SOLA and project 90 by 2030 worked together on solar PV mentorship programme with Khayelitsha youth

Salt River Secondary receives a solar system, thanks to Project 90 and SOLA

On 7 December, SOLA Future Energy was privileged to build a solar PV system for Salt River Secondary School in Cape Town. This was a culmination of SOLA’s involvement in the “Playing with Solar” project organised by Project 90 by 2030.

The 3.96kWp solar system will save the school around R 8 200.00 on its annual electricity bill. It will also help the school cut back 5 tons on its yearly carbon emissions. The school was awarded a Wessa Eco-Schools flag in 2017.

SOLA installs PV system at Salt River Secondary School

The project and donation came after two months of collaboration between organisation SOLA Future Energy and the YouLead Warriors – youth taking part in Project 90’s climate-focused youth leadership initiative.

The YouLead Warriors were given practical training on the mechanics and benefits of solar power at workshops held earlier in the year. This consisted of two 4-hour workshops at SOLA’s offices, detailing the basics of solar system design and media strategy and communications. The youth also visited two of SOLA’s sites – the iconic Robben Islalnd Microgrid, and Kenilworth Centre’s solar system.

Project 90 site visit Kenilworth Centre

Project 90 site visit to Robben Island

Dom Wills, CEO of SOLA Future Energy, says that it was a privilege to work with these future leaders. “Through this project, we have been able to teach learners that providing a reliable, cheap and clean form of energy is something that can benefit communities and create jobs.”

The ‘Playing with Solar’ initiative was made possible by generous funding from the HCI Foundation.  The installation was made possible through donations from Ingeteam and Lumax Energy, who sponsored the solar inverter and mounting gear respectively.

Acting school principal, Fairuz Patel, thanked everyone who worked on the project, saying that the money they are saving “can make a massive difference in the kind of education we can offer our learners, while also making a real and tangible difference to the environment”.

Solar PPAs are an affordable way to access the benefits of solar electricity

5 FAQs about solar PPAs

In some of our previous posts, we’ve alluded to the benefits of a solar PPA: both as a way to provide more options for business owners wanting to go solar, and as a way of reducing costs in certain sectors. At this point, you may be convinced that solar finance is an affordable way to access green energy for your company, but you may have a few questions. In this blog, we explore the 5 most common questions about the most common form of solar finance, the solar power purchase agreement or PPA.

Why a PPA?

As we mentioned in the previous blog, a solar PPA usually enables an electricity consumer to utilise solar energy at a rate that is cheaper than the existing utility. In addition the ownership of the solar system remains with the PPA provider, and the user only pays for the electricity that they consume, rather than for the overall cost of the solar system – making it an affordable choice for several sectors. Below follow some of the most frequently asked questions about solar PPAs.

1) How long does a solar PPA last?

In fact, this question gets asked so often that we wrote an article about how long solar PPAs are already, and if you’d like a detailed answer to the question, have a look at that article. The summarised answer is, “it depends”. Whilst as a rule of thumb, the longer the PPA, the greater the  immediate cost-savings will apply, many businesses prefer to enter into a shorter PPA period for a higher tariff, after which time the system ownership is transferred to the energy user. It all depends on the requirements of the client, as well as the overall objectives of the project.

2) Do I have to own the building to enter into a solar PPA?

PPAs ideally take place between a building owner and an energy provider, since the construction and ongoing maintenance, as well as energy distribution throughout the building, will require the building owner’s input and buy-in. However, if the building owner agrees to make the rooftop available for the solar system and the agreement takes the building and end user into account, tenants may be able to enter into a PPA.

3) If it isn’t sunny, do I still pay?

Depending on the type of PPA agreement you enter into, you shouldn’t have to pay if the system is not generating energy (take into consideration though, that even on cloudy days solar systems generate a good amount of power). However, the opposite does apply: if it is very sunny and producing more than what the building is consuming, the client may be liable for a minimum payment for the energy that is wasted, should it not be used. That is why it is essential to ensure that the system is sized correctly.

4)What happens at the end of the PPA?

Depending on the type of agreement, the system may transfer over to the client who then will take ownership of the solar system. This could work well if the building owner wishes to take  ownership of the system after a period of time. However, there can also be “early exit” options, if the property owner is concerned that the building might be sold during the PPA term. Again, each situation is different, and when entering into a PPA it is best to check if the agreement contains provision to either buy the system, or to get the new building owner to assume the PPA, should the building be sold.

5)What is included in the PPA tariff?

Depending on the type of agreement you enter into, the tariff will include the costs of designing the system, procuring all necessary components, and constructing the system on the suitable rooftop or ground-mounted area so that the solar electricity is readily available for the client. The tariff also includes the costs of maintaining the system on an ongoing basis, such as cleaning and part replacement as needed. Typically, these combined costs will be similar, or less than utility based power when comparing on a per-kWh basis.

 

Are you interested in finding out more? Contact our solar finance department to learn more about our solar financing options.

Fair Cape Dairies 100 kWp solar system

When cost reduction is king: 3 sectors perfect for solar finance

If you’re in business in South Africa, you’re likely feeling the squeeze of a slow-growing economy. Whilst some sectors have been more affected than others, it is safe to say that cost reduction remains a top priority for most facilities managers in today’s economic environment. At significantly lower cost to coal-based power, solar PV is a perfect solution for reducing overall electricity costs. However, for those that do not have the capex to outlay for the purchase of a new system, solar finance options remain a good choice. In this post we’ll explore three sectors that lend themselves particularly well to solar finance.    

