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Introduction
Solar Media Ltd.
3rd Floor, America House, This PV Tech Power special report is a unique industry as it seeks new opportunities in the region, and which
2 America Square,
resource exploring the trends shaping the fortunes of are explored in depth in this report.
London, EC3N 2LU, UK
Tel: +44 (0) 207 871 0122 PV in Sub-Saharan Africa, a region that harbours some On p.8 we look at the progress made in the large-
www.pv-tech.org
of the world’s most promising emerging solar markets. scale segment and why West Africa is emerging as a
Editorial Since we first published the report last year, the region particular hotspot for utility solar projects. On p.12 we
Head of content: has notched up a number of significant milestones, look at the commercial and industrial sector, with a
John Parnell
including the completion of new utility-scale plants in particular focus on the new business models emerging
Supplement editor:
Ben Willis Senegal and Uganda, a price-busting auction in Zambia to support it. Off-grid and mini-grid applications come
Reporters: and the signing of a bundle of significant PPAs. under the microscope on pages 15 and 18, and on p.22
Tom Kenning, Danielle Ola
There has been progress too in the commercial and we explore some of the innovative solutions being
Design & production industrial space, with Kenya seeing its largest indus- developed to aid the planning, building and operating
Design and production manager: trial PV hybrid plant reach completion. Meanwhile, in of PV plants in Africa.
Sarah-Jane Lee
Production: the off-grid and isolated-grid space PV is enjoying an The overall message is that solar is only just at the
Daniel Brown increasingly prominent role as a key plank in efforts to beginning of its journey in Africa. But bearing in mind
Advertising achieve universal energy access in what has historically the progress that has been made since this time last
Sales director: been the world’s most power-starved region. year, only the silly money would be against the region
David Evans
But many of the problems that have prevented having made several further leaps forward 12 months
Account managers:
Matthew Bosnjak, Graham Davie, Lili Zhu solar fully taking off in Sub-Saharan Africa still remain. from now.
Investment bottlenecks, political and regulatory uncer-
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Buxton Press Ltd., Derbyshire
tainty and difficult operating conditions are just some John Parnell
of the challenges the solar industry continues to face Head of content
This special report is a supplement to the
quarterly journal, PV Tech Power,
ISSN: 2057-438X
The entire contents of this publication are 04-05 Falling costs pave the way for African solar boom
protected by copyright, full details of which The improving economics of solar in Africa
are available from the publisher. All rights
reserved. No part of this publication may
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or transmitted in any form or by any means
06-07 Simple is best in Africa’s challenging conditions
– electronic, mechanical, photocopying, An interview with Platinum Sponsor, Huawei
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www.pv-tech.org | April 2017 | 3
Solar Powering Africa
T
he theoretical potential of solar significant projects hitting the ground Sub-Saharan Falling costs
power in Sub-Saharan Africa has and new players entering the scene. The Africa is better Nowhere has the fall in costs been more
placed than ever
rarely been in doubt. Some 600 most recent figures from the International apparent than in the utility-scale segment.
to capitalise on
million people on the continent lack access Renewable Energy Agency (IRENA) suggest the opportunities Here, South Africa is held up as the role
to electricity, with many more served by that total installed capacity in Africa offered by solar model, and the chart in Figure 1 shows
only sporadic and often costly power. With jumped from around 500MW in 2013 to how steeply that country’s successful
centralised grid infrastructure unlikely around 2,100MW at the end of 2015. independent power producer programme
to reach some communities any time “In recent years, solar PV costs have drove down the prices being bid for utility
soon, the ease of deploying PV coupled dropped dramatically and will continue to PV over a relatively short space of time.
with Africa’s rich solar resources make it do so with further declines of up to 59% For several years South Africa was the only
an attractive technology in unelectrified possible in the next 10 years,” said the utility PV market of note in Sub-Saharan
areas. For countries looking to bolster the International Renewable Energy Agency’s Africa. But then in mid-2016 Zambia came
capacity of their grids to keep up with (IRENA) director-general Adnan Amin to out of nowhere with a record-breaking
burgeoning demand, meanwhile, utility mark the publication of a report towards tender price for Africa of around US$0.06
solar looks like an increasingly cost-effec- the end of last year looking at the costs per kilowatt hour, suggesting that other
tive solution. of solar in Africa. “These cost reductions, countries have been watching and learning,
Indeed, it is PV’s consistently downwards coupled with vast solar potential on the and the industry is doing its bit to educate
cost trajectory that has helped it chip continent, present a huge opportunity for decision makers about what it can offer if
away at some of the many hurdles it has Africa. Both grid-connected and off-grid given the right conditions to take root.
faced in gaining a toehold in Africa and solar PV now offer a cost-competitive Several further tenders are expected
begin to realise some of its huge promise means to meet rising energy needs and in the region soon, indicating that utility
in the region. Falling costs across the bring electricity to the 600 million Africans PV has now passed the proof-of-concept
board have been the main factor behind who currently lack access. It has never phase in this part of the world and is
a marked shift in the narrative of solar in been more possible, and less expensive for gradually reaching if not maturity perhaps,
Africa even over the past two years, with Africa to realise this potential.” then certainly a wider level of acceptance.
Credit: IRENA
the paucity of available data but appears
to be positive. Figures show a wide
variance across the region in the range
of prices for such systems depending on
location and the technology: sub-1kW There have also been some targeted governments, regulators, finance and
home systems can cost anywhere efforts to support the take-up of solar in development institutions, and of course the
between US$4 and US$16/W, more if they the region, which are now starting to bear solar industry itself. It would probably be
include batteries; systems above 1kW cost fruit. One key intervention that looks likely fair to say that so far supportive policies to
in the range of US$2.5-7/W. But according to play a continuing role in the utility-scale help solar grow have been relatively slow
to IRENA, small stand-alone solar systems market is the International Finance Corpora- to come forward in Sub-Saharan Africa, or
providing power for individual house- tion’s Scaling Solar programme. This was where they have been put in place have
holds can be offered for as little as US$56 devised as a means of unblocking some faced teething problems.
