Tesla CEO Elon Musk recently launched the company’s latest energy product: solar roof tiles. They look similar to other premium roof tiles, only they double as solar panels for power generation. Making the product even more appealing is the fact that they will, according to Musk, cost less to make and install than traditional roof tiles, and they will be virtually unbreakable – reportedly being three times stronger than their regular counterparts. The solar tile comes not long after Tesla launched its sleek and slim battery energy storage solution, Powerwall, in 2015. Already available in South Africa, prices of the Powerwall device continue to fall.
Chris Bellingham, head of development at Juwi Renewable Energies, says the battery-pricing trajectory is similar to that of solar – rapidly decreasing per unit for energy storage. He believes this will have a significant effect on the market. ‘The holy grail for the renewables industry is where a combination of the generation price of renewables plus the storage price is better than that of fossil fuels or other alternatives. When that happens, there will be no debate about what type of energy we use. From a purely economic basis, when we get to that point, we’ll see renewables skyrocket,’ he says. ‘Battery technology presents incredible opportunities, which are only going to improve over time. It’s a matter of only a few years until battery pricing will have massive ramifications [for] our generation choices in both urban and rural areas.’
Frank Spencer, board member of the South African Photovoltaic Industry Association, agrees. ‘Battery technology is likely to be the next big wave. Solar projects have reached the point where they can be more than competitive compared to other technologies or energies.’ Batteries are going to change the landscape for the better, he adds.
‘Looking five to 10 years into the future, the volume of storage technologies is likely to ramp the same as solar did, with the price continuing to fall dramatically,’ says Bellingham. ‘This will drive more applications and volume.
‘Applications that are marginal today such as residential properties going off-grid; in five years’ time homeowners might buy battery systems and have cheaper electricity. I think that’s going to be a big game changer in the residential space.’ He adds that, while currently it is mostly wealthier individuals using battery-storage solutions, we are reaching the point where middle-income homeowners will soon be able to afford the device, and will begin to see installations increase en masse.
Johan Greyling, transaction advisory services partner at EY South Africa, believes that digitalisation has a significant role to play in the energy space, particularly where solar is concerned. ‘Digital grids, for example, are looking to transform utilities to be more responsive and innovative,’ he says.
He cites the smart metering industry and the internet of things as further examples of digitalisation. ‘Utilities should be focusing their attention on digital as there’s a lot to do from a utility point of view. In the South African market, you can already find really smart applications. For example, you can install a PV panel on a roof, which then integrates with appliances, a battery system and links to a metering system with the relevant utility,’ he says.
Many countries in Africa enjoy plenty of long, sunny days, making them prime for solar energy exploitation. With so many people living in rural areas – and formal infrastructure not always reaching these communities – solar power makes even more sense. ‘In Africa, there are significant opportunities for off-grid solutions or distributed-power solutions,’ says Greyling. Already, this is happening in Kenya and Tanzania, where several programmes are in place – and, he says, the number of these is increasing. A programme run in part by the World Bank, Scaling Solar, is actively trying to progress this, to unlock investment into this sector and allow these off-grid solutions to happen. ‘In Africa, where sometimes having access to the grid is not feasible or where building the infrastructure is sometimes not appropriate to far-flung areas, this is an elegant solution,’ says Greyling.
Spencer agrees. ‘Solar could play a huge role, and in some instances already is, in bringing electricity to people who are off the grid and who the grid is likely to never get to. It would be cheaper to build micro-grids than huge grid infrastructure in such cases.
‘That’s exciting because it’s a huge wave waiting to happen. It will also be transformative for those people.’ Battery technology will make the impact for these communities even greater, which would be ‘quite revolutionary’, he says.
Spencer believes Nigeria stands to benefit the most from solar energy exploitation. ‘They have even worse grids than we did,’ he says. ‘Back-up and diesel usage is everywhere in Nigeria.’ The opportunities that solar power, as well as battery storage, present in Nigeria are huge. ‘Nigeria will probably be one of the largest markets for this when the time is right, just by the size of the grid.’
Some of the other Africa countries looking to exploit solar and possibly build utility-scale PV plants include Egypt, Kenya, Morocco, Namibia and Zambia. Although their grids are much smaller than South Africa’s, meaning that programmes such as its Renewable Energy Independent Power Producer Procurement (REIPPP) programme are unlikely to take hold, Spencer believes solar is coming – and fast – to these and other African countries.
In 2015, ratings agency Moody’s ranked South Africa as the fastest-growing energy market in the world. Fast-forward two years and, while the country still ranks highly in terms of renewable opportunities, it has slipped down the rankings somewhat – due, in large, to the current delay in the government signing necessary paperwork for the power purchase agreements.
‘South Africa has one of the greatest solar resources around, certainly some of the best in the world,’ says Greyling. ‘I think it’s worth saying that our utility-scale solar programme was burgeoning until we saw this awkward slowdown in the programme.’
While things may have slowed on the utility-scale side of the sector, they have picked up on the industrial, commercial and residential front, partly due to better technology, as well as prices dropping significantly. ‘Commercial and industrial has grown exponentially,’ says Spencer. ‘That market has been doubling in size for the last four or five years.’
While he says it is difficult to get a feel for exactly how big the market is, the estimate is that between 150 MW and 200 MW of rooftop solar was built during 2016, double what was done in 2015 – and that was double what was done in 2014. ‘That’s driven purely by economics because people can make that electricity cheaper than they can buy it from the utility,’ he says.
South Africa’s independent power producer programme is so good that other countries in Africa are using it as a blueprint, says Greyling.
‘A lot of African markets are looking at this programme and taking components of it, and using it as a benchmark in terms of deploying large, utility-scale applications in these markets.’ However, he highlights the importance of regulation. ‘Energy investments generally have large capital requirements and it is imperative that any markets in Africa looking to deploy utility-scale renewable programmes ensure they have the regulatory environment properly set up, and that there is regulatory certainty. If you think of investors and funders who want to go into these markets, a lot of what they need revolves around a proper regulatory system. This is key to getting utility-scale projects in Africa to grow.’
Increasingly, across Africa (South Africa included), there are a number of private equity firms and infrastructure investors and funds looking to participate in the sector, says Greyling. ‘Our debt markets have matured in this sector, so we have all the ingredients to grow this sector both locally and across the continent,’ he says. ‘We have very sophisticated financiers and investors prepared to support the industry.’ This is really positive private-sector componentry, he adds. Moreover, a secondary industry has stemmed from this – the sale of shareholding in these businesses and more formalised institutions buying shares. We should exploit the market’s growth, says Greyling. ‘Having these building blocks is very important. The industry has great potential on the continent – provided we have the governmental and regulatory support.’