/ 25 February 2008

Eskom looks to the rising sun

Stretched-out plains with dust devils and the hot, unrelenting sun are the trademarks of the Northern Cape.

Every year the province records some of the highest aggregates of sunny days a year worldwide and rainy days are as rare as hen’s teeth. This is bad news if you’re a farmer, but great news if you plan to build one of the world’s biggest solar plants. And that’s just what power utility Eskom plans: to build a multimillion-rand solar plant near Upington that will generate 100MW.

Upington gets more solar radiation annually than sites in California, Nevada and New Mexico in the United States as well as other sun-splashed countries, such as Jordan, Morocco, Crete, India and Spain. The Upington project will be the first major solar-energy project in Africa. The electricity generated will be directed into the national power grid.

With South Africa’s electricity crunch and the need for renewable power in an economy where 90% of the power is generated by coal, it seems this plant is long overdue.

Until now solar power has been one of the most neglected renewable technologies. The figures of UBS, one of the world’s leading financial firms, show that solar contributes less than 1% to the world’s energy. But the world is getting a wake-up call.

UBS calculated that demand for solar energy is unprecedented. Its industry estimates are for 50% year-on-year growth. Figures released in January by the Earth Policy Institute show that solar power generation is the fastest-growing electricity source, doubling its output every two years. Forbes magazine says that in the next 25 years solar will be the fastest-growing alternative source of electric energy.

The potential of solar is enormous. Scientists estimate that every year 1km2 of desert receives solar energy equivalent to 1,5-million barrels of oil, which, multiplied by the area of deserts worldwide, is nearly a thousand times the entire energy consumption of the world. Another startling figure is that one hour of sunlight packs enough energy to power the world for a day.

Peet du Plooy, World Wildlife Fund trade and investment adviser for South Africa, says an area of 70km x 70km (a square with its corners in Cape Town and Paarl) could provide all of South Africa’s electricity requirement from concentrated solar power (CSP).

The biggest drawback to solar power up to now has been its cost. Eskom’s pilot project in Upington in 2003 cost about R2,2-billion. The utility was unable to give an estimate of what it would cost now. But Eskom expects solar to be priced around R22,50/watt at scale, Du Plooy says.

Spending R2,2-billion for 100MW of electricity might seem expensive — especially for a country credited with producing the world’s cheapest electricity at about R10/watt — because of the abundance of coal. But Du Plooy disagrees.

”I think it is worth re-evaluating the view that renewables are two to three times more expensive,” he says. ”New coal power is no longer as cheap as we used to think: while Eskom has cited R10/watt, Medupi’s actual price comes in at R16,40/watt (with no flue gas cleaning) and that’s capital cost only. That’s getting very close to R22,50/watt for solar at scale, which has no fuel cost.”

He says the price of coal climbed steeply in the past three years and the environmental cost is also high. ”Fossil-fuelled power today is cheap compared with solar, mostly because of its scale,” he says. ”As solar sees increased uptake, it will also become cheaper.”

Sipho Neke, spokesperson for Eskom, says high up-front capital costs, relatively small proven plant sizes compared with conventional generation options and component supply issues have been the biggest factors inhibiting Eskom’s investment in solar power. The single biggest cost to solar cell-makers is the high price of raw polysilicon, which makes up 70% of the structure, says UBS. But the cost of raw silicon for wafers is expected to fall by 66% in the next three years, from $300/kg to $100/kg.

The race is on to find the best solar technology — and the company that perfects it will make a killing.

One company competing in the race is Nanosolar, one of several in Japan, Europe, China and the US in competition to develop versions of ”thin film” solar technology. Nanosolar claims to have the lowest cost solar panel and can sell solar panels for as little as 99c a watt. This is comparable with the price of coal-generated electricity.

The company says it aims to build solar power stations up to 10MW in size, which can be up and running in six to nine months, compared with 10 years or more for coal-powered stations and 15 years for nuclear plants.

South Africa has its own contender in the ”thin film” race. Solar guru Professor Vivian Alberts, a physicist at the University of Johannesburg, has developed a thin film solar design, believed to be the most advanced in the world. He perfected his design in 2004 and his panels are ready for commercial use.

Alberts says it will cost about R14 a watt to produce his units. He sold his technology to German company Johanna Solar Technology, leading many South African critics to ask why Eskom did not lap up the technology.

But the professor kept the South African licence to the technology and Thin Film Solar Technologies will manufacture the product locally.

Eskom’s plant in Upington will use CSP, a relatively new technology worldwide that has the backing of the World Bank because it is the only zero-greenhouse-gas-emission technology that has the potential to rival coal-fired power as a low-cost solution to the energy crisis.

The US has the largest installed base of CSP plants, followed by Spain, while several others, including Australia, Morocco, Egypt, Mexico and India, are undertaking feasibility studies or building their own plants.

Eskom’s Neke says the power utility’s decision to look at CSP was the result of evaluating solar options being developed worldwide over many years. ”A key criterion, however, has been that the technology we would focus on had to be proven at the MW scale to reduce the overall technology risk,” he says.

Despite solar’s great economic predictions Neke says the CSP technologies are yet to benefit from economies of scale, sufficient supplier competition and standard product offerings.

At this point Eskom is reluctant to commit itself to an estimate of how much it will invest in solar power in the next 10 years. ”The possible investment will be determined by approval for the pilot [in Upington] and, if approved, the overall project success,” Neke says.