per year, less than the price they would of the pinch points that have historically Ghana is a good example of this. In 2011
pay for the generally poor quality energy stymied the flow of private investment into the West African country put in place what
services currently available. independent power producer projects in looked on paper like a generous feed-in
Meanwhile, for solar mini-grids above Africa generally and solar specifically. The tariff for solar to underpin efforts to get to a
around 200kW IRENA puts the installed programme is only two years old but has 10% share of renewables in the energy mix
cost at US$1.9 to U$5.9 per Watt, less already made its mark, having been a key by 2020. Unsurprisingly the tariff attracted
than older systems that came online catalyst for the Zambia tender referenced at huge interest, with developers applying for
before 2012. Ongoing decreases in PV projects totalling well over 3GW. This was
module and battery prices mean there far more than the Ghanaian national grid
is still plenty more headroom for cost “Cost reductions, coupled with vast could handle, forcing the government to
reductions in mini-grid systems, opening impose a temporary cap of 150MW of utility
the technology to new applications and solar potential on the continent, solar and to restrict individual projects to
driving further uptake.
present a huge opportunity for 20MW. So far there has been little sign of
Another area of promise for the region that situation easing, although Ghana does
is the commercial and industrial (C&I) Africa” have two relatively modest utility-scale PV
segment. This has seen some notable plants online.
projects installed in the past couple of Such difficulties are likely to be a recur-
years, driven mainly by the smart new the start of this article. Further tenders are ring theme across the continent, particu-
business models that have been devel- expected as other countries sign up to the larly in the utility segment. Some argue that
oped specifically to support C&I instal- programme. for this reason, solar in Sub-Saharan Africa is
lations. Some believe that this segment But there is still a long way to go. IRENA’s in fact better suited to off-grid applications
has perhaps the greatest potential in REthinking Energy 2017 report published where grid constraints are not an issue.
Sub-Saharan Africa given the growing in mid-January 2017 suggested that to But the likelihood is that solar will play an
demand by businesses for reliable, afford- reach universal electricity access by 2030, increasingly important role at all scales,
able power and the fact that projects can Africa will require generation capacity in and will be greatly aided when the cost of
take place outside of any government the on-grid, stand-alone and mini-grid battery storage comes down sufficiently to
tender or subsidy programmes. segments to be boosted by 42%, 17% and help it overcome some of the intermittency
Sitting behind most of the advances 40% respectively. Clearly PV is just one of a and grid stability issues that are currently
made by solar in Sub-Saharan Africa are number of technologies that will play a role limiting its uptake.
of course the general dynamics familiar if those targets are to be met, but if recent On the following pages of this special
to any observers of the global solar performance is anything to go by it will be report, we look at the progress being made
industry: cheaper hardware as module a major contributor. IRENA estimates that by the key solar segments in Sub-Saharan
and balance-of-system technologies by 2030 the region could be home to more Africa and the challenges they continue to
improve, lower costs of finance, reduced than 70GW of solar, a figure that dwarfs the face. In particular we examine in detail the
‘soft’ costs as processes become more 2.1GW installed by the end of 2015. technologies, business models and supply-
streamlined and the general efficiencies Getting anywhere close to this number is chain innovations that are helping solar find
that develop as businesses get better at going to require a concerted effort by all the its way into new markets and start to fulfil
doing what they do. key actors – regional institutions, national its potential.
Credit: Huawei
inverters look well suited to the region’s frequently challenging
conditions.
together with the government and supporting more than have been running for over three years; through those we
1,000 villages to supply solar power to those villages. And the have proven that we can fit into all of those conditions very
project has been ongoing for two years, and most of these well.
villages have been covered – these are highly appreciated by
the government and of course by the villages. In parallel we’re What feedback have you had so far on the performance
supporting a number of projects in the continent with differ- of your solutions deployed in the field?
ent capital resources and also the developers. And some of The Senegal project has not been long enough on the grid
them are also linked with remote education or remote medical for us to have any solid data to show yet. And yet on the
services. verbal feedback I’ve collected, they are very happy with our
solution, for a couple of reasons. One is it’s very stable, so
How is Huawei’s technology suited to applications in this during the installation phase there have been no failures. And
region? two, it’s very easy to maintain – so even with just a low-speed
First of all it’s very easy to implement. In Africa many of the internet connection you can transmit all the data from the field
plants are remote, and in terms of transportation and instal- to the cloud and then the expert engineers can see remotely
lation, the conditions are not so perfect – you don’t have big
roads, you cannot get parts easily to the plant. Our solution is
small, and versus some of the traditional solutions, which are “Our solution is small and you
centralised, huge cabinets, you can ship it with any vehicle –
maybe even a bike! You don’t need big roads, you don’t need
can ship it with any vehicle –
big container trucks and it can also be installed very easily. maybe even a bike!”
The solution also fits very well in the Sub-Saharan Africa
weather conditions. In this region we see a huge variety of
weather: some of the areas are desert-like and dusty; some and have visibility on all the situations on the ground. Then
have very high humidity, high temperatures and very salty air if through this remote control and remote communication you
they’re close to the seashore. And our IP65 protection design, can notify the engineers and dispatch them with the neces-
which is pretty much unique in the industry, gives protection sary action items so they can fix problems in the field.
against all those conditions: the dust cannot come in, the wet Another thing they like very much is that we have only one
Huawei’s
cannot come in and it’s protected against the salty air. So you type of spare part in the field. So people won’t get confused
technology has
been designed can implement it in any conditions in Sub-Saharan Africa. In with tens of different modules and which one should be
to withstand the the past several years we also had scattered projects here replaced; when a problem happens they just take the spare
harsh conditions and there in the Middle East and Africa and some of them machine to the place and replace it, and send the faulty
found in parts of
module back to us. So you don’t need experts, there’s no
Africa
confusion and you can control it remotely.
Finally, on yields, the power generation, according to what
we have observed now, we think we are fairly beyond the
designed performance. And yet we are trying to collect more
information.
What are your hopes for how the market will take off in
Sub-Saharan Africa and where will you be focusing your
energies?