What is solar finance?

Solar finance usually involves a Power Purchase Agreement, or PPA, between a producer of electricity and an end-user of electricity. In the case of solar PV, this usually enables an electricity consumer, such as a building, to utilise solar energy at a cheaper rate to the existing utility. In addition, although the solar system may be installed on the user’s rooftop, the ownership of the system remains elsewhere, and the user pays for the electricity that they consume, rather than for the overall cost of the solar system.

  1. The Manufacturing Sector

Industrial processing, particularly the manufacturing sector, remains one of South Africa’s most important, given the potential to create and maintain jobs. However, in a weak economy, manufacturing is one of the first sectors to suffer: and South Africa is lagging behind its regional peers. Although South Africa needs support and policy certainty when it comes to manufacturing, it is also of chief importance that each individual facility maintains its profitability through slick and efficient and operations – and this should include using the cheapest energy.

At a much lower LCOE than grid-based power, solar is a great option for manufacturing businesses. Solar finance is especially relevant as manufacturers are not necessarily interested in owning and maintaining their own solar system – they just need to access affordable and reliable power. By entering into a solar finance option such as a solar PPA, they can maintain low operating costs and remain competitive in a struggling economy.

Dynachem Industrial manufacturing facility

Dynachem Industrial manufacturing facility, 60 kWp

  1. The Agro processing Sector

Agro processing is a subset of the manufacturing industry but focused on processing raw, agricultural materials. A key growth sector in South Africa, Agro processing has been emphasised by the Department of Trade and Industry, as well at the Eastern Cape’s Department of Economic Development, and for obvious reasons: it accounts for almost 14% of South Africa’s manufacturing sector.

Similar to the manufacturing sector, agro processing runs on a tight margin and reducing operating costs are welcome. Although the input material costs may fluctuate significantly depending on the seasons and weather, entering into a solar PPA will ensure consistently low electricity prices for the processing of the raw materials.

As an added bonus, agro processing plants are often situated in rural areas, where there is access to adequate land for ground-mounted PV solutions, or large agricultural buildings for  rooftop PV solutions.

Fair Cape Dairies 100 kWp solar system

Fair Cape Dairies 100 kWp solar system

  1. The Hospitality and conferencing sector

The hospitality sector is undeniably important to South Africa, with it contributing 9.3 % of the countries overall GDP in 2016. However, the sector is also facing challenges – as disruptive technology such as AirBnB continue to grow and tightened budgets mean less cause for business conference travel.

As any facilities manager of a hotel or conference centre will tell you, running a well-oiled ship is a key aspect of ensuring that their facility remains competitive. This means finding innovative ways to ensure costs are kept to a minimum. When budgeting, planning is very important, particularly because there are several variables year-on-year that can affect the overall cost of maintaining the facility.

This is why a solar finance option is perfect for the hospitality sector: entering into a solar PPA will ensure a fixed escalation on the cost of electricity for several years – meaning greater control when planning energy costs. Ensuring that the building management system is also optimised toward solar energy – for example, ramping up the aircon mid-morning rather than early morning – can ensure even greater savings. The bonus with a PPA, furthermore, is that the system will be operated and maintained externally – giving facilities managers one less thing to worry about.

Century City Conference Centre goes green through solar energy installed by SOLA Future Energy

Century City Conference Centre 260 kWp solar system

Solar finance options are fast-growing way of tapping in to the cost and environmental benefits of solar power. Although these three sectors here are ideal for a solar finance option such as a PPA, it is not only these sectors that can benefit. Contact us to get a sense if a solar finance option will work for you.

SOLA’s Robben Island Project wins SANEA Project of the Year Award

SOLA Future Energy has won SANEA’s Energy Project of the Year Award. The award, which recognises an energy project that has brought significant recognition internationally to South Africa’s energy environment, was given to SOLA for their design and build of Robben Island’s Microgrid – a project funded by the Department of Tourism.

The award was given based on the project meeting a stringent set of criteria, including:

  • Leadership
  • Innovation
  • Initiative
  • Role model
  • Visionary qualities
  • International recognition
  • Contribution has had impact in South Africa

The Microgrid has assisted Robben Island, historically a grim landmark of isolation and oppression, to evolve into a space for critical dialogue, remembrance, education, tourism and conservation.

The installation of a state-of-the-art microgrid on Robben Island is the largest combined solar and lithium-ion storage facility in South Africa. The Department of Tourism had set aside funding for a microgrid project with solar photovoltaic systems (PV) to improve both the island’s image and function. SOLA Future Energy was awarded the contract to design and install a PV farm comprising nearly two thousand high-efficiency modules that would generate in excess of 666 kWp.

The Robben Island Solar project is a prime example of a technologically innovative and sustainable initiative.

Since adopting a green energy system, the island has already produced 650 000 kWh of solar energy – an average of 3250 kwh per day – which has significantly reduced its reliance on traditional diesel generators, a noisy and expensive feature of the old system.

