SA solar energy future shines bright

The future of solar power in South Africa was brought to light on Wednesday 25 January after Solarplaza, a Dutch-based company, held its first South African conference at the Sandton Convention Centre. The company aims to form links with solar energy businesses and markets around the world, startting with its most recent venture onto South African soil.

“People need solar service,” said Edwin Koot, chairman and CEO of Solarplaza, “people need it in a simple way”. In the case of South Africa, enough investment in solar energy ventures would have the potential to curb the country’s dependency on coal as a means of producing electricity, and instead switching to a photovoltaic solar system, or PV system, of producing electricity.

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Building solar plants more sustainable than coal-fired stations

Building solar plants is in many ways more financially viable and sustainable than erecting coal fired power stations, various experts claim. They will elaborate on this topic during The Solar Future South Africa conference in Johannesburg this coming Wednesday.
“Building solar plants as opposed to coal-fired stations is not only better for the planet, it also makes more financial sense,” says Edwin Koot, the CEO of SolarPlaza.
This global solar energy platform is the driving force behind the Johannesburg gathering - the first one in Africa since the company’s inception.
“When a coal power plant has reached its life span, usually after 40 years or so depending on the technology, the only thing you can do is demolishing it and building a new plant. This costs billions,” Koot continues, referring to the costs of the Medupi power station.
Built from scratch, this power station’s price tag has escalated from an initial R80 billion to R125 billion.
“When panels of a solar plant reach their lifespan, you don’t have to demolish the plant’s basic infrastructure - the metal structures that carry the panels. You simply replace the panels,” Koot continues.
“Replacing panels is becoming cheaper and cheaper every year. In addition, panels are becoming better in what they do as the technology is continuously improving.”
This makes solar a very interesting commodity to invest in, says Vishal Shah - managing director for the US-based alternative energy divisions at the Deutsche Bank.
“On top of that, your return on investment does not depend on fluctuating coal prices. This means solar is a very stable commodity to invest in,” he adds.
But has the sun the same potential power generating capacity as coal? Yes, various experts claim.
“South Africa has abundant coal reserves, but its reserves of solar power are even greater. And unlike coal, solar power is inflation-proof and doesn’t lead to the destruction of landscapes or the pollution of previous water,” says Peet du Plooy. As the programme manager at the Trade and Industrial Policy
Strategies (TIPS) think-tank, he predominantly deals with sustainable growth
issues.
Dick Berlijn, managing director of Pretoria-based solar electricity development firm Subsolar Energy, concurs. “South Africa is the world’s best solar energy location after the Sahara and Australia. This country has an annual 2500 solar hours. This is enormous. South Africa has a lot of space too. On paper at least, the Rainbow Nation could get all its energy from the sun.”
The Solar Future will take place on January 25, 2012 in the Sandton Convention Centre in Johannesburg. Speakers include Karen Breytenbach (Senior Project Advisor within National Treasury’s Public Private Partnership Unit), Velaphi Msimang (General Manager: Hydrogen and Energy subprogramme for the Department of Science and Technology), Ayanda Nakedi (Senior General Manager at Eskom Renewables), Omar Vajeth (Head of the Power and Energy division at ABSA Capital), Scott Brodsky (energy and projects partner at Dewey & LeBoeuf in Johannesburg), and Christopher Haw
(founder of the South African Photovoltaic Industry Association).
 
Distributed by Solar Plaza

Solar energy - South Africa’s job creation powerhouse

Apart from curbing South Africa’s gigantic carbon footprint and being a reliable and cost-effective source of power, solar energy will create thousands and thousands of much-needed jobs if the government plays its cards right.

“The South African government plans to eventually install 1450 Megawatt (MW) of solar PV through the initial RE IPP program before 2014. According to international research, every MW of solar generates 30 full-time equivalent (FTE) jobs of which less than 10 for production. The installation phase of plants alone would lead to at least 29.000 jobs (FTE),” says Edwin Koot, CEO of SolarPlaza.

“The maintenance phase of solar plants creates another 1.450 employment opportunities. These downstream jobs are mainly local.”

SolarPlaza is an international platform for solar industry stakeholders, and renown for its solar conferences. The organisation’s first gathering of 2012 will be held in Johannesburg on January 25.