In the near term we will have a lot of focus on the on-grid
opportunities particularly in South Africa, Kenya, Nigeria,
Senegal and Ghana. These are the main countries in my
mind. And yet personally I still believe in the long run the
off-grid and the mini-grid option is going to be the mainstream
Credit: Huawei
L
ast June, surely more than a construction could be underway as Senegal’s 20MW certainly made a lot of people sit up
few eyebrows would have been soon as the end of Q1 2017. If that Senergy 2 project and take notice,” says Yasser Charafi, a
is one of a
raised when a solar tender in the indeed comes to pass, then the Zambia senior investment officer at the World
growing number
southern African country of Zambia tender could well mark a turning point of large-scale Bank’s International Finance Corpora-
registered a new record low price for utility solar in Sub-Saharan Africa. PV plants now tion (IFC). “It’s a very different thing if
benchmark for the region of a shade Despite the obvious potential for large- reaching fruition people can hope for prices between six
in Sub-Saharan
over 6 US cents per kilowatt-hour. Not scale solar in this part of the world, the and 10 cents or if they’re looking at 15¢
Africa
only was this the first time Zambia had segment’s progress in Africa has so far and above. It changes the nature of the
had any significant plans for utility solar been characterised more by words and discussion.”
on the table, but here were two projects unfulfilled promises than electrons on One reason for optimism is that the
attracting bids from heavyweight the grid. But if nothing else the Zambia Zambia tender was in a large part made
international players – Italy’s Enel and tender has the potential to demonstrate possible by the fact that it fell under
France’s Neoen in partnership with US what is possible in a part of the world the IFC’s Scaling Solar programme.
giant First Solar – at prices previously where investment in utility PV has This was launched in 2015 with the
unseen in the region. been slow to come forward, potentially aim of helping utility solar take off in
The tender outcome has since had its unblocking the logjam for others to Sub-Saharan Africa by creating the
share of detractors, but at the time of follow. right conditions for private investment
writing financial close for the projects “Some people thought [the Zambia to come forward. Zambia is one of the
was imminent and reports suggested tender] too good to be true, but it’s four-strong first wave of countries to
sign up to Scaling Solar – the others Sub-Saharan Africa has been a neces-
being Senegal, Madagascar and Ethio- sarily slow and painstaking one, in
pia – but more are showing an interest which developers have had to educate
in being part of the programme, and sponsor governments in how the IPP
Charafi is confident grid-connected business works. But that work is now
solar is now something firmly on the beginning to bear fruit.
radar of government decision makers “It is of vital importance that govern-
across the continent, particularly since ments understand what is needed
the Zambia tender. in terms of contract structures, PPAs
“We’ve had calls from key stakehold- and government guarantees backing
ers in electricity sectors that would the programmes to make them
not have even wanted to hear about bankable,” Tørud says. “I think we see
solar PV and were adamant it was a that maturing in terms of an under-
distraction from their stated objectives,” standing of [what is required]. We are
Charafi says. “We have teams travelling of course trying to be active in advising
Credit: IRENA
every week to respond to initial discus- governments. It’s a responsibility for all
sions from governments. I don’t know stakeholders to provide sound advice
of any country [in Sub-Saharan Africa] and also to ensure there are realistic
at the moment that is not seriously expectations of what can be put in IRENA’s projec- Nevertheless, through the few
looking at options for solar PV right now place.” tions for utility- concept projects now built, and more
scale installed
one way or another.” A further responsibility for compa- recently through the work being done
costs by project
Indeed, the Zambia tender was just nies that, as Scatec Solar does, see size in Africa, under the banner of the Scaling Solar
one of a number of events in 2016 and themselves as pioneers has been the 2011-2018 programme, utility PV does finally
the latter part of 2015 that, together, need to prove the concept of utility seem to be finding its feet. And that
suggest the wheels are finally begin- solar in the region before it can enjoy process looks set to continue. Accord-
ning to turn for utility PV in Sub-Saharan any wider rollout. ing to IFC’s Charafi Senegal is shortly
Africa. Notably, the number of countries “It’s important to demonstrate the expected to invite initial expressions of
in the region joining the utility-scale viability of some of these projects interest for a 200MW solar tender that
solar club grew last year; beyond South now and get them off the ground,” has ensued from its involvement in
Africa, a well-established utility PV Tørud says. “And I think governments Scaling Solar. Madagascar and Ethiopia,
market, and Rwanda, where an 8.5MW see that that is required before they meanwhile, are also drawing up plans
project was completed in 2015. Ghana, launch larger programmes and invite for tenders that should be revealed
Senegal and Uganda all saw their first the broader set of investors in. There’s this year. Zambia itself has signed up
multi-megawatt grid-connected instal- for a further 500MW under the Scaling
lations completed last year. Behind Solar programme. And of course,
these, a swathe of PPAs has been “Some people thought the Zambia other countries are poised to join the
signed for projects in a number of other
countries by reputable developers with
tender too good to be true, but programme, Charafi says, suggesting it
is only at the beginning of what it could
a track record of delivering projects in it’s certainly made a lot of people achieve for the continent.
Africa. West Africa has emerged as a
particular hotspot for utility solar PV sit up and take notice. It’s a very Ongoing challenges
(see box, p.10).
Among the more active developers in
different thing if people can hope Yet there are still plenty of reasons
not to get too over-excited about the
the region is Scatec Solar, the Norwe- for prices between six and 10 progress large-scale PV has made
gian independent power producer in Sub-Saharan Africa. One is that in
that has built several projects in South cents or if they’re looking at 15¢ proportion to the number of projects
Africa and co-developed the pioneer-
ing Rwanda project with Dutch firm
and above. It changes the nature being announced, the number actually
reaching financial close is still relatively
Gigawatt Global. Scatec has a pipeline of the discussion” low, suggesting a number of ongoing
of several hundreds of megawatts in obstacles for the industry to surmount.
size for projects across Africa, including Peter Hutchinson is executive director
Nigeria, Mozambique, Mali, Senegal and always a discussion on when to go of Green Power Africa (GAP), a UK-based
Burkina Faso, some of which are well for tenders, for instance, and that is investment vehicle that helps finance
advanced in the development process. typically the second wave for some of renewable energy projects on behalf
According to Scatec Solar’s chief these countries; to get into that they of the donor-financed Private Infra-
financial officer, Mikkel Tørud, the have to prove the concept first and we structure Development Group. GAP
process of establishing a market for like to be part of that, but it’s not for finance played a make-or-break role in
utility PV in a challenging region such as everyone.” allowing Senegal’s first utility PV project,
Why West Africa is the newest hotspot for solar clear indication that “none of them is
easy”, Hutchinson adds. One signifi-
Karim Megherbi of Access Power, the Dubai-based developer behind Uganda’s cant issue in his view is that the size of
recently commissioned debut utility PV plant, Soroti, discusses the project and
projects being pursued in Sub-Saharan
why attention is turning to West Africa as the next utility solar hotspot.
