RENEWABLES: SSEG ESI African in conversation with Frank Spencer, embedded generation committee chairman at the South African Photovoltaic Industry Association (SAPVIA) on the challenges and solutions for small-scale embedded generation “The sun won’t stop shining, even if the lights keep going out” rooftop solar PV systems was reduced by an estimated 70% between 2010 and 2015. The option of a net feed-in tariff was not on the cards for South Africans until now. A recent discussion report titled Small-Scale Renewable Embedded Generation: Regulatory Framework for Distributers v10 of 10 December 2014 was drawn up and released for comment by NERSA. The report creates a framework for 1MW PV projects to exist outside of the current legislation requiring a generation licence and allows municipalities to establish tariffs at which to charge customers for the use of their networks, as well as remunerate for exported power. NERSA has identified the increasing number of rooftop solar PV installations in both residential and commercial areas, predominantly used for self- consumption, where some have entered into a net-metering agreement with certain municipalities. NERSA classifies a net-metering system as “a service to an electric consumer under which electric energy generated by that electric consumer from an eligible on-site generating facility and delivered to the local distribution facilities may be used to offset electric energy provided by the electric utility to the electric consumer during the applicable billing period”. According to the NERSA report, there are 36 licensed small-scale photovoltaic embedded generation (SSPVEG) installations across South Africa, with a generation capacity of approximately 10MW. The report however does not include all SSEG installations as some connections are not authorised or registered. In the discussion report documents on the updated Department of Energy’s integrated resource plan (IRP) 2010-2030 it “estimates that Embedded Generation (EG) residential and commercial [solar] PV could reach 22.5GW by 2030”. If estimates are correct this means a dramatic increase in SSPVEG in South Africa by 2030. CAPE WESTERN PROVINCE PILOT SCHEME The City of Cape Town signed its first two small scale embedded generation deals with Black River Park in Cape Town on 23 September 2014. The office park has two rooftop solar (PV) installations (950kWp and 252kWp) that will generate power for the whole park and supply any excess power to the City of Cape Town’s 72 What are the key challenges/barriers for small-scale photovoltaic embedded generation (SSPVEG) in South Africa? At the moment, it is diffi cult to get permission to connect an SSPVEG to the grid. There are some workable, although challenging, processes in municipalities like the City of Cape Town, but Eskom does not allow them at all on their low voltage (LV) networks. Currently there are no tariff schemes which adequately reward SSPVEG operators for exporting power to the grid. Therefore most projects in the commercial, industrial and agricultural space are for self-consumption, making it diffi cult for residential customers (who have low loads in the middle of the day when the SSPVEG is working best) to get good economics. A feed-in-tariff system, at a level similar to that of the cost of energy from a newly built electricity plant, would go a long way to accelerating adoption. The City of Cape Town does offer a tariff for exported energy, but it is extremely low and thus unexciting (refer to City of Cape Town SSEG project above). Most businesses and homeowners do not have easy access to the financing needed to install a solar PV system, an equivalent to buying 25 years of electricity upfront. However, I do believe financial instruments to address this will come into the market. There is evidence of this already starting to happen, with banks and finance houses offering lease-to-own models for such systems. Do you think more South Africans will become decentralised if the current power situation continues? Absolutely! It is happening right now, unfortunately, through the purchase of diesel generators. Nevertheless, there is a rapidly accelerating adoption of solar PV, battery, and diesel systems, often in combination with each other, to save energy costs and ensure power security. Can you provide some information on the current energy storage technology? The energy storage space is a fascinating one. To all intents and purposes, storage should halve in price within the next five years. Today if you were to go “off-grid” with a solar PV system, the amortized levelised cost of electricity (LCOE) would be around R3.5 /kWh. However, in five years’ time, that could drop to R2.25/kWh or less, which would be similar to most residential tariffs by that time. Therefore one can expect a growing rate of grid defection, where customers move predominantly to having their own solar battery systems as prime supply, with Eskom as backup. This is already happening in the upper income space. Can you provide some light on Eskom’s argument of losing revenue should SSEG be implemented? With a shortage of power to supply their consumers, Eskom won’t lose revenue – they will do less load-shedding, which would only add tremendous value to the economy. Eskom should be an enabler of economic growth and development, rather than worrying about customers making their own electricity. Can you give a few pros and cons of Small-scale Embedded Generation (SSEG) from both a utility and a small-scale standpoint? Utilities perceive SSEG as problematic, as they force the utilities to change their business models and methods of operation. So a pattern is surfacing showing international utilities embracing SSEG, even dumping their old conventional coal power plants. In South Africa we are short of energy (kWhs), hence the need to run huge amounts of diesel plants at a massive revenue loss to Eskom. SSEG is significantly cheaper than diesel, and could reduce costs should South Africa embrace this scheme. As the economics of solar PV are pretty linear, there aren’t significant drawbacks to building smaller solar PV plants, especially as they mostly will generate electricity at the point of consumption, taking stress off the larger generation and distribution networks. What are your energy predictions for the next three to five years? The sun won’t stop shining, even if the lights keep going out. The economics of SSPVEG will only get better, both in terms of the financial case and the ability to address our country’s energy security needs. As an industry, we believe we can build more than 500MW per annum in SSPVEG, if an enabling regulatory framework is in place. ESI AFRICA ISSUE 2 2015