Future Of Solar Energy In South Africa

South Africa’s Solar Energy – At Glance

Several years ago, solar technology sparked little interest in South Africa. Solar panels in South Africa were formerly a rarity in South Africa, mostly seen on the rooftops of wealthy homes. This is quickly changing, owing to three factors: the global push toward renewable energy, a severely constrained local power supply, and a continuous decline in the cost of solar panels in South Africa.

The climate in South Africa is excellent for solar. The majority of the nation receives around 2500 hours of sunlight each year, which is among the greatest in the world due to the country’s Equatorial location. The more sunlight the panels get, the more energy they produce, and they operate even on overcast days.

Solar is becoming an increasingly more feasible and cost-effective alternative for companies in South Africa as energy prices continue to rise. There is an initial cost required, it is often recouped within five to eight years. That is an excellent internal rate of return (IRR), particularly given that solar energy is thereafter free beyond the first payback period. Thus, a solar panel in South Africa provides an appealing savings strategy for companies.

South Africa, following other nations’ example, agreed to an Integrated Resource Plan for the development of energy production infrastructure from 2010 to 2030.

By 2030, the nation intends to have a solar capacity of 9600 MW. When the plan was developed in 2010, solar energy was confined to a few isolated panels on residential roofs and provided nothing at all to the national power system run by state-owned utility Eskom until recently.

However, this is changing. Solar panel in South Africa are being built, the majority of which are being developed by the private sector via a specifically tailored procurement scheme. Additionally, Eskom is building certain facilities.

The defining breakthrough in solar energy over the past decade has been the precipitous decline in the cost of photovoltaic panels. Additionally, there have been some minor technical advancements in other solar technologies including energy storage.

Over the years, research advancements, particularly those involving readily accessible silicon-based materials, have reduced the cost of this solar technology. It is also the most popular at the moment.

The simplest photovoltaic design uses a stationary solar panel in South Africa that is slightly angled relative to the ground and oriented north toward the noon sun. The Droogfontein Plant, located near Kimberley in South Africa’s Northern Cape region, is an example. The panel rows are arranged in such a manner that no panel shades the one behind it.

A more advanced design, found at the Sishen Plant in Kathu, also in the Northern Cape, compensates for efficiency losses via the use of single-axis tracking technology. Each row of panels moves in lockstep with the sun along a north-south axis until it begins to shade the row behind it.

In two-axis tracking systems, panels are always directly facing the sun. This technique is used in the Herbert and Greefspan facilities near Douglas in the Northern Cape. The expense of the extra tracking motors is offset by the increased amount of sunlight captured.

Solar photovoltaic (PV) increase in Africa during the last decade:

Africa’s solar photovoltaic capacity has grown exponentially in recent years. Despite a low starting point, cumulative installed capacity more than doubled between 2009 and 2014 and has continued to grow year on year thereafter. As of 2019, South Africa alone has built a solar capacity of over 2,500MW – a staggering leap from only 2MW in 2010.

Solar panel in South Africa’s growing reputation as a cheap and dependable source of energy for homes in major cities and farmers in more rural regions across South Africa is evident.

South Africa has embraced solar with such zeal in part because the country’s energy infrastructure is overloaded and monopolized. Load shedding hit an all-time high in 2020, and electricity costs are expected to rise again in 2021. South Africa’s terrible electricity situation is wreaking havoc on families and businesses throughout the country – people are desperate for change.

Solar panel in South Africa’s power prices have risen by 300 percent in the past decade alone. However, the nation has now reached a point where the energy produced by new wind and solar farms is 200 percent less expensive than the electricity generated by Medupi and Kusile. Solar energy is on track to outperform fossil fuels and take over as the primary source of power in the next few years, owing to its high return on investment and cheap operating costs. Households and businesses are better equipped than ever to switch to solar energy and move away from the grid and toward a plentiful, renewable energy source. It definitely seems as if the change is on the horizon.

In 2020, the world was in chaos

Despite the solar panel in South Africa industry’s anticipated downturn in the aftermath of the coronavirus epidemic, the market is projected to grow steadily in the medium and long term. The industry has generally been untouched by the crisis, owing to solar’s affordability in comparison to alternatives and the role it has shown in supplying critical energy during times of crisis.

Solar panel in South Africa have also been a lifesaver for a number of hospitals in rural parts of Africa, supplying power for essential treatment for coronavirus patients in places where medical personnel cannot depend on the grid. While solar power performed well at the pandemic’s peak, the renewable energy industry will also be critical to Africa’s recovery from the pandemic’s terrible consequences. Government investments in renewable energy will ensure the continuation of companies and the uninterrupted supply of power to critical facilities.

Is solar energy a good solution to South Africa’s energy crisis?

Africa is experiencing an energy crisis, with a 2019 study predicting that 44% of the continent’s 1.35 billion people lack access to power. This is worrisome, particularly given that alternative energy sources, such as solar energy, which may provide a realistic answer for the continent, began gaining widespread worldwide appeal in 2005.

Despite favourable circumstances for solar panel in Africa, the continent’s solar sector generates less than 1% of worldwide solar income. By contrast, developing market nations in Asia are actively pursuing solar possibilities, averaging a 67 percent worldwide solar market share from 2015 to 2019. Solar panel in South Africa, therefore, have the potential to play a growing part in Africa’s future energy mix.