African countries is in many cases
PV Tech Power: Explain more about Access Power’s latest project in Uganda too large. Not only is this potentially
Karim Megherbi: Uganda was a very interesting project for us, 10MW connected to the grid, awarded problematic in terms of the stability of
through the Get FiT programme managed by [German development bank] KfW. We were able to national grids – which are as a general
develop this project in only 12 months between the award and the start of construction, which is rule quite weak in African countries
amazing for Africa! After that we constructed the plant in a few months and now we are producing
– but can also be a headache from a
the electricity and everything is going well.
financing perspective.
You have said West Africa will be the top spot for IPP projects between now and 2020. Why? “The larger a project becomes, the
West Africa is a very dynamic region in terms of GDP growth so it’s all about economy and demand. more interested parties have to be
It seemed that there was a huge pipeline of projects that was just waiting for the right economy involved in the financing,” Hutchinson
conditions and also favourable environment in respect to policies etc. Now you have almost all these explains. “And when you start adding
ingredients. So you have the first projects that went online in Senegal and in Ghana and a stream of
more players into the mix the complex-
projects in Nigeria, Mali, Burkina Faso, Ivory Coast and Ghana as well, and the majority of these will
be renewable energy projects. ity becomes ever more pronounced and
that just slows the whole process down.”
Is there any advice, or anything that you would pinpoint as key, for investors or developers Unless this process can somehow
who want to get involved in the African market? be sped up, Hutchinson says “it’s hard
There is a notion that doing business in Africa comes with bureaucratic delays and inefficiencies.
to see how you ever get to a stage
But when you step outside of the cloud of these notions you realise that there are ambitious and
knowledgeable parties to engage with across the entire continent. There is no shortage of skills and where you can build enough plants fast
entrepreneurship; what is lacking are the investors and developers that are willing to take early stage enough” in the context of the ever-
risk and turn the many laudable concepts into bankable projects. growing demands for power in most
African countries.
By Danielle Ola “At which point one starts to think
a little about how electricity became
readily available. And in almost all
Western countries I’m aware of they
all started with localised mini-grids
and the national grid came much later.
Maybe the answer for Africa is going to
be to use the same path and not to go
for grid-scale production, but to go for
mini-grids. That again would play to the
idea of smaller projects being easier to
get off ground and may end up being
a way forward which can go alongside
Credit: Access Power
Credit Solarcentury
Bridging the finance gap
Finance | Commercial and industrial end users in Sub-Saharan Africa arguably have the most to
gain from solar, which can act as a buffer against costly and unreliable electricity supply. But as
Danielle Ola reports, getting the right financing in place remains a challenge
C
ommercial and industrial (C&I) their costs towards energy,” says Andrea Agriculture, On-grid solar plants at business sites
solar in Africa is still very much Griffin, vice president of global business commerce and make commercial sense in Africa versus
industry are
a market in its infancy, and yet development at solar finance business more developed markets because these
all potentially
much of the focus on distributed solar SunFunder. significant benefi- customers are still often using diesel for
in Sub-Saharan Africa is in this sector, It is not only the falling of PV prices ciaries of solar between 10-20% of their energy because
where private developers are starting to that will help this segment take off, but the grid is unreliable.
flourish and money to flow. also developments and innovations in “Even for on-grid customers, we are
Self-generation accounts for as much financing and credit – as this has histori- integrating fuel-save controllers and the
as 20% of installed generation in some cally posed the biggest barrier. To this ability for solar to work in tandem with
Sub-Saharan Africa countries, according end, solar financiers and developers are the grid and diesel; part of this is not
to the World Bank, with most businesses working to introduce and implement just savings against the grid, but savings
heavily reliant on expensive diesel gener- various business models that will serve against the cost of running the diesel
ators and yet still suffering an average of to widen access to financing, lower generators,” says Jake Cusack, managing
eight power outages a month. However, transaction costs and raise total invest- partner at CrossBoundary and Cross-
as the cost of solar PV equipment rapidly ment costs. Boundary Energy – pioneer investment
declines, the technology is increasingly and economic development consulting
an attractive option for businesses On-grid versus off-grid firm in C&I. “The off-grid model is a bit
“In West Africa, the price of electric- The C&I segment typically encompasses simpler: there is no grid, so you are just
ity is quite high, you start to see a lot solar projects of around 200kW-5MW integrating with the diesel and reducing
of C&I projects make economic sense that power businesses, generally in the consumption of that.”
because customers are saving money form of rooftop systems atop commercial
on a monthly basis on their electricity and industrial buildings or at mines and Energy storage
prices. That’s particularly important for farms. It is split into both the off-grid The main difference between the two
the commercial and industrial compa- and on-grid market, with both sectors would usually be the introduction of
nies who pay an exorbitant amount of coming with a different business case. battery storage for off-grid projects, to
allow for a smooth displacing of diesel with enough projects in it to attract improvements to yield quick paybacks.
generators, even at night and in adverse investment. But such a timeline does not lend itself to
weather conditions. Lower-value, third-party contract solar as has been explained. To overcome
“Battery storage is the perfect partner projects are rife in this space, and gener- this, developers are offering C&I projects
for solar because storing energy gener- ally are too small to be individually to customers under different financing
ated during daylight hours, ready for use assessed by the development banks that mechanisms such as a PPA or a lease,
at night, means that system owners can back utility-scale solar in Africa. Equally, allowing for minimal down payments
further reduce their reliance on grid and/ small-scale developers are often insuf- and for project savings to be developed
or diesel generators. Utilising more solar ficiently robust to raise project financing over the long term.