In the past, diesel had to be transported by ship from the mainland, primarily to desalinate the island’s water supply. The cost of purchasing and transporting the diesel formed a substantial portion of the island’s operating budget. From a financial perspective, the solar plant is estimated to save the island over R6 000 000 in energy costs each year. The initial cost of installing the solar plant is likely to be paid off within four years. The snowball effect of the reduced spend on fuel is, at this stage, difficult to quantify. However, the savings could be used to upgrade existing infrastructure and create jobs on the island.

Over and above the financial considerations, the noise and dust emanating from these generators were not creating a tourist-friendly environment. In terms of carbon emissions, the solar farm is expected to reduce the CO2 emissions of the island by 860 Tons per annum.

Mmekutmfon Essien, Senior Project Manager at SOLA Future Energy, receives award from the Chairperson of SANEA

Mmekutmfon Essien, Senior Project Manager at SOLA Future Energy, receives award from the Chairperson of SANEA

Solar finance options make solar PV available to large businesses in Africa

Finance options for rooftop solar PV in Southern Africa

If your business is considering a solar PV system, chances are that you have looked at the advantages of the system in terms of the reduction of electricity acquired from the national grid and reduced carbon emissions, but the most important question will remain: how will a solar system save money for your business?

Although many companies will choose to purchase their solar PV system outright – meaning that after paying a once-off amount for the system, they’ll be able to use the system’s free energy over the next 25+ years – this is not the only option available to go solar. As opposed to purchasing a solar system outright, there are several solar finance options requiring little to no upfront costs, allowing more flexibility for a company.

For companies that don’t want to outlay capex to acquire an embedded solar system for their building, a financed solar solution is a great way to enjoy the benefits of solar – including reduced electricity costs and carbon emissions – without the upfront capital. Solar financing options generally allow businesses to pay only for the solar energy they use, depending on the type of agreement that is entered in to. The following blog explores the various solar finance options for commercial and industrial businesses in Southern Africa.

Introduction to solar finance

Simply stated, solar finance is a way to enjoy benefits of solar PV without the upfront capital costs. Instead of owning the solar system from day 1, businesses can “rent” a custom solar system through various solar finance options. Businesses can therefore still enjoy a diversification of energy sources and reductions on energy costs, without acquiring the solar system themselves.

Solar finance could be a particularly appealing option if:

  • A business does not have capex budget for the cost of a solar PV system
  • A business has a portfolio of buildings and does not want to buy separate PV systems for each; removing the “hassle factor”
  • A business would like to achieve electricity cost savings without impacting the balance sheet
  • A business wants to plan accurately for costs of electricity and wants greater stability with regards to tariff increases

A solar finance option will still entail a custom built embedded solar system being installed on the client’s building, but instead of ownership for the system being with the building owner, it will belong to the finance provider. In this way it differs from wheeling green energy or buying renewable energy certificates. With an embedded solar system that doesn’t belong directly to the business, there is little reason to get very involved in your building’s electricity supply – as long as the power is efficient, reliable and cost effective. Furthermore, dependent on exact structure of the agreement, the solar asset remains off balance sheet, allowing for a greater return on assets.

In contrast, owning one’s own solar system means that the building will have its own embedded power generation that belongs to the business. If the business has a good Operations and Maintenance contract in place and wishes to spend Capex upfront, this is a good option.

However, business owners may want to have even less involvement: as long as the cheapest and most reliable form of electricity is available. In this case, it pays to enter into a solar Power Purchase Agreement with a company specialising in solar PV, who will concentrate on all aspects of the system’s design, operation and maintenance over the lifetime of the system. The business can thus maintain its independence, only paying for the electricity that it uses.

Market overview of solar finance options

There are three types of solar finance agreements which are generally used for commercial and industrial business owners in Southern Africa. They differ slightly in scope and objectives, but the outcomes are similar.

  1. The solar Power Purchase Agreement (PPA).

The first and most common solar financing option is the solar Power Purchase Agreement (PPA).

A business who enters into a PPA agreement will only pay for the electricity that the system generates on a monthly basis, similar to municipal or utility power. This tariff will increase gradually over the years, but dissimilar to utility tariffs, the increases are usually at a fixed escalation that is agreed upon upfront, shielding business from price volatility.

Often  included in this agreement is an “early purchase option”, or an option to purchase the solar PV system anytime after an initial period. This enables flexibility for the business, should they decide at a later stage to purchase the system rather than continuing to pay for the solar electricity through the PPA.

At the end of a PPA term, the client is usually offered the option to purchase the system for it’s residual value or the system ownership automatically transfers to the client for no value. This is an important matter that can affect the starting tariff of a PPA and potential clients must make sure they know who the system belongs to at the end of PPA before entering into it.

  1. A roof rental agreement

A roof rental agreement is the second type of solar finance commonly used. In this type of agreement, a business leases their rooftop to a solar provider who builds a solar system and enters into a PPA to sell the energy from the system. The company entering into the PPA does not necessarily need to be the same as the company leasing the rooftop, which allows for several possible arrangements.

For example, a building owner with tenants could earn rental income from having a solar system installed on their roof and then have their tenants enter into a PPA, who would benefit from cost savings of the PPA. Alternatively the building owner can be the lessor of the roof rental agreement as well as the offtaker of the PPA and decide how to pass on the PPA savings to his tenants.

This option provides commercial building owners a yield enhancement of their property, turning previously unused roof area into income-making asset.

