SAMSET Releases a New Guide to Clean Energy Transitions for Sub Saharan Municipalities

Simon Batchelor from Gamos writes on the recently-released Guidelines to Clean Energy document for SAMSET.

As a part of our ongoing work with Sub Saharan Municipalities in Uganda and Ghana, the research team have brought together some basic information on clean energy transitions.  “GUIDELINES TO CLEAN ENERGY:- A PRACTICAL GUIDE FOR SUB SAHARAN AFRICAN MUNICIPALITIES (2017)”. The Guide is intended to help decision makers in Municipalities in Sub Saharan Africa to consider ways in which they could make their city utilize cleaner energy. Its foreword states “This manual has been designed for use by city officials and planners working in sub-Saharan Africa. It is a practical handbook, which identifies easy to achieve energy interventions that will save money (for cities, businesses and households), promote local economic development, and enhance the sustainable profile of a city. This manual is specifically aimed as a support tool to achieve the implementation of key interventions within municipalities across sub-Saharan Africa.”

The 200 page document starts with a call for cleaner energy. Its opening chapter draws on various sources to show how our ongoing use of fossil fuels is linked to climate change. The historical contribution of Sub Saharan Africa to global climate change is small compared to the developed countries, however over the next 30 years it will increase its contribution particularly if ‘Business as Usual’ is continued. The opening chapters discuss how this global problem is the responsibility of all, and how municipalities could take a decision to move towards clean energy that might contribute to climate change mitigation in the long term.

The guide, however, is titled ‘A Practical Guide’ and we felt it important to move quickly on from the macro picture of global challenges to the specifics of what a municipality might do. Each of the chapters has the same format –

• An overview, which includes some basic description of technology and social change options;
• The Case; which discusses how simple changes can make considerable differences
• Potential for Rollout; discussing the realities of Sub Saharan African life and whether the technology could be introduced
• Barriers to implementation (and effort to resolve); an attempt to anticipate barriers, and suggestions of what might be done
• How to go about implementation; some suggestions for action
• Case Studies; some Sub Saharan African case studies to illustrate the relevance and possibilities of the chapters subject.

Chapter 5 starts with Energy efficient lighting a technology that is relatively easy to implement. LED bulbs have become common and simple action ensuring they are available in the market and ‘encouraged’ among consumers can save significant amount of electricity (compared to older lamps). Chapter 6 broadens the picture to include energy efficient buildings.Ideally these need some design at the very start, but the chapter also makes suggestion for retrofitting that can lower energy consumption. Chapter 7 considers public transport. Vehicles can not only consume considerable amounts of fossil fuel, but create localized pollution. The chapter focuses on the possibilities of public transport as an alternative to everyone getting their own car. Chapter 8 considers cooking. While it may seem that municipalities have little to say about the choice of domestic cooking fuels, the ongoing use of biomass (charcoal) in urban areas contributes to local pollution, kitchen pollution and global pollution. Municipalities can undertake various strategies to assist consumers to move toward genuinely clean cooking.

Waste to energy in Chapter 9 is very much a municipality concern. Collection of waste is a challenge to many SSA municipalities, and the possibility of converting it to useful energy is worth consideration. Chapter 10 talks about Solar Photovoltaics. Solar PV has come down in price considerably over the last few years and this chapter discusses the possibilities – from solar farms contributing to the national grid, to mini and micro grids, to solar home systems.

Renewable purchase agreements are a policy tool that can encourage clean energy. Chapter 11 discusses these, pointing the municipality players to consider the policy instruments available in their country. Chapter 11 touches on carbon trading – this again is effectively a policy instrument that municipalities might consider using. And finally , a last chapter summaries but does not deal in depth, some ideas on Concentrated Solar Power, Wind Power and Solar Water Heaters.

The guide ends with a call to action, to share ideas with colleagues, and to take small steps that help us tread lightly on the earth. “We may have discussed many ideas, technologies, approaches, regulations, policies, feed in tariffs, low energy light bulbs, and energy efficient buildings among others, but ultimately consumption and sustainability come down to you. Humanity has a large footprint on this world and currently we are not treading lightly. We consume; we consume fossil fuel, we create so much impact that our climate is changing, we build cities that can be seen from space; we are heavy on the earth.”

Ongoing ‘Decreasing International Solar PV Prices’.

Simon Batchelor from Gamos writes to continue the theme of global solar PV prices, and their continuing price reduction.

In his blog on Decentralised Solar PV Acceleration in South Africa, my colleague, Mark Borchers, noted that “Where national grid power prices are rising fast, as is the case in many African countries, the decreasing international solar PV prices will sooner or later lead to a situation where it makes sense for businesses to install their own grid-connected rooftop systems.”  In a blog last year “Will Solar Photovoltaics Continue to Decrease their Cost?” we shared some insights into the ‘decreasing international solar PV prices’.

It is well worth keeping an eye on this price descent of solar, and this blog takes the opportunity to refer to a new report by IRENA – The International Renewable Energy Agency. The report “THE POWER TO CHANGE: SOLAR AND WIND COST REDUCTION POTENTIAL TO 2025” focuses on utility scaled activities, nevertheless they present an up to date analysis of solar photovoltaics and suggestions of costs through to 2025.