electricity by consuming solar electric- and shoulder the appropriate risk. CrossBoundary’s inaugural dedicated
ity at night that has been stored in the “There are still too many risks that C&I fund of US$8 million was set up to
battery also helps the system owner to sit with the end user as opposed to finance US$20- 30 million in projects, to
get more value from their solar invest- the financier,” says Irons. “The financier help the sector and carve out a new asset
ment,” says Andrew Crossland, storage wants to get into the system but they class. SolarAfrica too was developed to
specialist at Solarcentury. are looking for 5MW projects that have allow local developers to offer a fully
“Energy storage systems can also a multinational off-taker who’s going financed PPA.
intelligently protect against grid outages “The origin of CrossBoundary
and unstable voltage and frequency. This
prolongs the life of electrical equipment,
“The challenge with C&I projects Energy was working with very small
and mid-sized businesses in Africa and
keeps business running without inter- is that each is relatively small, so seeing that the two biggest challenges
ruption and makes life easier for all of us.” for them were access to finance and
Whilst the cost of storage doesn’t to organise finance on a case-by- access to cheap, reliable energy. We
yet always make commercial sense for
this segment, the cost of equipment is
case basis can be quite expen- thought there was an opportunity to
bring the commercial and industrial solar
falling, just like solar did many years ago. sive and the transaction costs – PPA model to Africa and allow these
However, particularly for off-grid, energy businesses to get cheaper and cleaner
storage is proving essential for such overwhelm the potential returns” energy without having to bear any
projects. upfront or take any technical risks,” says
“I personally think that the C&I market to pay whether you use the energy or Cusack.
cannot work without an efficient storage not. Those projects are nice and there The CrossBoundary approach was not
product tied with it,” says James Irons, is financing available but that doesn’t to raise funds on a case-by-case basis,
CEO of SolarAfrica, a C&I specialist. Irons grow the market; there’s only a handful but have the equity in bulk available to
explains that because many commercial of those.” deploy, allowing the company to spread
premises are not occupied for maybe “The challenge normally with C&I the costs across an array of projects in
two days a week, without storage they projects is that each is relatively small, several different countries.
cannot reap the full value of a solar so to organise finance on a case-by-case CrossBoundary is also elevating the
system. basis can be quite expensive and the traditional PPA model by using it to also
“An office park would be great for transaction costs – the cost of putting tackle currency risk. Traditionally PPAs
solar five days a week, but on Satur- it together – overwhelm the potential are linked to US dollars or the euro,
day and Sunday there isn’t sufficient returns,” agrees Cusack. which does not work for every company
energy usage on the site to warrant According to Griffin, developers have considering revenues are often in local
installing solar system,” he says. “If we particularly struggled in finding financ- currency, leaving exposure to whatever
have the ability to tie energy storage to ing that matches the long-term returns the difference between the two curren-
that product we are now able to offer offered by solar. “You can construct your cies is. “Thinking through the ability to
that office park a viable solar solution project and once you have, you can manage currency risk and offer long-
because we are able to store the energy either sell it for cash, you can provide a term PPAs in local currency could help
on the weekends and have that energy lease or loan to the end user, or do a PPA unlock the sector,” says Cusack.
available during the week. It opens with a developer or a fund who can take Enabling local currency PPAs widens
up the market and I think that we are ownership of that. If it’s the latter two access as it is typically blue chip
certainly getting close to being able to you have to arrange for that long-term off-takers that have the balance sheet to
do projects on that basis.” financing and that’s where a lot of the weather a currency fluctuation that can
developers in certain markets have had take on that risk. Local currency options
Barriers to finance some difficulty – finding that financing,” enable developers to trickle down and
C&I solar’s main challenge in Africa Griffin says. start providing solar solutions to SMEs
comes in the form of financing. A lack and smaller businesses that may not be
of access to finance has been the major Financing solutions able to take on that risk.
obstacle for the segment for years and Financial innovation is widely viewed
continues to stand in the way. The bitty as the key to unlocking Africa’s C&I Standardisation and bundling
and patchwork nature of C&I only exacer- segment. As credit is so expensive in the SolarAfrica is taking a different approach
bates finance access issues, as it has region, businesses often fund capital to surmounting C&I’s chronic financing
traditionally been rare to find a portfolio expenditure in cash and expect capital problem.
Credit SunFunder
S
ome 1.6 billion people across the says the pioneers have helped to create Business models only for people in cities. Yet now, with
world lack access to electricity, a vibrant market. such as pay-as- the development of solar power, it is
you-go have
with around one-third of those in “Because technologies such as solar possible to access power anywhere.
helped propel
Africa. Indeed, according to the African and storage are modular and scalable, the growth of This has an immediate impact.
Development Bank (AfDB), almost 620 they can be distributed and installed off-grid solar in “On average, children spend up to
million people on the continent lack at a much faster pace than many other Africa two hours per night extra on their
power. technologies that require larger scale,” studies and families often use the extra
Given the inability of traditional grids says Bloomberg analyst Itamar Orlandi. time in the evenings to increase their
to reach rural populations, the off-grid “At the extreme, they are just sold as incomes,” he says.
solar sector has been filling the gap. a consumer product in the form of solar “Shopkeepers are able to keep their
According to the ‘Off-Grid Solar Market lights or home systems. Because they stores open longer and farmers can
Trends Report 2016’ from Bloomberg can be put in a box and sold directly, process crops in the evening and be
New Energy Finance (BNEF), an industry they can reach customers much faster first to market in the morning. Everyone
that had a near-standing start less than than large power generation projects can keep their phone on all the time,
10 years ago now has more than 100 that require multiple stakeholders and without worrying about the cost of
companies selling solar lanterns and face lengthy development cycles.” charging it up.”