  1. An equipment rental/lease agreement

The third common form of solar finance is an equipment rental or solar lease agreement which is very similar to a PPA, in that a client pays a monthly fee towards the use of a solar PV system. The major difference with this type of solar lease agreement is that the fee is not linked to the output of the system but is rather fixed. In other words, the client would pay a similar amount, agreed in advance, every month, rather than paying for the energy that is generated in a specific month based on an agreed-upon tariff.  

Fixed tariff escalations: risk or reward?

For conservative business owners, signing on to a fixed tariff escalation for energy costs might seem risky. After all, what happens if the costs of state power go down significantly in the coming years?

This is a fair question, and the best way of mitigating this risk is to ensure that the fixed escalation on a solar PPA will be significantly lower, on average, than the utility’s escalation. In general, tariff escalations for many Southern African state utilities are quite high and fluctuate significantly year on year. Generally PPA tariffs increases range between 5-10% per annum, whilst Eskom and NamPower have had 10-year average increases of 13.8% and 13.4% respectively.

The graph below demonstrates the average tariff increases for South Africa and Namibia’s utilities over the last 10 years. Whilst some years, the increase was lower than the 6% increase typical of a solar tariff, the average increase is much higher than 10% (the grey line demonstrates a typical PPA tariff increase of 6%).

PPA tariff increases in South Africa and Namibia

Furthermore the discount offered by the PPA in year one offers further buffer from the PPA tariff ever crossing the utility tariff.

Conclusion

Solar financing readily makes clean, renewable energy available to a range of energy users in the commercial or industrial property environment. Offering both flexibility and stability, they are a very helpful way of promoting the accessibility of solar PV solutions to business owners across Southern Africa.

Do you have a business that could benefit from a solar finance solution? Contact us for more information.

 

Operations and Maintenance ensures that solar systems perform optimally

How to save through solar: 3 tips for commercial and industrial property managers

It’s long been known that managing commercial and industrial properties sustainably is not only about environmental, but also economic, sustainability. The good news is that for many facilities managers, managing properties sustainably can also deliver on their bottom line. One of the key areas of this is building electricity consumption – one of the largest expenditure chunks in any facility manager’s budget. As we know that reducing electricity consumption is a sure-fire way to save money, using a solar PV system to offset energy consumption makes sense. In this post we’ll explore three ways to ensure the economic benefits of solar PV are guaranteed in managing commercial and industrial properties.

Electricity consumption: a key concern for facilities managers in South Africa

In South Africa, electricity tariffs have increased on average 9% per annum for the last 5 years – and we may be in store for a further tariff increase in September due to Eskom’s RCA approval. These increasing tariff costs mean that it electricity is likely one of the top concerns for facility managers.  In fact, both cost savings and sustainability were highlighted as two “game changing” aspects of Facilities management for the next few years, according to the Facilities Management South Africa Knowledge Executive Report. With increased pressures on facilities managers to deliver high quality service at a reduced cost, electricity savings are imperative for facilities managers.

Much of this pressure has lead the property sector to invest in solar PV. Grid-tied solar PV systems can save properties between 20 – 40 % of their total energy consumption, making them an attractive option for saving energy costs. Increasingly, property companies and Real Estate Investment Trusts (REITS) are rolling out portfolio-wide solar PV interventions. The reason that this is so attractive is because of the rapidly decreasing prices for PV technology over the past few years, causing the costs to fall by 80% since 2009.

However, in order to make sure that a solar PV intervention actually saves money, there are a variety of factors to consider. Below are our three tips to follow in order to maximise the cost-benefit of the solar PV investment.

Tip 1: Implement in-house energy efficiency measures first

The lowest hanging fruit when it comes to building cost saving is often implementing in-house energy efficiency measures. If you haven’t already implemented in-house energy efficiency, this is the place to start for any kind of cost-saving, but it will also help any investment in solar PV to be more cost effective. A typical solar PV system has an output which ramps up in the morning, reaches peak output at midday, and then slows in the evening, such as the red line in this graph demonstrates:

typical solar PV load

Implementing energy efficiency measures to shift some load to mid-day when solar PV is at its peak production will ensure that you will fully utilise the cheaper energy when it is abundant. As an added advantage, peak tariff times are generally in the mornings and evenings, meaning that there will be an added saving. In order to fully optimise energy efficiency, implementing electrical submetering is a helpful way to analyse the energy load and understand the main energy-guzzling activities – in a typical commercial building this will likely be HVAC (air conditioning), lighting and electrical appliances.

The benefit of analysing a building’s load and implementing energy efficiency measures before procuring solar PV it twofold: it can not only shift the load more optimally as highlighted above, but it can also ensure that the solar PV system that is procured is the optimal size.

Khayim Fredericks, National Technical manager for Old Mutual, recommends looking into energy efficiency as a first measure.

“[I recommend] looking at [your] building and asking, is my building operating as efficiently as it can be, so that the solar system can be sized as efficiently as possible? […] When we explored the solar option [at Old Mutual head office], we had already reduced our consumption from 30 – 35%”.

Old Mutual solar PV system

Tip 2: size the solar system correctly.

As mentioned above, sizing solar PV systems correctly is key to enhancing their cost-reducing benefits. When sizing a system correctly, there are several factors that need to be understood, including:

  • The required energy load. This includes a thorough knowledge about the amount of energy that the building uses on a daily basis, including seasonal variations and power required.
  • The tariffs that apply. It is important to understand the energy tariffs that apply to the building, including what their tariff structure is and if peak demand charges apply. This will help when designing the solar system to see if excess energy stored in batteries might be cheaper than peak-demand municipal electricity tariffs.
  • High-rise, large commercial office blocks typically have less rooftop space available than sprawling retail centres. Understanding what roof space or ground is available around the commercial property is an important aspect of designing the solar system and its size.