In South Africa, where 25% of the workforce is unemployed, the bulk of these jobs would be downstream: solar panels are mainly produced in China, the United States, and Germany.

“Solar employment opportunities in South Africa will be mainly created in areas such as the engineering and design of solar plants, the installation if the panels, marketing, maintenance of solar plants, and sales,” Koot adds.

Dick Berlijn, managing director of Pretoria-based solar electricity development firm Subsolar Energy, confirms Koot’s statements.

“The manufacturing of the remaining components of solar plants, such as structures, cables, inverters, and transformers, is a good source of employment too and this is already happening in South Africa by the way. The same counts for PV module assembly,” he said.

“So, when large scale solar power really starts to take off in South Africa, these spheres will create more jobs too. Best is, that many of these jobs will be created in areas with low economic developments”

Peet du Plooy notes that the renewable energy sector in terms of job creation is far superior to any other form of energy. As the programme manager at the Trade and Industrial Policy Strategies (TIPS) think-tank, De Plooy predominantly deals with sustainable growth.

“What can be said with confidence is that renewable energy of all forms - including solar - creates more jobs per unit of capacity (kW), unit of generation (kWh) or unit of investment (Rand, Dollar or Euro) than fossil fuel-based energy,” he says.

A 2010 Greenpeace report dealing with the link between renewable energy and job creation in South Africa confirms this. According to the researchers a minimum of 78.000 new jobs could be created in less than two decades if the government plays chooses a greener route.

To come to this conclusion, ‘South African Energy Sector Jobs in 2030’ explored three energy growth scenarios. When following the first one, derived from the International Energy Agency’s 2007 Africa projections, 46.000 employment opportunities could be created by 2030.

The Long Term Mitigation Scenario Without Growth Constraints model is a reflection of South Africa’s energy future in the absence of climate change and oil constraints. This scenario could result in 71.000 jobs.

The number of 78.000 jobs created by the third model, the Energy [R]evolution scenario, could climb to 111.700 when wind turbines and other renewable energy equipment are manufactured locally, the researchers say.

The link between job creation and solar will be one of the topics of discussion during SolarPlaza’s conference in Johannesburg (25 January, Sandton Convention Centre). Other issues that will be addressed include the investment potential of solar energy, the financing of PV projects, and what solar could mean for South Africa’s electricity demand and economy.  

Speakers include Koot, Berlijn, Du Plooy, Karen Breytenbach (Senior Project Advisor within National Treasury’s Public Private Partnership Unit), Omar Vajeth (Head of the Power and Energy division at ABSA Capital), and Ayanda Nakedi (Senior General Manager at Eskom Renewables).

‘It is crystal clear: 2012 will become a decisive year for many solar PV companies’

Solarplaza talks to Dennis Gieselaar, Managing Director & Co-founder Oskomera Solar Power Solutions, about the South African solar PV market.

Oskomera Solar Power Solutions (OSPS) is a dedicated EPC contractor and distributor of PV equipment. In 10 years' time we have evolved to become one of Northern Europe’s leading providers of turnkey EPC solutions and wholesale services. OSPS is recognized by banks, technical due diligence advisors, project developers and asset managers as a high-end, reliable partner for solar investments. Currently we are active in Holland, Belgium, Germany, the United Kingdom, Italy, and the Caribbean. We are now establishing a South African entity.

So far, what have been your most important lessons learnt with respect to large PV power plant development in other markets?
We have experienced that a successful development and operation of a high-yield PV power plant depends on three critical key factors: engineering skills, experience and collaboration. A profound multidisciplinary and skilled engineering team results in maximization of the plant's long-term yield. It starts with little things such as cable lengths and specifications, defining the type of nuts and bolts for the framing, right through to the detailed solar customized sizing of the high-voltage transformers and switch gear for grid operations. The OSPS team has realized more than 250 plants generating far above expected and guaranteed performance ratios.
Experience is also critical. Working in other markets means that it is highly likely the unexpected will occur. Ignoring this fact of life is naive. Oskomera is working with procedures developed over more than 65 years of complex project management operation since we were established in 1947 as a construction company. Experienced senior staff such as project managers and site managers are key to successful construction abroad. If people know how to remain calm, analytical and dedicated when new and/or unexpected circumstances arise, the construction risks are limited dramatically for clients, financial institutions and other stakeholders.
Next to engineering skills and experience we have learned that close collaboration with local partners such as subcontractors and installers is the key to our success. This starts right at the early stages of project development, with identifying project opportunities. It also involves the local partners working closely together with us, focusing on the technical feasibility and cost price. The most successful projects for our clients have been projects which have been developed together right from the initial phase. OSPS is working together with South African companies and is still in search of other partners. Furthermore, direct and open communication lines between clients, technical advisors and ourselves are the enabler for a successful team. Our project managers are keen on teamwork and are experienced in managing and remaining aware in terms of the various interests involved.

