Speaking on a panel discussion at the recent Africa Renewables Investment Summit 2023, Nontokozo Nkosi, Director: Project Development for AMEA Power South Africa, said there is a huge demand for electricity use across Sub-Saharan Africa.

When it comes to growing the installation of renewables on the continent, governments have been instrumental in the growth of solar in the C&I market. “Where there is clear policy, there is development of C&I PPAs,” said Nkosi.

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Lessons in Reducing C&I and utility-scale solar LCOE and O&M costs

She specifically mentioned these countries in terms of:
– Kenya’s recent adjustment of its policies for government and C&I sector to engage on PPAs;
– Uganda’s specific investment policies on renewable energy to incentivise organisations which invest in renewable energy;
– Morocco’s liberalisation of the energy sector; and
– South Africa’s Renewable Energy Independent Power Producers Procurement Programme (REIPPPP), which changed how local financial institutions and energy developers looked at large energy projects.

“Governments are instrumental. Policies need to be clear and certain to give comfort to investors.”

“The first PPAs [in South Africa] were from REIPPPP. Now we’re starting to see the C&I market pick up,” said Nkosi.

She pointed out that on the C&I side, businesses first look at cost, and since the price of renewable energy technology is declining, it is becoming a more attractive form of investment.

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Where are the installed C&I solar projects?

“Also, when looking at country populations, the reliability of power is key for a business to grow,” said Nkosi. “Africa is rich in natural resources, but most mines operate in remote areas, which is costly. The cost of operating a genset solution versus a renewable energy plus battery system can help.

“When looking at why C&Is are moving into the use of PPAs, cost impact and the ability to harness natural resources play a role. C&I are also filling in a gap – the more MW you put onto the grid, the better for the country as it allows government to focus on other pressing issues,” said Nkosi.

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The IEA’s Africa Energy Outlook 2022 says the continent is home to 60% of the best solar resources globally, yet only 1% of installed solar PV capacity, so there’s still a lot of room to grow.

De Wet Taljaard, a SAPVIA technical specialist, said the South African Photovoltaic Industry Association would next week launch a database of installed solar capacity in South Africa, which would quantify all installations ranging from residential to C&I modules.

“It’s something we all know, but the data shows the penetration rates for residential are heavily skewed towards NLI 7 to 10, so the higher end,” he said.

Residential solar installations combined for the metros of Cape Town, eThekwini, Johannesburg and Tshwane is 10%, “which shows there’s lots of room for growth.”

Residential solar installations per income group NLI 7-10 expressed as a percentage of the total city are: 8% in the City of Johannesburg; 19% in the City of Tshwane; 13% in the City of Cape Town; and 5% in eThekwini.

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Lessons in Reducing C&I and utility-scale solar LCOE and O&M costs

While most African countries struggle to quantify solar PV installation data because of a lack of data, the African Solar Industry Association tries to track installed capacity by aggregating and tracking project announcements. Their 2022 Solar Outlook report said 949MW of new solar photovoltaic capacity was installed across the continent in 2022, up from 833MW in 2021.

The AFSIA report says C&I projects “will play an extremely important role in South Africa particularly.”

“Looking at data for projects under development, we notice that announcements for C&I projects only represent 4.8% of potential future capacity across Africa (but we know that many large-scale projects unfortunately never see the daylight, and this figure is potentially also biased by a group of super large green hydrogen projects announced…)

“Yet, if we zoom in on South Africa, we notice that 22.2% of all projects currently announced are already related to C&I (including wheeling projects). This should not come as a surprise though when taking into account the need for companies to take their power supply into their own hands given the failure of Eskom and the simplified procedure to supply up to 100MW of capacity for own consumption.”

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Drivers of C&I solar growth

Taljaard pointed out that traditionally the C&I market’s energy footprint was driven by factors such as decarbonising the supply chain and reducing operational expenditure by creating a power system that was cheaper than grid-provided power. “The same drivers in the residential space are now shifting into C&I,” he said SAPVIA was noticing.

“Loadshedding is becoming a bigger trigger.”

One of the data sources that SAPVIA relies on is the Nersa dataset. “We estimate that of the 5.6GW registered with Nersa on that dashboard, 4.3GW is likely for wheeling or trading purposes, to give an idea of the growth we’re seeing year to date,” he explained.

“We are SAPVIA, so we cannot speak to the same level of data in other African countries. It’s a shame that this kind of data isn’t available. We are trying to reach out to other renewable energy organisations like those in Namibia, Tanzania, Nigeria and Mozambique, trying to share as much of the learnings we have,” he explained.

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Kadrie Nassiep, City of Cape Town executive director of energy, said there are a few key things happening across Africa that are pushing the uptake of solar power by the C&I sector. “Cost of technology is a huge driver. Before, when you spoke about renewable energy and incorporating storage, you would get alarmed looks. Now the price is approaching R1.60kWh for the combination.

“The alternative is no power. So, the reality is the emergence of solar plus storage is being seen as highly competitive at scale.”

“Then, the ability to trade power… the opportunities have opened up significantly,” explained Nassiep. ESI

ESI Africa is proud to be a Media Partner at the Africa Renewables Investment Summit 2023.