Analysis of the size, scope and opportunity for deployment ...cdn.solarmedia.co.uk/assets/presentations/sora2014/dexter_gauntlet… · Dexter Gauntlett Senior Research Analyst Africa

M A R K E T I N T E L L I G E N C E • A N A LY S I S • B E N C H M A R K I N G

©2014 Navigant Consulting, Inc. Notice: No material in this publication may be reproduced, stored in a retrieval system, or transmitted by any means, in whole or in part, without the express written permission of Navigant Consulting, Inc.

Analysis of the size, scope and opportunity for

deployment of solar energy within the region

March 2014

Dexter Gauntlett

Senior Research Analyst

Africa Solar & Off-Grid Renewables Conference

Navigant Research provides in-depth analysis of global

clean technology markets.

The team’s research methodology combines supply-side industry analysis, end-user primary research and demand assessment, and deep examination of technology trends to provide a comprehensive view of the Smart Energy ecosystem.

Introduction

2 ©2014 Navigant Consulting, Inc. All rights reserved.

Sector Focus:

Smart Energy

Smart Utilities

Smart Transportation

Smart Buildings

Research Offerings:

Research Reports

Subscription Research Services

Custom Market Research

• Custom Market Analysis• Market Sizing and Forecasting• Primary Research• Go-to-Market Services

• Strategic Advisory Sessions• Commercial Due Diligence• Technology Evaluation

Smart Energy Ecosystem


Distributed Energy


Reports Published:

1Q14 Energy Storage for Microgrids 1Q14 Industrial Combined Heat and Power4Q13 Microgrids 4Q13 Market Data: Hydrogen Infrastructure 4Q13 Microgrid Deployment Tracker 4Q13 3Q13 Fuel Cells Annual Report 2013 3Q13 Remote Microgrids 2Q13 Distributed Solar Energy Generation 2Q13 Direct Current Distribution Networks 2Q13 Microgrid Deployment Tracker 2Q13 1Q13 Off-Grid Power for Remote Sensing Applications 1Q13 Off-Grid Power for Mobile Base Stations1Q13 The Fuel Cell and Hydrogen Industries: 10 Trends to Watch

in 2013 and Beyond1Q13 Market Data: Microgrids 1Q13 Virtual Power Plants

Future Reports (Subject to Change):

1Q14 Stationary Fuel Cells1Q14 Nanogrids2Q14 Renewable Distributed Energy Generation 2Q14 Microgrid Tracker 2Q142Q14 Microgrids in Asia Pacific2Q14 Fuel Cell and Hydrogen Industry: Ten Trends to Watch in

2014 and Beyond2Q14 Virtual Power Plants 3Q14 Fuel Cells Annual Report 3Q14 Distributed Generation and Energy Storage

in the Mining Industry3Q14 Residential Energy Innovations

• Microgrids

• Distributed Solar Energy

• Small Wind Power

• Fuel Cells

• Combined Heat and Power

• Natural Gas and Diesel Generator Sets


Table of Contents

Section 1 » Global Overview & Forecasts

Section 2 » Sub-Saharan Africa Overview and Forecast

Section 3 » Country Highlights

Section 4 » Lighting Africa, Power Africa, and other Opportunities

Global Solar PV Forecast

©2014 Navigant Consulting, Inc. All rights reserved.7

» The 2013 global solar PV market reached 36 GW, representing $89 billion in revenue from installations.

» 96 GW was installed in the past 3 years (2011-2013)

› Market began in Europe, led by Germany, Spain, and Italy and is now shifting to Asia, led by China and Japan

› Momentum building in North America, Latin America, Middle East and Africa

Global Solar PV Market Forecast


» Utility Scale Defined as > 5 MW

» Strong concentration of completed projects in mature markets in Southern Europe, Western US, India, China, but also Chile, Western Australia, and Eastern Europe

Utility-Scale Solar PV Projects

Source: Wiki-Solar.org


Global Average Solar PV Installed Prices


» Distributed solar defined as < 1 MW systems

» Distributed solar driven by FITs, Net Metering, Rebates, Tax Credits, Solar Lease

» Utility Solar driven by legislated targets (RPS, RES, Political Mandates)

Global Solar PV Market forecast


» Pro’s

› Many projects that were planned as CSP were converted to PV due to falling module prices

› Economies of scale enable lower pricing ($2-$3/Watt Installed)

› Efficiency gains

‒ Tracking systems can improve production by as much as 20%

‒ Central inverters are 99% efficient and offer increasingly sophisticated controls

› Strong track record among developers, with international reach

› PPAs provide a hedge against volatile fossil fuel costs

› Good way for utilities to meet a portion of their renewable energy targets

Utility Scale Solar PV


» Con’s

› Siting challenges

‒ Environmental Impact Studies, Permitting, Public v. Private Land Issues

› Water use

‒ Large solar PV plants in the desert could tap already scarce water supplies

‒ If sited near a town or community, even more potential for water competing with irrigation, drinking, and other household use.

