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Prospects for investment in large-scale, grid-connected solar energy in Africa

Nygaard, Ivan

Publication date:2014

Link back to DTU Orbit

Citation (APA):Nygaard, I. (2014). Prospects for investment in large-scale, grid-connected solar energy in Africa [Sound/Visualproduction (digital)]. Conference on Sustainable Energy Investments in Africa - Engaging the Private Sector,Copenhagen, Denmark, 24/06/2014

Prospects for investment in large-scale,

grid-connected solar energy in Africa

Ivan Nygaard

Senior Researcher, PhD

UNEP Risø Centre

Opportunity Africa:

Sustainable Energy Investments in Africa - Engaging the Private Sector

UN City, Copenhagen, 24-25 June 2014

Outline

• The challenge

• Drivers behind diffusion of solar PV

• Characteristics of the power sector in Africa

• Current FiTs and Bids

• Large scale projects

• Concluding remarks

InnovatorsEarly adopters

Early majority

Late majority

Laggards

Ad

op

tio

n s

ha

re

Time

Technology diffusion

(Rogers, 1962)

Roof top PV diffusion in Denmark

2011 2012 2013

• Financial viability

• Available finance

• Legal frameworks

• Political stability

• Trust

Net metering tariff 2000-2012

27 EUR ct./kwh, yearly basis

Sale of surplus: 17.3 ct./kWh

Development in crude oil prices

Source: Monthly Crude Oil Prices: www.inflationdata.com

Annual production of PV panels

Source: PV status report 2013, European Commission, DG Joint Research Centre

Annual PV installation

Source: PV status report 2013, European Commission, DG Joint Research Centre

Steadily falling PV module prices

Source: Mints, P. (2013). Solar PV Profit ’ s Last Stand. RenewableEnergyWorld.com, March 2013.

Price versus volume - the learning curve

Source: Bazilian, M. et al., 2013. Re-considering the economics of photovoltaic power. Renewable Energy, 53, pp. 329-338

Markets for solar PV in developing countries

Technology and products

Market segments Installed capacity / size

Owners and buyers

Small pico-systems: solar lanterns, LED lamps, solar chargers

Lighting and charging of batteries and mobile phones in mainly non-electrified areas

1-10 Wp Private (over the counter) consumer devices

Solar home systems (SHS)

Off-grid electricity demand in private homes in dispersed settlements, in smaller non-electrified villages and on the outskirts of electrified towns and villages far from existing distribution lines

10-100 Wp Residential SHS (private households), ESCOs

Stand-alone 'institutional PV systems’

Institutions located in villages without grid or mini-grid, or on the outskirts of grid-electrified villages

50-500 Wp Government/municipal procurement for public institutions (schools, hospitals, health clinics)

Telecommunications and tourism

Powering telecom base receiver stations (BTS), link sites, and remote tele-centres, and basic electricity supply (mainly lighting) for rural lodges and hotels

0.2-15 KWp Procurement by commercial companies in the telecom and tourism sectors (e.g. telecom service providers, hotel owners, etc.)

Mini-grids (e.g. hybrid PV-diesel )

Villages and towns located far from existing grid

5 kW-1 MWp Utilities, cooperatives (community-based), ESCOs (village electrification projects)

Large-scale, grid-connected PV systems

Expansion of production capacity in existing grid

1-50 MWp Utilities, IPPs (incl. foreign investors)

Power sector in Africa

Fuel composition Emergency capacity

• Ghana 80 MW, 5.4 %

• Kenya 100 MW, 8.3 %

• Rwanda 15 MW, 48.4 %

• Senegal 40 MW, 16.5 %

• Tanzania 40 MW, 4.5 %

• Uganda 100 MW, 4.7 % Source: Eberhard et al. 2010

Funding gap (opportunities)

Source: IRENA 2012: Prospects for the African Power Sector

Evolution in FiTs and Bids

Evolution of tariffs FiTs and bids

Country USD c. EUR c.

Germany Jan. 2014 13.6 9.5

South Africa 3rd. round 10.2 7.2

Kenya 12.0 8.4

Ghana 14.0 9.8

Tanzania grid 9.5 6.7

Tanzania minigrid 30.0 21.0

FiT Germany (EUR ct./Kwh)

2004 2006 2008 2010 2012 2014

54.0 48.7 35.5 29.4 13.4 9.5

REIPPPP South Africa (EUR ct./kwh)

Round 1 Round 2 Round 3

22.4 13.4 7.17

Source:

German Energy Blog http://www.germanenergyblog.de/?page_id=965

PV-insider http://www.pv-insider.com/africa/pdf/SouthAfricaCSPvsPV.pdf

Ulrich Elmer Hansen, Ivan Nygaard, Mathilde Brix Pedersen (2014). Review of Solar PV Market Development in East Africa.

UNEP Risø Centre Working Paper Series no. 12. Technical University of Denmark

http://www.uneprisoe.org/URC-Working-Paper-Series

Large scale diesel 16 EUR ct./kWh

IRENA energy scenarios 2030-2050

Source: IRENA 2012: Prospects for the African Power Sector.

Solar PV moves fast in Africa now

Local Assembly

• Kenya 2011

• Senegal 2011

– (closed 2013 ?)

• South Africa 2011

• Ethiopia, 2012

• Mozambique 2014

Hybrid PV-Diesel

• Senegal

• Mali

• Kenya

Large grid connected projects (build, planned ?)

• South Africa, 1400 MW in three rounds, – (8400 MW by 2030)

• Morocco 20 MW – (160 MW in 2016, 2000 MW in 2020)

• Kenya 1.6 MW – Jinkosolar 50 MW (PPA) Canadian Solar 50 MW) (MoU))

• Rwanda 0.25 MW – (Scatec 8.5 MW in 2014, 3E power solar, 10 MW )

• Ghana 2.5 MW – (Blue Sky 155 MW 2014, Scatec 55 MW, 2015)

• Burkina Faso – (Zagtouli, 33 MW, EU, EIB, AFD, 4*15 MW bidding round

2015, Windiga, 20 MW)

• Mali – (Africa Power, 33 MW, 44 MW)

Conclusion

• Solar power is the fastest growing RE technology worldwide

• High solar irradiation in most parts of Africa

• Production cost competitive with diesel generation

• PV has short installation time and is easy to maintain

• Options for local assembly and maintenance

• Infrastructure funding gap (opportunity)

• Activities on the ground for the last 3-4 years show that large scale grid connected PV is now considered as an promising green investment option

Thanks for your attention !

Main source: Ulrich E. Hansen, Ivan Nygaard, Mathilde

Brix Pedersen, 2014. Prospects for investment in large-

scale grid-connected solar power in Africa. UNEP Risø

Centre, Technical University of Denmark.

www.unep-risoe.org

Comments, updates and suggestion are most welcome

during breaks or in writing to ivny@dtu.dk