What is wheeling?

Wheeling is the process of using energy from a location where it is not produced. Due to the way in which cities are set up, wheeling has great potential as it will enable building energy users with more roof space but less energy requirements, such as distribution centres or warehouses, to transfer power into energy-intensive urban hubs.

Tip 3: Add Operations and Maintenance into your ongoing energy costs.

Like any asset, the operations and maintenance of an installed solar PV system is paramount. Monetary savings generated by solar PV systems will be consistent if and Operations and Maintenance plan is followed. Factoring in the costs for operations and maintenance in the overall IRR of the solar system is important, because it will allow diagnosis of any possible problems early and thus ensure that the system continues to produce the predicted savings.

Make sure that you scrutinise what is included in an O&M contract. A comprehensive plan should include:

  • Access to software that provides real-time data on the production of the solar system
  • Remote monitoring and corrective action, when required
  • Access to technical staff who are able to assist with problem solving
  • Collating, analysing, and reporting on monthly and annual data
  • Inspecting the site and/or replacing components
  • Cleaning of the modules

A comprehensive Operations and Maintenance arrangement for your solar PV system will ensure that the system is running smoothly without you spending time diagnosing and troubleshooting, should there be a problem.

Operations and Maintenance ensures that solar systems perform optimally

By implementing in-house energy efficiency measures before procuring a solar system, sizing the system correctly for your load, and employing a comprehensive operations and maintenance plan, you will ensure the economic savings of a solar PV system on a commercial property.

solar PV for commercial and industrial property

Installing solar on your commercial or industrial property? 6 questions you need to ask

Installing solar PV systems on commercial or industrial property has become a commonplace practice, given that property investors generally look at the long-term value of their assets. Since solar provides consistent, affordable and clean energy over a 25 year lifetime, it is not surprising that commercial and industrial properties are investing in solar. However, given the flurry of investment, there are many solar system providers – and even more opinions around what is important when installing a solar system. Investing in solar PV is an incredible investment, if it is done correctly, but as someone specialising in property development, you might not know how to judge if a solar system will be done in a way that ensures optimal ROI (Return on Investment). In the following blog post, we explore 6 different questions that are essential to commercial and industrial property owners when going out to procure a solar system.

A beginners buying guide to C&I solar PV – the essential components

At its most essential, a solar PV system harnesses the energy of the sun and converts it into electricity for use. However, in terms of how this energy is harvested and when and where it is deployed, there are a range of variables that can significantly impact both the cost and the output of the system. The first step to understanding if your commercial property would benefit from solar is to understand your energy tariff. By doing this, you’ll be able to see if a typical solar tariff will beat what you’re currently paying. In order to find out the detailed costs and expected returns on a solar project for a commercial or industrial building, you would then need to commission a feasibility study, or solar proposal, that will show some basic figures on the return for your property.

There are a few essential components that should be covered in a solar feasibility proposal:

  • The size of the system (DC) and the proposed output (kWh). This is a basic indication of how much power the solar system would output based on the size of your building. There are various different ways that this can be optimised – which will be explored later in the post.
  • What the system will cost, given a comparative option of upfront capital cost (capex/ EPC cost) or a financed solar solution (PPA). This would show what the ROI would look like on various options and help you decide what is most relevant to your building and business model.
  • If you have load data for your building or facility, a good feasibility study should include a load analysis. If no load data was provided, the study should explicitly say this, so that there is no confusion as to the accuracy of the figures in the proposal.    

Once you have received a feasibility study on your commercial or industrial property, it is important to make an informed decision on the procurement of the system – and that’s where this article aims to help. The following 6 questions to ask when buying solar for commercial and industrial property should guide your thinking:

1. What is the optimum size of the system?

It may seem obvious, but the size of a solar system is one of the most key aspects of ensuring that solar PV works for your business. This is because there are several factors – such as operational requirements, roof space, reliance on diesel, etc., that all factor in to the optimal size for a PV system. When assessing a solar feasibility study, it is important to check that there is optimal configuration of the system design: that all components deliver their maximum value and make the system more efficient.

For example, you can get optimal value from solar inverters by making sure that they are not overloaded or operated outside of the manufacturers instructions. Similarly, solar modules might perform more efficiently if surrounded by a cool breeze. When assessing the property’s energy load profile, it also might add value to slightly oversize the system, or incorporate a small battery, in order to reduce the property’s demand charges (more on this later). By paying a slightly higher fee for the added components, the saving on demand costs could be significant, depending on the tariff structure and the building’s operations.

Value engineering will ensure that environmental factors, energy load, building design and component functionality are all taken into account to ensure the most efficient system size for your property and budget.

value engineering ensures better cost effectiveness for solar PV on Commercial and industrial property

2. Will the system meet legal requirements?

This question is almost as obvious as the first question but it is one that is, surprisingly, often overlooked. There are a large amount of compliance and legal standards when it comes to installing a solar system, and in order to make sure they don’t have any legal hassles, commercial property owners need to make sure that the solar system provider will ensure compliance with all relevant requirements.