› Transmission challenges

‒ Cost, Eminent domain, Efficiency losses

› Bidding process risk

‒ Uncertain if project bid will be selected, even after investing time and money into designing the project

Utility Scale Solar PV


» Pro’s

› Reduces need for new transmission

› Electricity consumed onsite

› Broadens the economic impact within the local economy (installers, balance of system suppliers)

› Provides an opportunity for individuals and cooperatives to invest in and get decent returns on solar (FITs, community solar)

› Scaleable

› Can be integrated into a microgrid, with other renewables.

Distributed Solar PV


» Con’s

› More expensive on $/W basis compared to utility-scale (can be 2x)

› Presents unique challenge for utilities

‒ Technical / Cultural: Lack of experience in managing smaller systems & their impact on the grid to their variability

‒ Financial: Potentially erodes (existing or future) customer base

› Lack of access to capital for homeowner / small businesses

› High customer acquisition costs for residential / commercial segments

Distributed Solar PV

Emerging Markets Solar PV Forecast


» Emerging Markets expected to grow from 1.4 GW annual market in 2013 ($4.5 billion in revenue) to 10.8 GW annual market in 2020 ($22.7 billion)

Emerging Markets


» Solar PV Market Dominated by South Africa but a number of utility scale projects in development.

» The likelihood of the announced projects being installed is uncertain.

» If the majority of announcements are realized in the next 6 years, the African solar PV market could see more than 8 GW installed and $23 billion in revenue by 2020.

Sub-Saharan Africa Solar PV Forecast (Advanced)


Operating and Announced Solar PV Projects

Country Highlights


» Government targeting nearly 10 GW solar PV installed by 2030, according to the country’s integrated resource plan.

» The Renewable Energy Independent Power Producer Program (REIPPP), launched in 2011, has the scope of allocating 1,450 MW of PV capacity in up to five tender rounds.

› The program provides PPAs over 20 years with Eskom, for projects up to 75 MW.

South Africa


» The first two rounds of REIPPP has successfully closed a total of R28 billion ($2.83 billion) in investment and 1,043 megawatts of capacity allocated

» Delays in construction of the first two rounds, as most round one projects began construction in early 2013

» The third round concluded in November with an additional 400 MW of solar

› Italy’s Enel Green Power selected as preferred bidder for 314MW of solar PV projects.

› Sonnedix selected for 86MW PV project in the Northern Cape was one of the six.

Round 3 Nuances:

» Local Content Requirement threshold increased to 45 percent for the third round of bidding.

› The LCRs could raise costs and is not attractive to outside developers

» Black South African Shareholder Requirement

› Will make it difficult particularly for smaller companies with only a few shareholders

South Africa Market - REIPP


South Africa Replicated?

Replicable in Nigeria, Ghana, Kenya?

Requires strong government structure, transparency, standard PPA framework


» Rwanda

› 8.5 MW solar PV installation Built by GigaWatt Global Rwanda in Agahozo Shalom Youth Village in Easter Province for $23 million ($2.70/Watt)

» Tanzania

› Tanzania Portland Cement Company Ltd and GIZ signed an agreement for 5-8 MW solar PV plant.

» Mauritania

› 15 MW installed and 15 MW in development, 40% rural electrification goal by 2020

» Ethiopia

› 20 MW module assembly Line in the works in partnership with Spire

» Ghana

› Targeting 10% renewable energy by 2020.

Other Country Highlights

Lighting Africa, Power Africa & Other Opportunities


» 3 Billion (almost half the world population) live on less than $2.50 a day

» 1.1 Billion without Safe Drinking Water

» More than two-thirds of the population of Sub-Saharan Africa have no access to electricity – a figure that rises to more than 85% of those living in rural areas.

Energy Access


» 7 million people reached thus far

» 2.7 million units of off-grid lighting products that passed Lighting Global quality standards sold in Africa

› SunnyMoney reports selling 532,368 lights in Africa in the Nov 2012-October 2013, one solar light every minute, primarily through schools, representing an increase of more than 250% over sales recorded in 2012.

» 7.5% market penetration for lighting products in unelectrifiedregions in Kenya, 2.5% for all of Africa

» 32 manufacturers whose products have passed rigorous Minimum Quality Standards

Lighting Africa


» Initial goal of 10 GW, with mix of renewables, fossil fuel, and privatization of energy assets (transmission, distribution)

» Primary focus: Ethiopia, Ghana, Kenya, Liberia, Nigeria, and Tanzania.

» Power Africa will also partner with Uganda and Mozambique on responsible oil and gas resources management.

» Leverages existing financing, technical support

» $2 million to launch the Off-Grid Energy Challenge to provide grants of up to US$100,000 to African-owned and operated enterprises to develop or expand the use of proven technologies for off-grid electricity in rural areas.

Power Africa


» Remote microgrids are an essential piece of the energy access picture and a strong opportunity for distributed solar and other renewables.

Microgrids


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Analysis of the size, scope and opportunity for deployment ...cdn.solarmedia.co.uk/assets/presentations/sora2014/dexter_gauntlet… · Dexter Gauntlett Senior Research Analyst Africa