South Africa’s electricity access gap

South Africa is home to over 345 million people, with 57% living in rural regions with less than 5% power penetration. South Africa, the region’s most developed nation, has about 5.2 million people without access to power. This has been a significant impediment to the nation’s social and economic growth, especially among the most disadvantaged areas. Due to a lack of or restricted access to power, local economies cannot flourish, lesser employment can be generated, and schoolchildren cannot read properly into the night. The present fossil-fuel-based energy supply is insufficiently inclusive owing to problems such as coal supply constraints, inadequate energy distribution infrastructure, and poorly managed energy production infrastructure. With it in mind, solar energy may be the solution to South Africa’s short- to medium energy consumption requirements.

The difficulty of ensuring energy dependability

Although South Africa sells 26% of its 280 725 kilotonnes of coal, it continues to rely on unstable energy generated by existing coal-fired power plants. On the one hand, population development has contributed to existing power plants running at a higher utilization factor, since energy demand exceeds supply. On the other hand, power utilities lack the money necessary to invest in maintaining existing power plants or replacing facilities that have reached the end of their useful lives.

On the other hand, power utilities lack the money necessary to invest in maintaining existing power plants or replacing facilities that have reached the end of their useful lives.

Natural environmental conditions favourable

Exposure to the sun

South Africa receives a high irradiation rate (a proxy for solar potential) of between 1500 and 2000 kilowatt-hours (kWh) per year. This implies that the climatic conditions are more favourable for solar than the top solar producers on the planet, such as Germany. Germany has about 1000 kWh of solar capacity each year, but generated 46.5 terawatt-hours (TWh) in 2019, accounting for 9% of the country’s net energy supply.

In comparison, South Africa’s solar sector accounts for less than 1% of overall energy production. This underutilization occurs in the context of a national energy crisis, in which the need will likely exceed supply for another 15 to 20 years.

Land area

Apart from its favourable solar exposure, South Africa boasts an astonishingly low population of only 25 persons per square mile. Germany, by contrast, has a population density almost tenfold that of the United States. Numerous plots of land were available for solar plant installation. The Kalahari and Namib deserts, for example, encompass 930 000 km2 and 81 000 km2 of area, respectively. While not all of this property is appropriate for solar plant construction, there is a chance to utilize part of it for solar-related activities. However, the cost of establishing and installing the necessary energy distribution infrastructure may restrict the profitability of this option.

The cost of manufacturing Solar panels in South Africa is decreasing

Solar energy production costs are decreasing as a result of improved technology, greater manufacturing volumes, and increased government auctions for renewable energy to fulfil the 2015 United Nations Paris Agreement’s renewable energy goals. Solar energy currently costs US$0.068 per kilowatt-hour, down from US$0.378 in 2010. These cost reductions are anticipated to continue as solar panels in South Africa, inverter, and storage technology advances, as well as increasing competition and economies of scale associated with growing adoption rates. Global trends in this direction will help South Africa’s cost-sensitive market.

The difficulties

Despite the effort to address the energy problem and transition to greener energy sources, solar adoption has been slow in South Africa. Middle-income families who may be able to finance solar installations struggle to understand the value proposition of solar energy in terms of upfront costs, return on investment, and utility power replacement.

Installing a grid-tied solar home system for a three- or four-bedroom freestanding house in South Africa costs between R150 000 and R200 000. After investing this significant amount of money, the buyer’s minimal expectation should be to migrate to off-grid energy usage with little to no reliance on the grid. Unfortunately, this is not the case, with an off-the-grid solar solution anticipated to cost between two and three times as much, depending on the equipment used in these homes, such as geysers, pool pumps, stoves, microwaves, irons, and kettles. Solar energy’s value proposition would therefore need to be strengthened from a price and optimization perspective. A possible option would be to employ a hybrid energy solution that combines solar and gas for heating and cooking, or to provide longer payment terms for purchased solar systems, ranging from five to twenty years.

Lessons

Lessons may be learnt from India, which has a GDP per capita of $2 104 per year, slightly less than the average GDP per capita in South Africa, which is $2 114 per year. Despite India’s somewhat lower living standards, it is Asia’s third-biggest solar energy generator, with a capacity of 27GW as of 2020 and a goal of 100GW by 2022.

Solar panel in South Africa account for 22.8 percent of the company’s overall renewable energy capacity. India got it right when it established specialized organizations for renewable and solar energy: the ministry of new and renewable energy and, later, the Solar Energy Corporation of India, which accelerated solar energy adoption.

Between 2010 and 2015, tax incentives such as accelerated depreciation and tax holidays aided in the rise in uptake. Subsidies and incentives were offered to utility-scale solar farms, open-access solar farms, and rooftop solar plants. Additionally, the ease of doing business led to an increase in foreign direct investments (FDI). India permits 100 percent FDI in renewable energy projects to promote financial and knowledge transfer. Additionally, financial incentives are available for the establishment of mega-factories producing solar cells, lithium-ion batteries, electric cars, and charging infrastructure. Additionally, it is working on grid strengthening in order to facilitate smooth and increasing renewable energy integration.

Remedies

Solar energy cannot be effective in South Africa unless solar installers offer solutions for equipment that cannot be utilized during power outages. They may integrate a solar home system with solar geysers, as well as natural gas for heating and cooking, to guarantee a smooth transition during power outages.

Additionally, installers and lenders should collaborate to provide a package that is based on operating rather than capital expenditure models, alleviating the burden of excessive upfront expenses.

The customer pays solely for the energy produced in operational models, while in capital expenditure models, the client pays for the solar system’s purchase and installation.

Installers and financiers should strive to guarantee that families can either replace their existing power bill in the middle-income market or that the cost is readily reasonable, particularly for lower-income households. This may be accomplished by extending the payment term, which breaks the expenses down into reasonable monthly payments.

Other possible solutions include favourable government regulations that benefit both installers and customers, lowering the net cost of solar systems. These improvements will contribute to an increase in solar panel adoption in South Africa.