Compliance with legal perimeters changes in each country, so the service provider will need to be familiar with the requirements for each particular property location. In South Africa, the following basic compliance rules apply:

  • Solar PV systems under 1 MW in size must have embedded generator approval from the relevant municipality
  • In some municipalities you may be required to go through a building plan approval process, especially for carport or ground mounted installations
  • For solar PV systems over 1 MW, the current legislation stipulates that these systems must have an electricity generation licence  from Nersa (the National Energy Regulator of South Africa). However, it is expected that this process will become slightly easier for projects between 1  – 10 MW in the coming months
  • If it is a battery coupled or off-grid system, it currently does not have to be registered, however this might change in the future depending on how Nersa regulations are updated going forward
  • The system should also meet technical compliance standards. It is important, for example, that the system is compliant in terms of technical regulations for electricity connections – (NRS regulations 097-2-1 – grid connection of embedded systems). A qualified electrical engineer is needed to sign off on this.  
  • Structural compliance – ensure that the structural design of the system is signed off by a professional engineer (Pr Eng).
  • Some PV installations may require additional regulatory approvals such as environmental impact assessments, rezoning, etc.

3. What do good quality components look like?

From just a simple Google search for solar panels, one will realise that there are a range of manufacturers out there, and trying to find the best quality vs price components can be daunting. The most important thing to evaluate when looking at the type and quality of components used in a solar system proposal is that the warranties and guarantees meet the requirements of the length of the investment. In terms of investing in a solar PV system for a commercial property, this usually means 20 to 25 years.

  • Solar modules or solar panels form the basis of your investment. Generally, solar modules come with a 20 – 30 year performance guarantee. Mono-crystalline solar panels are typically more efficient than polycrystalline, but tend be be slightly more expensive. Also, make sure that you differentiate between performance guarantee (the guaranteed efficiency of the panel during its operational life) vs product guarantee (the manufacturing or workmanship guarantee on the panel itself).
  • Inverters convert the DC electricity to AC and integrate this into the building’s energy supply. Typically, inverters carry a 5 – 10 year guarantee, which can be extended.
  • Batteries are another component that you will want to ensure are of good quality, if they form part of your system. Remember that how batteries are managed will also ensure that they carry a longer life span. Battery technologies are advancing rapidly in terms of cost and robustness, and are now available with warranties in excess of 10 years.
  • Also make sure that the feasibility costing includes provision for the installation of weather and monitoring instrumentation that will allow you to track the performance of the system over time.

Solar PV module and mounting system

 

4. How has the performance of the system been guaranteed in the short, medium, long term?

In addition to component guarantees, it is also useful to take note of overall guarantees of the system for the long, medium and short term. A solar system installer may have an overall efficiency measurement or performance ratio by which they guarantee the system. For example, they may measure the ratio between the total amount of available insolation (solar power) on your property’s site, vs the usable power coming out of the system (DC).

The solar proposal should also include a Internal Rate of Return or IRR. As those in the commercial and industrial property industry will be well aware, IRR is the rate of return on investment that will be achieved by investing capital in a solar asset, over the lifetime of that asset. IRR can also be calculated during a specific timeframe, for example, the first 10 years of a solar system’s lifespan.

When it comes to signing a financed solar system or a Power Purchase Agreement (PPA) with a solar solutions provider, IRR would not be relevant. Instead, the savings from solar energy would be calculated as a monthly operational saving, based on the expected tariff increases.

5. How will you measure ongoing performance and ROI on your solar system?

Like any asset, solar PV systems need ongoing care and maintenance in order to retain their optimal performance. When evaluating  the purchase of a solar solution the provision and associated costs of Operations and Maintenance (O&M) is an essential component to consider.

Not only will investment in O&M diagnose any possible problems early through continual real-time monitoring, it will also ensure that the system continues to produce the predicted savings and ensure the overall financial case of the project.

When evaluating an O&M offering, make sure that there is regular reporting and site inspections and the option of accessing live data on the solar system, such as through a client portal. Keeping track of the solar system’s historical performance through regular reports will help you to look at the savings and ROI over time and to make more accurate predictions of future performance.

If your solar system is on a PPA, you will not be directly responsible for its ongoing maintenance and operations. However, you should still request ongoing reports to track your savings comparative to your alternative power options.

ongoing solar operations and maintenance is essential for Commercial and industrial property

6. Will energy storage improve your solar system?

Although batteries have historically been expensive additions to solar PV systems, it is now essential to ask about energy storage when thinking about a solar system for your commercial or industrial property. The prices of batteries have rapidly decreased and often can ensure a more efficient use of the abundant solar resource. Whether you originally planned to include batteries in the system or not, it is worth asking about when evaluating a new solar proposal.

How could combining solar PV with batteries and/or generators improve the overall business case? It depends on your specific building and load profile – for example, peak shaving can help to push overall tariffs significantly lower and change the business payback of the solar PV system significantly. Similarly, for retail centres and remote industrial or mining properties, batteries can allow a totally islanded or microgrid solution.

That concludes our list of 6 questions to ask when installing solar PV on commercial and industrial property. Like any large asset, investing in a solar PV system requires careful decision-making and evaluation. If you have a commercial or industrial property that you are interested in converting to solar power, try our online feasibility tool.