home system kits to those without As of June 2016, 100 million people
power. The impact of light have moved off kerosene and other
The impact has been tremendous. Simon Bransfield-Garth is chief execu- fossil fuel sources for lighting, result-
In Kenya, for example, BNEF estimates tive of Azuri Technologies, which sells ing in US$4.33 billion in energy-related
more than 30% of people living off the home solar systems across Africa. He savings. Ned Tozun, CEO and co-found-
grid have a solar product at home. It says electricity, historically, has been er of pan-African solar provider d.light,
says solar-powered portable products result, the cost of comparable systems PEG Africa, agrees PAYG has been crucial
and home systems offer safer, more dropped from almost US$1,000 in 2009 in enabling solar in off-grid areas.
affordable and higher quality energy to between US$200 and US$300 now,” “It is providing the rails along which
solutions compared to kerosene, he says. solar is receiving investment and
candles and generators. “The improvements in larger scale support to reach poor consumers,”
“In just eight years, transformations storage are more recent than in PV, he says. “PAYG allows a company to
in off-grid solar have led to a significant and this is likely to have an impact on remotely manage assets in the field,
improvement in the delivery of energy kilowatt-scale installations in the coming allowing us to profitably serve distrib-
access in developing nations,” he says. years.” uted and remote customers who would
“We believe this will catalyse a chain Thomas Hillig of TH Energy consulting be impossible to service otherwise.”
of events that move the develop- highlights some of the other develop- Bransfield-Garth says the decentral-
ing world into new forms of energy ment in the off-grid space. ised approach of powering each house-
access, financial inclusion and Internet “We are seeing gensets that are hold individually dramatically reduces
connectivity, significantly increasing made for hybrid applications, so-called the rollout time to new customers,
GDP in turn.” low-load gensets, local weather forecast- allowing new PAYG solar communities to
ing that allows for optimal operations be created in weeks rather than years.
Developing technologies of gensets and storage, and finally “The gap for what you can provide
Off-grid solar is advancing rapidly moveable solar power plants that are with stand-alone power and the cost
beyond simply lighting and phone a solution when the off-taker does not of connecting people to the grid is
charging. BNEF says cost reductions, growing. The PAYG model of distributed
consumer demand and a sales-driven power is becoming a genuine alternative
push for higher-margin products means “In just eight years, transforma- to the grid,” he says.
solar home systems capable of powering
appliances such as TVs and fans are likely
tions in off-grid solar have led to East Africa, with its high mobile
money uptake, is the continental leader
to capture an increasing market share in a significant improvement in the in this space, and Boucher says PAYG is
the future. “everything”.
“About 7 million off-grid households delivery of energy access in devel- “Obviously companies like it because
will use solar-powered fans and 15
million households will have a solar-
oping nations” it ensures full payment. It’s also
important because behaviour among
powered TV in 2020, according to our low-income consumers is such that
estimates. Similar systems will also pay the bill. For rural electrification, there they consume frequently and in small
provide services to small businesses,” the are also smart metering and mobile amounts,” he says.
report says. payment solutions,” he says. “PAYG seems to be the best way to
Developments in storage will also match consumer behaviour. I think it’s
play a key role in maximising efficiency Paying as you go fair to say that in Kenya people like it
and bringing down costs. While solar One of the initial hurdles solar providers primarily because it gives them control
production peaks during the day, energy in Africa had to overcome was the high over their spending.”
consumption is highest in the morning upfront costs of purchasing a solar home
and evening. Storage solutions allow system. This has been solved across the Funding scale
solar home systems to save energy continent by the adoption of pay-as- This business model has helped make
produced for when it is needed most. you-go (PAYG) business models, where African solar firms more attractive
Daniel Boucher, public relations lead home and business owners make small to investors, with BNEF saying PAYG
for micro-grid provider Powerhive, says regular payments to acquire the systems companies have attracted four times
in the context of residential electric- over time, often via mobile money. as much investment in half the time as
ity demand, storage is key. “When the Tozun says PAYG financing has proven those selling products for cash. This is a
sun sets early in the evening as it of an extremely effective way to get solar significant change to how infrastructure
course does around the equator people home systems and other solar powered investments have traditionally worked.
need storage to be able to use electric- products into the hands of more people. “Historically, sizeable investments in
ity when they come home from their “Once the system is paid off, it’s energy have funded centralised infra-
farms. Lighting remains a huge driver unlocked forever. This intersection of structure, like government-backed grid
of residential demand. But people also PAYG mobile payments, affordable home expansions. However, in today’s emerg-
like to do other activities after dark that solar power and pent-up demand in ing markets, the most efficient and
require electricity, such as watching TV the developing world will create new, scalable business model is decentralised
or listening to the radio,” he says. dynamic paradigms of energy access energy delivery,” says Tozun, whose
Orlandi says developments in storage, empowerment and personal financial company d.light is one of a handful of
alongside improvements in PV and identity for billions of people at the base Africa-based solar firms to have secured
LED lighting, support the advance in of the pyramid,” he says. multi-million dollar funding rounds.
solar: “They all reinforce each other. As a Hugh Whalan, CEO of PAYG solar firm “Many technological, social and
business trends are making it easier Storage a key enabler in the expansion of off-grid solar
to provide high-quality, affordable
solutions in emerging markets. d.light Energy storage systems (ESS) for solar are growing in importance globally to deal with the instability
is just one of many companies with and unpredictability of systems and match them to demand. This is especially valuable in Africa,
where weather is often variable.
sustainable models providing energy Solar customers in Africa have a wide variety of usage patterns, while the quantity of available
products and services to off-grid sunlight varies depending on season and cloud cover. Conventional systems have therefore struggled
families. We’ve demonstrated that it’s to perform at an optimum and efficient level for every user, a fact storage is well placed to address.
possible to build socially driven, profit- One company that has adapted to this reality is Azuri, which has rolled out HomeSmart technology
able businesses that deliver financial that “learns” a customer’s power usage patterns. The solar system then optimises light brightness,
battery charging and load conditions to ensure the best possible match to the customer’s daily
returns to investors on par with conven-
requirement given the level of available sunlight.
tional investments.” “Many off-grid customers use a standalone solar home system for power. A standard solar home
The off-grid solar industry is now system has a panel on the customer’s roof, connected to an energy storage system with a battery,
also catching the attention of more which then drives appliances such as lights,” says Azuri’s Bransfield-Garth.
traditional investors. Revenues have “These work well in sunny climates, but historically they have all suffered from the problem that if
increased 18% to US$139 million, largely the previous day was cloudy, insufficient power can be stored to run the lights all night. This means
that customers never know how much light they can expect each night.”
attributed to the sales of larger products,
The HomeSmart artificial intelligence manages the power in the system. Instead of the lights
which retail at a higher price. More going out early following cloudy days, the system will continue to work even when there was limited
investment is necessary for the industry sunshine. For example, if a customer typically uses the system both in the morning and the evening,
to truly scale, however. the system will automatically slightly dim the lights in the evening on days when there is less
“As the market grows exponentially, sunshine, ensuring there is still power available in the morning.
