PV

system in CT.

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Good Solar Resource

• Using satellite data predictions the

resource probability can be calculated

and guaranteed

• Approximately 1650kWh/kWp

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Good Resource

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Opportunity - Load shifting

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Essential Loads

Non-Essential

Loads

Inverter/PLC

PV system

Stand-by

Generator

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Load shifting and

demand control

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PV Generation – Old Load Profile – New Load Profile –

300kVA, 2 hours, R160 per KVA

Saving – R48,000 p.m.

Equivalent kWh- 18,000

kWh value – R2.60

A dispatchable generation source

with LCOE less than R2.60 is

financially viable.

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Load shifting

opportunities

• Load shifting, or demand management, is in the best interests

of the Utilities.

• Smart grids aim to improve demand management and

measurement

• Embedded PV systems include components with the ability to

measure demand peaks and control non-essential or residual

loads.

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Barriers evident from the case study

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Size restriction

• With no bi-directional flow allowed the system has to

be optimized to ensure minimum over-production

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Huge opportunities for embedded generation are lost

because regulation is not in place to allow back feed into

the system.

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Return generation

effecting Market Uptake

• Evidence suggests that most medium size businesses require

payback period of 3-4 years to enable market.

• This means IRRs of 25-33%.

• Current returns with Eskom subsidy are 15-20% in Cape Town

and 20-25% in Johannesburg

• Returns are difficult to calculate with complicated tariff

structures and require historical load profiles.

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Further support is needed to fuel further PV uptake:

• Provide simplified tariff structures for embedded generators

• Eskom SOP subsidy

• Tax breaks, other..

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Wheeling Charges

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Eskom’s “wheeling” charges can be as much as 18% of the tariff or approximately 30c/kWh in 2016, effectively discouraging

potential wheeling agreements in South Africa.

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Addressing the criticisms

of solar PV

1. It generates energy at the wrong time and

therefore does not contribute to the capacity

crisis

2. It has no storage and can’t be used in a

baseload manner.

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Generation Timing

• Load profiles evolve with more urbanisation and economic sophistication

• South Africa has both a current “peak” crisis, but also a future energy supply crisis

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PV future costs in SA

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PV as baseload

• Combined with

pump storage

(e.g. INGA), PV-

PS will be

cheaper than

coal by 2020.

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Water Usage

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Conclusions

• Solar PV has a strong future in South Africa and is expected to

achieve rapid growth in the next 15 years.

• Many of the critisisms aimed at PV are mitigated by its rapid

cost reduction ability and the evolving load profile

• The commercial and industrial market segment will

experience growth as prices reach parity but require political

support and focused effort to amend restrictive regulation

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• Thank you

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