Cedar Mill Mall goes solar

Going wire-free in Africa: Two examples

Our last blog post focused on how microgrids in Africa can enable electrification in rural communities to encourage economic prosperity without the need of centralised grid infrastructure. This blog explores two examples that SOLA Future Energy has designed, engineered and built – and how these might be replicated in African communities.

Robben Island – an isolated microgrid

Robben Island’s state-of-the-art microgrid is the largest combined solar and lithium-ion storage facility in South Africa. The microgrid, consisting of a combined solar PV facility and a battery bank, has enabled the island to move away from its diesel generators. Since adopting this green energy system, the island has already produced 650 000 kWh of solar energy – an average of 3250 kwh per day – which has significantly reduced its reliance on traditional diesel generators, a noisy and expensive feature of the energy system.

In the past, diesel had to be transported by ship from the mainland to fuel the diesel generators. The island’s load is primarily occupied by a desalination plant and to provide power for the 100 residents who live on the island. The cost of purchasing and transporting the diesel formed a substantial portion of the island’s operating budget. Over and above the financial considerations, the noise and dust emanating from the generators were not creating a tourist-friendly environment.

Robben island is now powered by the sun
Cedar Mill Mall – solar and batteries enabling development

Robben Island is a perfect example of how microgrids can provide electricity supply in rural contexts that are isolated from electricity grids. However, even grid-connected businesses can benefit from microgrid technology.

This is exactly why Noble Property Fund, developers of Cedar Mill shopping centre in Clanwilliam, a rural town in the Cederberg region of the Western Cape in South Africa, approached SOLA Future Energy to help with their power supply needs. Initially, the developers had applied for a 500 kVA connection from Eskom to power the facility, but the parastatal was only able to approve half of their demand requirements due to local constraints to the grid.

Faced with a major supply shortage, the developers were forced to consider utilising noisy and expensive diesel generators to make up the shortfall. As an alternative, SOLA suggested the use of solar PV and batteries to make up for the shortage, and has subsequently been appointed to integrate a microgrid into the shopping centre. Consisting of a 851kWp solar PV system with a 700kWh lithium ion battery, the microgrid makes up for the power shortfall – allowing the mall’s development to continue.  

“Incorporating a microgrid into the shopping centre turned out to be a financially attractive solution when considering how much energy could be harvested and stored from solar PV,” said Mario Dos Reis, director of Leasing at Noble Property Fund. “The shopping centre will be a blessing for small business owners in the town looking for an accessible and safe location to trade”.

As such, although the mall already had grid connection, the solar PV microgrid enabled the building of the mall to go ahead. This mall will become an economic hub of activity in the mostly rural region, providing jobs and economic spinoffs to the local community. The cost-savings of the building owners will trickle down to tenants, and hopefully make businesses more profitable as a result.

Cedar Mill Mall goes solar

Entasopia Kenya, powered by solar microgrid

Microgrids in Africa: rethinking the centralised electricity grid

Think about it: just two decades ago, many African towns were barely accessible because of the lack of telephone line infrastructure to key development areas. Today, cellular technology has allowed communications to leapfrog telephone line technology and provide communications without expensive, centralised infrastructure.

Mobile technology in Africa

A similar argument can be made about electricity. Now that both solar PV and battery costs have reduced significantly, microgrid technology promises to be an opportunity for Africa to leapfrog traditional grid-based electricity – a typically fossil-fuel heavy, centralised mode of providing power. 

Africa is a uniquely positioned continent, because of its widely-dispersed nodes of development over large geographic areas. As a result of this, the costs of building electrical infrastructure over geographically large areas have typically inhibited electrification, leaving large parts of African countries without electricity – in fact, Africa remains the least electrified continent in the world with only 35% of the continent having access to electricity.

Much of Africa remains disconnected from electricity grids

Microgrid technology is inherently decentralised, as it operates as a smart grid on its own, smaller scale, often using wireless technology. A cornerstone of microgrid technology is solar PV and batteries, since they are deployable in decentralised areas and do not require massive infrastructure to function. Combined, microgrids would seem to carry immense potential for Africa.

Despite this, a report published on PV magazine found that only 1% of electricity investment in the 20 least electrified countries was spent on decentralised energy production, despite at least 40% of electrification being suitable for microgrid deployment in these countries. This presents a massive opportunity – both for the unelectrified communities, as well as for electricity developers in Africa. Microgrids could be a sustainable – and affordable – solution for energy access in Africa.

But are microgrids proven to work? Take an example of Entasopia, a small village in the south of Kenya. The village, disconnected from Kenya’s national electricity grid, is supplied power by a small solar PV microgrid.  This microgrid enables 60 homes, small businesses, and even a petrol station to run, making the area a hive of economic activity and enabling growth even in the remote area. With this technology, schools and clinics can access electricity and businesses can sprout up, enabling economic empowerment in previously isolated areas.

Entasopia Kenya, powered by solar microgrid

Entasopia, Kenya, powered by solar microgrid

The Robben Island solar PV microgrid is also a great example of converting an existing diesel generation system to a smart PV and battery coupled microgrid. Even though the island was already supplied by diesel generators, the cost of diesel meant that the addition of solar PV and batteries still made perfect business sense – it’ll pay itself back in about 5 years. The island’s activities – including the bustling harbour and desalination plant – are now powered almost entirely by clean energy, and the ecologically sensitive island is no longer affected by the diesel and noise emissions from the generators.