What is your vision on global PV market development and what do you expect will be the demand in 2012 in MW? How do you expect this to grow in 2013-2015?
It is crystal clear that 2012 will become a decisive year for many companies in the industry. Not only does the huge oversupply provide challenges for cell and module manufacturers which are have not yet been faced in this industry, but uncertainties about FITs make it very difficult for solar developers to decide on the economic attractiveness of projects. The overcapacity will result in a so-called shake out and consolidation upstream, at the cell and module manufacturer level. The first signs have already been seen. It is key for developers and contractors to have a good insight on what is happening at the upstream partner level due to the potential liabilities involved. OSPS also sees a shift towards markets which do not depend strongly on FITs, but which are driven by other factors such as high retail electricity prices and high solar irradiation. These markets need to be developed so it does not result in significant growth. We also see many opportunities in the Americas, Asia and even Africa to develop solar incentives, which also means new marketplaces. Therefore OSPS predicts a very low, close to zero, growth figure for the global PV market in 2012. From 2013 onwards, we expect that the new markets which aren’t incentivized by FITs will pick up, showing stronger annual growth figures. We do not expect this to be much more than 10% per annum the coming three years.

What is your vision about the South African PV market? Why, as a Dutch company, do you believe so strongly in the South African market? What are your expectations in terms of MWs of new installed PV power in 2012?
OSPS has been tracking the South African solar market for three years now. We strongly believe that the fundamentals are there: outstanding solar irradiation, a developed economical climate, with a good financial infrastructure, and soaring prices for electricity over the coming years. During my various visits I have seen that power reliability is critical for enterprises across the country, so we also see a strong potential for solar energy backup systems (UPS applications). Furthermore, we have to take the South African Government very seriously with regard to their renewable energy targets. These are ambitious but realistic in our view.

What is your current position in the South African market? Do you already have some experience in South Africa? And what do you want to achieve in the coming two years? Would you be looking for specific partners?
We are establishing a company at this very moment and have appointed Mr. Joris Nouwens to manage this. He will be stationed in South Africa and be responsible for business development and establishing liaisons with local partners. OSPS hasn’t realized a solar power plant yet in South Africa but will be focused on realizing the first megawatts as soon as possible. The objective is to become one of the leading dedicated EPC contractors for PV power plants and PV equipment distributor. OSPS is keen on working together with local partners such as banks, contractors, electrical installers and consultants. At this time we are investigating the possibility for a local assembly facility in order to make our EPC process more efficient.

What do you see as or expect to be the major threats or thresholds in South African PV market development?
One of the challenges we are facing is the correct understanding and stability of the South African legal framework within which projects can be developed and realized. We have experienced in other markets that changing legal frameworks of solar incentives can have a tremendous influence on business success. We are therefore liaising with local partners in order to gain an in-depth understanding of the local legal and administrative conditions that apply.  

Some people in South Africa might be hesitant with all these new foreign business players entering the SA market. How will the SA market benefit from your entrance?
As collaboration is one of our business's critical success factors, we are seeking partners with whom we can work. We bring years of experience and knowledge our partners can tap into, forging a strong team for successful business. We are aware that diffusion and sharing our knowledge is key to the success of our South African operation.

What is your vision for the future of the global PV market from 2012 to 2015? Do you expect further strong growth?
As said before, we envision stronger growth figures after 2013, but do not expect the same sort of figures we have seen during the last five years. Triple-digit growth figures aren’t sustainable for any industry and are therefore not healthy - especially when they are driven by government incentives. OSPS is looking forward to a market less dependent on governmental support and more driven by economical drivers.