Storage is a key enabler for the efficiency of solar power in Africa, but as with all aspects of the
more working capital from traditional
technology prices need to continue to fall for
funds is needed to provide greater
G
lobal access to electricity is a
key priority for most develop-
ing countries to reach social
advancement. The availability of modern
energy is beneficial in many aspects of life,
ranging from lighting in the evenings and
storage of fresh food or medicine in cold
rooms or refrigerators, to the powering of
pumps for drinking water or irrigation of
fields to grow better crops. Cities are the
first electrified areas, followed by nearby
low-carbon economy and the supply of The centralised PV and wind mini-grid
electricity to rural remote areas. In total was designed, supplied and installed by
these mini-grids produce 200kW of PV Trama TecnoAmbiental (TTA), a Barcelona-
power (STC) providing access to modern based engineering and consultancy firm
electricity and enhancing income-gener- with more than 25 years of experience in
ating activities to 3,500 residents. They renewable energy technology, and in close
supply up to 650 kWh/day of renewable collaboration with the GEDAP team. This
Battery storage
The intermittent renewable electricity is
partially stored in a battery bank of 170kWh
at 48V. This battery bank is connected to
six inverters of 8kW each that convert the
electricity to standard alternating current
at 400/230 V. A diesel genset of 30 kVA
provides back up in exceptional cases
when renewable energy is lacking.
Remote access
All components are of first-class renowned
brands, fulfilling the highest international
quality criteria. The energy management
system by Studer Innotec allows remote
monitoring and control from TTA’s offices
in Spain.
Local integration
The system was delivered turnkey and for
the first two years it will be monitored and
serviced by TTA. The long-term economic
sustainability is guaranteed through the
implication of the national grid operator
close collaboration allowed for effective The installation Figure 1. A as responsible for handling the mini-
quality control, quick decision-making The mini-grid on Pediatorkope supplies schematic grids after the contractual operation and
diagram of the
and smooth processes. Local key partners, up to 160kWh/day of renewable and maintenance phase. Local staff and users
mini-grid system
namely AEA and GTS Engineering Services, reliable electricity, available 24 hours per on Pediatorkope have already been trained and are actively
were also involved in the project. day. Figure 1 shows a schematic of the taking care and supervising the installation,
The design is based on detailed studies system. following the operation and maintenance
of the future customer’s energy demand The centralised, low-voltage distri- protocols and schedules.
and willingness to pay for electricity. This bution grid consists of a three-phase By not only providing renewable energy
analysis was made in order to accurately backbone feeder with single-phase later- but also empowering the local commu-
dimension the power plant including als connecting single-phase loads at each nity, the installation generates various job
additional capacity for short-term demand customer’s premises. A dedicated line opportunities in plant operation, customer
increase and additional space for a future feeds 30 high-efficiency LED street lamps relations, service fee collection, service card
long-term expansion of the generation throughout the village. recording, trouble shooting and energy
plant. The power plant has a rated AC capac- efficiency assessment services.
The mini-grid’s load management ity of 48kVA, a PV array of 39kWp (STC)
(demand-side management) is ensured by and two wind generators with a total Growing demand
the ‘Energy Daily Allowance’ (EDA) concept, capacity of 11kW. The 156 PV modules In most of the communities, requests for
which guarantees each user a minimum are mounted on a metal pergola that service upgrading started immediately
amount of energy within their needs provides not only shading for the power- after the start-up phase. A 20% extension
and budget. The allocation of electricity house but also for community meetings of the grids is already agreed and in the
is controlled by an electricity dispenser to take place, which is well-appreciated process of formalisation.
that can be programmed according to added value. Moreover, the V-shaped The success of this pilot project has led
the different tariff levels. Six different tariff pergola mounting structure allowed to the elaboration of a programme for 80
subscriptions are offered to the house- for easy shipping and assembly by local further mini-grids.
holds, shops and institutions (see Table 1). craftsmen.
Authors
Tariff level Energy allowance, Wh/day Typical uses of electricity Christoph Peters is an energy consultant and
Basic (T01) 275 Lighting, phone charging project manager at TTA, specialised in renewable
Low (T11) 550 T01 + small appliances energy-based rural electrification and energy
efficient building design.
Medium (T21) 1,100 T11 + TV, fan
High (T31) 1,650 T21 + small fridge
Mid power (T42) 2,200 Lighting, TV, fan, fridge Christina Imboden is marketing coordinator at
Studer Innotec SA. She has an MSc in business
High power (T53) 2,750 T42 + small machinery
administration and is an experienced industrial
marketing professional.
Table 1. The mini-grid on Pediatorkope offers six tariff levels each of which sets a
daily energy allowance.
DuPont Photovoltaic Solutions (DuPont) will be a sponsor for the 25-year expected lifetime of the panel, but not all
of Clean Energy Summit Africa in Accra, Ghana, 4-6 April backsheet materials will withstand higher exposure to the
2017, which will bring together government stakeholders, UV and thermal stress of African climatic conditions. In
investors, financiers and industry leaders to discuss how order for the region’s solar energy industry to continue to
to contribute to the energy debate in Africa, by outlining grow, it is important for solar investors to understand what
policies and programmes to support universal access to impact materials selection has and which materials will help
power and the development of solar energy across the
continent.