They confirm that solar PV modules have high learning rates (i.e. cost reductions as technology manufacturers accumulate experience) (18% to 22%) and rapid deployment – there was around 40% growth in cumulative installed capacity in each of 2012 and 2013 and around 30% in 2014 and 2015. These factors resulted in PV module prices declining by around 80% between the end of 2009 and the end of 2015. In 2011, price declines accelerated as oversupply created a buyer’s market. The price declines then slowed between 2013 and 2015 as manufacturer margins reached more sustainable levels and trade disputes set price floors in some markets. Current country average module prices range from USD 0.52 to USD 0.72/W. They believe that module costs are set to continue to fall, and they state that by their reckoning, module costs will have dropped by 42% by 2025.

However these module costs are only part of the system costs. IRENA shows that there are considerable gains to be made by reducing all the other system costs. In their figure 2 (see below) they show some of the balance of system costs for various countries of utility scale PV projects. It is interesting to note that the difference between China and Germany on the one hand and Australia and Japan on the other is a factor of 3. The report suggests that there is considerable room for reducing these balance of system costs further and it is improved efficiencies of installation that will continue to drive the system prices down.

The report also considers the levelised cost of electricity (LCOE), which takes into account the lifetime of the system, the ongoing operation and maintenance costs, as well as the capital investment. They note that the LCOE of solar PV fell 58% between 2010-15, making it increasingly competitive at utility scale. Of course looking ahead there are many unknowns, however their predictions are that utility scale PV could have project costs in the range of USD 0.03 to USD 0.12/kWh by 2025.

This general trend highlighted by the report in the context of utility scale PV nevertheless supports Mark Borchers’ observations on shopping malls and PV. He noted that “a combination of steadily reducing international solar PV prices and consistently higher-than-inflation electricity price hikes” was behind the decision to put solar PV on malls, and that “such installations are now a financial no-brainer – giving an 18% internal rate of return (IRR) with a 5 year payback”. While the IRENA report had a slightly different focus (scale of PV), it nevertheless confirms that PV is likely to continue its price descent, making the IRR for shopping malls in South Africa even better in the coming years.

Mark ends his blog by stating that since this is financially worthwhile, and will inevitably become even more so, he calls for urban areas to think about the “big implications for sustainable energy planning”. We echo that call.

Decentralised Solar PV Acceleration in South Africa

Mark Borchers from SEA writes on a recent visit to an embedded photovoltaic generation project in a commercial building, and the insights into the industry acceleration gained there.

I recently visited a shopping mall in Tshwane, South Africa, which had installed a grid-connected solar PV system on its roof (called an ‘embedded’ generator – because it is embedded in the local distribution grid). This is not unusual in the country nowadays, and estimates are that over 1000 embedded, distributed PV systems are in existence around the country, generating 40 to 50 Megawatts during the day. But I was struck by the fact that the mall developer said that for them such installations are now a financial no-brainer – giving an 18% internal rate of return (IRR) with a 5 year payback (whereas the decision to build a mall only requires a 10% IRR). So they intend to do these installations on all malls they construct. What’s behind this trend? Largely a combination of steadily reducing international solar PV prices and consistently higher-than-inflation electricity price hikes. Also, mall and other commercial operation load profiles tend to match solar PV generation quite well, being daytime-peaking.

While national government and most municipalities do not yet have clear regulatory frameworks to accommodate such installations, the financial case particularly in the commercial sector is such that they are happening anyway, leaving the government to catch a horse that has already bolted from the stable. A few quick calculations show that mall construction alone is likely to add 6 or more Mega-Watts (MW) of solar PV to the country’s electricity grid capacity per year. Others estimate that 500MW per year could be added from these embedded PV systems from all sectors. That’s about 1% of the total national generation capacity per year, which is significant, and something that national electricity planners will have to take seriously.

There are many benefits to these developments, but also challenges. The benefits include growth in renewable, low carbon energy, local economic development, and the fact that such generation capacity is entirely privately funded. The challenges include potential revenue loss from electricity distributors due to reduced sales, and balancing the grid power at a national level to meet the country’s demand – particularly the evening peak demand where solar PV does not contribute. There has been significant work done to show how the country can negotiate these challenges, but it does mean that well-entrenched systems have to adjust and change – which seldom happens quickly. Overall, this trend is in keeping with what is being observed internationally: that the future will move increasingly towards decentralized generation, with solar PV in particular becoming an increasingly big player. It has been suggested that the days of large power utilities are numbered. (Bloomberg.com)

This is a development we need to keep an eye on in urban Sub-Saharan Africa as a whole. Where national grid power prices are rising fast, as is the case in many African countries, the decreasing international solar PV prices will sooner or later lead to a situation where it makes sense for businesses to install their own grid-connected rooftop systems. And this is likely to happen irrespective of what government or utilities do, or don’t do, about it. It’s an inevitable transformation of the power sector which has big implications for sustainable energy planning in urban areas.