Eskom’s recent announcement that it would reconsider the signing on of additional Independent Power Producers may have raised eyebrows and set the scene for further debate, but players in the sector say this move will not change the fact that alternative power generation is here to stay.
It is gaining traction in South Africa; solar power in particular has become a viable alternative to traditional power supplies, and shopping malls, office blocks, communities and individual homeowners are rapidly turning to solar-mains hybrid supply systems to reduce their dependence on traditional grid power.
As the cost of solar photovoltaic (PV) panels continues to drop, the pace of small-scale adoption is expected to pick up. The only challenge remains the high cost of power storage. Because solar power is harvested during the daylight hours, it must either be stored in a costly battery or fed back into the grid for storage, in order to be available for use at night. This is proving to be the key sticking point in the alternative power story — unless Eskom or other offtakers [purchasers of power] are willing and able to take on excess power during the day and resupply it by night, the onus is on the individual small power producer to find a viable way to store it.
Decentralised, hybrid models ahead
At the annual POWER-GEN & DistribuTECH Africa conference in Sandton held in July, power sector stakeholders from across Africa noted that alternative, renewable power sources presented the answer to many of Africa’s power challenges, including high cost, reliability issues and access for rural communities.
Solar, wind, hydro and gas resources are abundant across the continent. All that is required is a legislative environment conducive to foreign investment to help African nations tap into these rich reserves, said stakeholders. Transmission grids also have to be upgraded to accommodate power generated by new renewable energy providers; and there are expectations that Africa will inevitably move towards decentralised, hybrid models in the future.
“However, for baseload [the permanent minimum load that a power system is required to deliver] generation, there are still only two real options: coal and nuclear,” said Lynne Brown, South African Minister of Public Enterprises.
A market in flux
Dr Willie de Beer, veteran power industry consultant and chairman of the POWER-GEN & DistribuTECH Africa board, said that while Eskom appears to be regaining control of power stability and plant availability at this stage, the South African power sector is nonetheless a market in a state of change.
“One must appreciate the Eskom position — they are on a massive expansion programme, their existing fleet is performing better, and they have to ask questions in terms of the optimal mix and business sustainability. But there isno question that we need diverse energy sources in the mix; we cannot focus only on baseload requirements.
“The weakness in the South African industry is that we have never sorted out the market arrangements and clearly defined the market rules. For instance, we have in effect been “forcing” Eskom to be the only offtaker. We should ask why municipalities, manufacturers and big mining houses don’t become direct offtakers too,” he said.
“Now, the market is being reformed through theback door, or by default. Customers themselves are reshaping the market and as alternative energy comes in at a lower price and becomes increasingly competitive, the balance in the energy mix will shift. Imagine just 1 000 households, each with 3kW PV installation on the roof — this becomes a sizeable plant. And we are seeing a significant increase in the number of consumers installing their own capacity.
“We have to acknowledge that customers are changing the market. They have become far more energy-conscious than they were a few years ago. Reliability and availability of supply became a priority due to, among others, load-shedding, energy price increases, and decreases in the cost of solar PVs. Customers won’t be dictated to by utilities going forward, and they are contributing to sector reform via the back door.”
De Beer said that renewables will play an increasingly important role in the energy mix in future, particularly if they are injected at distribution level. “It’s cheaper and easier to do it at the distribution level than at transmissionlevel. Obviously this calls for addressing the requiredinvestments into distribution maintenance and grid visibility, but bringing new generation capacity on the distribution side offers voltage injection, loss reduction and capacity availability much closer to end customers.”
This presents significant opportunities for private players, metros and municipalities to develop their own embedded PV farms or wind farms. It may also incentivise the private sector to do so within their own communities orin partnership with municipalities.
“There are many reasons why municipalities should be looking at alternative energy generation options. We have already seen some, such as the Nelson Mandela Bay metro, doing so with great success. Joburg City Power is also reported to be looking at alternative power options; and the City of Cape Town has bought [power] from the Darling wind farm for some time. As it becomes more competitive and municipalities review their current electricity business model, more municipalities will consider it,” said De Beer.
Renewables here to stay
Alwyn Smith, chairperson of the Southern African Alternative Energy Association (SAAEA), noted that with R149-billion having already been invested in renewable energy generation through South Africa’s IPP programme, “renewables aren’t going anywhere”. SAAEA’s members, all of whom are small-scale alternative energy sector players, effectively compete on a municipal level.
“We see that the bulk of small solar and other alternative energy projects of five Megawatts and below are commercial and domestic implementations that never go back into the grid. Rather, they are part of hybrid systems that consume a combination of solar and Eskom power.”
Smith said the cost of solar installations has dropped significantly in recent years, adding to the off-grid appeal: “Five years ago, you’d pay in the region of R26 per watt for solar panels. Now we’re seeing this dropping to around R7 per watt. While there is an upfront cost involved, once the customer reaches payback stage in five to eight years, they have free power for the next 12 years.”
Homeowners, office blocks and malls are fast catching on to the benefits of solar, he said. “Clearwater Mall in Roodepoort, for example, now has one of the largest rooftop solar installations in Africa. They started with 500kW, quickly realised the benefits, and added more panels for a total 1.5MW.”
The mall’s system, installed by Solareff, generates on average 2 500 000kWh of electricity per annum, off around 12 000m² of panels.
Smith said South Africans are starting to emulate trends in Europe, where solar contributes a growing proportion of the total generated power, from far less daylight than is available in South Africa.
“I’m optimistic about the future for alternative energy — it’s working all over the world and it will certainly work here. Technologies such as solar and wind are mature and proven, and they are becoming far more affordable. Even the storage technology is becoming more advanced, reliable and affordable, with longer-lasting lithium ion batteries starting to replace the older lead-acid batteries. We have to get past the politics of power and move to[wards] a more sustainable power market.”