Government and private sector ambitions for the solar
industry in Africa need to be carefully balanced by appropri-
ate standards to ensure the quality, reliability and durabil-
ity of solar panels and systems installed in the region will
withstand its harsh climatic conditions.
The PV system cost reductions seen in recent years are
set to continue, but savings must be balanced without
adding risk to get the best long-term investment returns
from a system. A focus solely on lowering the system’s cost
per watt can reduce the system’s expected power output
over its actual lifetime, therefore increasing the levelised
cost of energy (LCOE). Consequently this can impact the
overall return on investment of PV projects and potentially
damage the integrity and credibility of the industry.
Figure 1. 41% of inspected modules exhibited some visual defect. Source: DuPont global
The backsheet material, for example, should protect the field module survey of 71 installations (912,000 modules at 203MW) in North America,
panel from the elements and provide electrical insulation Europe and Asia Pacific.
F
inancing is arguably the biggest Pre-construction The successful poor directions.
challenge for developers looking to After choosing a project location, a execution of PV “We normally try to reduce that
projects in Africa
build projects in Sub-Saharan Africa. developer will typically install on-site risk by teaming up with a company
presents some
But with finance secured, they then face weather stations to assess the climate. unique challeng- experienced in that field in manag-
a swathe of logistical headaches around However, sources in the public domain es for the industry ing the logistics in Sub-Saharan
transporting parts, finding and train- of Africa such as solar maps and the countries,” says Said Istambuli, head of
ing a local labour force, operating and output from national weather stations international business development
maintaining projects, sourcing spare that measure irradiation, temperature at Madrid-headquartered EPC firm
parts and keeping projects safe from and wind speed are all scarce. Gransolar, which is developing projects
possible vandalism or theft. Bad roads, “In Africa there are solar maps avail- in Nigeria, preparing EPC for a plant
frequent lightning and lost cargo all able but most of them are unverified,” in Mozambique and is experienced in
stand in the way of a well-executed PV says Riaan Meyer, managing director O&M services. “This is a crucial aspect of
project. of GeoSUN Africa, a South African firm the whole supply chain and the whole
Regulatory environments have histori- that specialises in on-site solar resource planning of a project.”
cally been a source of uncertainty and assessments. “The moment you want to Poor road infrastructure is also a
therefore continued stasis in the African take the next step and get data from the concern for any EPC contractor that
PV market, but inertia was brushed weather services or maybe a university, intends to import panels, but Africa has
away last year, heralded by a flurry of there is next to nothing available.” well-established trade processes and
major PPA signings in the region, the For this reason the World Bank has well-organised ports, says Jon Sarpong,
completion of several utility PV plants been funding wind, solar, hydro and president of Toronto-based renewables
and a record-breaking tender in Zambia. biomass atlases for various African firm Avior Energy, which is developing
However many developers cite the ‘creep- nations with solar maps being made a 20MW project in Ghana. Thus, getting
ing risk’ of political upheaval or sudden specifically for Zambia and Malawi. the modules in country and transferring
regulatory changes that hangs over many Furthermore, a new map called “Poten- them to site is one of the more simple
African developments. All in all it is a tial Electricity Production or ‘PVOut’ is aspects of a project. However, Avior
region that presents plenty of challenges now available for all African countries Energy also has the fortune of working
for the industry to contend with, from showing the annual electricity yield of a in Ghana where there are a number of
planning through to profitable operation. typical solar panel, while taking both tilt quality roads. So if you are in a country
at the factory for their own specific centimetres to one side and the whole
modules. Therefore, different contain- truck flipping on high-speed corners.
ers coming out of the same factory
might have been bought and financed Construction
by different banks and destined for When it comes to building projects,
separate locations. there are differing views on how skilled
“If you have a logistics partner who is the local workforces are. Said Istambuli
not aware of these processes, they will says in some locations you may need to
see the same cargo and send it to the Transportation of components to site can be affected by prepare seminars for people to under-
[same] jobsite as the containers arrive difficult terrain stand how to work on the PV projects
developing PV projects.”
In areas of high lightning density such
as Uganda and Kenya the whole plant
design has to cater for it. Lightning can
Mobile irradiance testing is now offered in lieu of local weather stations
even pose a threat to the staff working in
the field of a PV plant.
and it may require using local subcon- Moreover, in a region where security is “Lightning damages PV panels,” Meyer
tractors, with your own team to come in paramount, Sarpong claims it is easy says. “I know of a plant in South America
and supervise execution of the work. to overlook the value of having a good where a single lightning strike damaged
Sarpong says the Sub-Saharan relationship with the local community. If 400 panels. Those panels needed
region has a wide range of skillsets neighbours believe that the developer is replacement. Lightning also damages
on the EPC side: “When we talk about there to benefit the community, bring- the communication system inside the PV
the on-the-ground workforce I think ing jobs and knowledge transfer instead facility such as the communication lines
that the national locales are more than of coming there just to take resources for data from inverters, weather stations
capable of supplying the required and leave, the community is more apt and combiner boxes.”
labour. There’s an abundance of that to support the initiative and also do its Setting up and operating a PV project
specifically in Sub-Saharan Africa. own sort of local policing around the in Africa is clearly a complex operation
What will make financiers comfort- site. that requires care to be taken at every
able is a bridge between established level and throughout the entire supply
EPC companies, whether they be from Operations and maintenance chain, but the opportunities have never
North America or Europe, and local When it comes to operating a plant, been as abundant as they are now.
expertise and local companies to enact O&M teams need to have a mix of spare Indeed, Avior Energy’s Sarpong says:
the construction and commissioning of parts in the right place, local mainte- “The PV situation in Sub-Saharan Africa
these plants.” nance teams and remote monitoring will grow and there’s a tremendous
A partnership with a local firm is capabilities. They also need to provide opportunity for foreign companies to
absolutely necessary, he believes. data to utilities. engage and I encourage them to do so.”
#CEAfrica
Philippe Miquel, CEO Joel Abrams Evan Rice, Business Hoda Moustafa
Western & Central Africa Managing Director Development Manager, Country Head, Africa
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