If you were in the year 2015, looking back, what, in your opinion, will have been the surprise that the PV business did not foresee?
Two major issues: Economical viable PV power plants without FITs all across the world and an acceleration of distributed power generation in developed countries as a result of high volumes of residential solar systems. These two aspects will move the industry towards a mature marketplace.

‘The year 2011 was a key year for the solar PV industry in South Africa’

Solarplaza talks to Peet du Plooy, Programme Manager, Sustainable Growth, Trade & Industrial Policy Strategies, about the South African solar PV market in 2011, the national energy plan and his expectations for the future of the South African market.


Trade & Industrial Policy Strategies (TIPS) is an independent, non-profit economic research institution active in South Africa and the region. The organisation facilitates policy development and dialogue in pursuit of sustainable and equitable growth in Africa

How was the year 2011 for the South African PV market overall? How many MW have been installed in 2011?
2011 was a key year for PV with the publication of the National Energy Plan, IRP2010-2030, which included a massive allocation for PV (8.4GW of new build by 2030) early in the year, as well as the launch of the IPP Procurement Programme (IPPPP) for contracting the first 1450MW of PV by around 2015 – roughly in line with (and even slightly more ambitious than) the IRP Plan for 300MW of new capacity a year from 2012.
Actual installed MW in the year was far less (I would estimate 10MW at most and probably less than half that), which shows the massive relevance of the Energy Plan and Procurement Programme.

Based on your market position, market knowledge and vision, what are your expectations for South Africa's market development in 2012? How many MW will actually be installed? And what is your best guess for installations in 2015?
The bulk of PV installations over the next three years will be driven by the IPPPP. Preferred bidders for the first IPPPP round amount to just over 630MW. This suggests that these developers are in a good position to deliver this capacity by the end of 2013, with somewhat less than half of this – say 200MW – to be installed in 2012. This is a quantum leap for the industry compared to any prior year and hopefully a sufficient stimulus for supporting and growing the local manufacturing industry which has, to date, exported almost all of its production. By 2015, total installed capacity should be roughly in line with the 1450MW targeted by the IPPPP.

Looking at the requirements and conditions, what do you see as the major obstacles for large-scale PV application in South Africa?
Beyond costs (for which a global slump in demand has provided a significant reprieve), grid integration is possibly the only major challenge for PV, both in terms of access to the grid for remote sites and – for the system operator – the balancing of the grid for the variability of PV supply.
Over time, it is also hoped that PV moves from large-scale generation to more distributed (e.g. building-integrated) supply, where the challenges of grid integration remain but are somewhat different in nature (e.g. establishment of reverse/bi-directional metering and billing, smart grid infrastructure and time-of-use tariffs).

What will be the opportunities for PV in 2012 and 2013? What more will happen in the South African market apart from large-scale PV power plants being built as part of the Independent Power Producer Procurement Program?
We may well (and hope to) see the entry of new PV producers (not just project developers) into the country, as well as the rest of the continent following suit, with PV providing an opportunity to help address the continent’s energy infrastructure shortcomings.

What will the focus be for South African developers, investors and contractors in 2012?
Getting projects delivered on a scale never seen before in the country will sufficiently occupy most developers, investors and contractors, along with decisions about growing local manufacturing and export capacity.

What role can solar PV play in South Africa's energy mix from now to 2020?
Over time, technological innovation around hybridization, smart grids and electricity storage (e.g. batteries) will address variability concerns, while scale and innovation in mass production methods and building-integrated solutions will drive a reduction in costs.
Around 4GW, as envisioned by the IRP, would make a significant (around 2%) contribution to energy supply in 2020, with uptake likely to accelerate beyond this point as PV reaches grid (cost) parity.

Suppose you were the Minister: what measures would you take to stimulate the PV market in South Africa?
If I were the Energy Minister, I would firstly pat myself on the back for a job well done in 2011. In 2012, my focus would be on facilitating small-scale and distributed PV (rooftop generation) – an area with significant challenges, particularly since the procurement is not directly under the control of a national department as in the case of the IPPPP, but rather in the domain of municipalities. Distributed household PV could help not only in electrifying the one-in-four South Africans without access to electricity, but can also help to reduce residential demand and the strain on an aging electricity distribution infrastructure.