Robben Island solar PV microgrid

Robben Island solar PV microgrid

The fact that microgrids make business sense not only for completely disconnected communities but also for those with existing, fossil-heavy grids (such as Robben Island) show demonstrable effectiveness for further applications – such as mining. Mining activities can now rely on PV and battery coupled microgrids, where previously they relied on diesel generation. These microgrids provide a solution that can not only save mining operations money, but also reduce the environmental impact of the mining activity.

SOLA Future Energy is a proudly African company, and we believe in the potential that affordable, clean energy can bring for the whole continent. Despite its historically slower economic growth, we believe that Africa is in a unique position now, particularly because of the way in which new technologies can assist the continent to spur development. Get in touch with us to find out how microgrids could assist your business or community.

Solar mining in Africa

How the mining sector in Africa can benefit from solar energy

The mining sector is one of Africa’s largest, with much of the continent being richly endowed by mineral resources. However, the mining sector struggles in Africa compared to other regions in the world – partly because of economic and political uncertainty.

A key aspect to securing a long-term return in a mining operation  in Africa, therefore, is creating a stable, well-run operation which will encourage investment and diversify economic spin-offs for local communities. Energy supply is a key aspect of this, and it is important that energy supply is both affordable, secure and sustainable.  

Why is solar a relevant consideration for the African mining sector?

Continued pressure on cost minimisation in mining

The mining sector has taken a knock in recent years, particularly due to economic pressures from global markets. This has squeezed resources available for mining operations, increasing the pressure for efficient and slick operations. For energy-intensive mines (many mines spend up to 20% of their total input costs on energy), it is important that electricity supply is as cheap, and reliable, as possible.

Many mining operations in Africa are located remotely, with electricity only being provided by diesel gen-sets. Because diesel not only needs to be bought, but also transported to the site of the mine, this method of providing energy is extremely expensive and encompasses potential supply disruption risks – particularly in Africa, where road infrastructure is often unreliable.

Because of the falling costs of solar PV and batteries, microgrids are seen as a reliable solution for the electrification of Africa.  Microgrids offer a reliable electrical connection where there is no grid available, and/or the existing grid cannot output the required power and voltage. Properly programmed microgrids provide continuous, reliable power by switching sources seamlessly when needed. Over and above this, one of the cheapest microgrids can be formed from solar PV, battery storage, and gas to supplement supply. These microgrids can even be financed by third parties, resulting in immediate savings for the mining operation with no initial capex outlay.

Increased focus on sustainability and environmental impact of mines

Global interest in sustainability has caused reflection in the mining sector, which, despite providing much of the world’s economic activity, often has negative social and environmental impacts. On top of this, recent international codes and reporting standards, such as the Global Reporting Initiative, encourage mining companies to become increasingly transparent about their social and environmental impacts – and report on the “triple bottom line”.

For mining companies, reporting on their environmental footprint will include their greenhouse gas emissions, or “carbon footprint”.  

How companies report on their greenhouse gas emissions

Scope 1 emissions relate to a company’s direct combustion of fuel. In the case of a mining company, this would include any transport fuel used when transporting goods to and from the mine, as well as the diesel fuel burnt, if diesel generators are being used.

Scope 2 emissions relate to purchased electricity. In the case of a mine, any electricity that is generated by the national grid would be applicable here.

Scope 3 emissions relate to the supply chain emissions of the operation – whether incoming or outgoing. In the case of a mining operation, this would include emissions released in the processing, smelting or disposal of the mined products.

Depending on their commitment to transparency, sustainability reports could include reporting on scope one, two and three emissions. On top of this, shareholders expect a commitment to a reduction in the overall carbon footprint. Switching over to green energy is an important step for mining businesses to reduce both their scope 1 and 2 emissions.

Is solar risky for mining operations?

Avoiding operational risks is a key aspect of being successful in the mining industry, which is recognized as being traditionally quite conservative and risk-averse. Given that any downtime or disturbance to the operations of a mine can lead to very large financial losses, any risk associated with deploying new or untested technologies is not an option.

As such, historically, unfamiliarity with solar technology has made mine managers reluctant to implement solar solutions that could create significant cost savings. Yet increasingly the “proof of concept” for solar energy and the knowledge of successfully implemented systems is turning mining managers around to the benefits.

Solar is by now a mature technology that has been proven in several mining operational case studies around the world, and reliability of the systems can match and exceed what an existing diesel genset (or grid) offer. For example, a hybrid system in Western Australia has allowed the gold-copper mining operation to save 20% on diesel costs. Even a Russian precious metals mine is converting to solar energy, despite Russia’s low irradiance levels.

Also on the African continent, solar energy installations at mines are becoming more common, with an increasing number of solar systems being installed or considered at mines in Namibia, Botswana, Tanzania and Ghana. Such projects are often offered on a financed basis – for example, for a gold mine in Burkina Faso, signing a 15-year renewable energy Power Purchase Agreement (PPA) for 15 MW of solar power was the best option to save on operational costs.

SOLA Future Energy has designed and constructed hybrid solar-battery-diesel systems that have a wide applicability in the mining sector. Should you be involved in mining operations or its financial management, we are keen to meet to discuss your requirements on-site and execute a thorough feasibility assessment, and create a system design tailored to the specific operational conditions of your mine. Feel to reach out to our team members dedicated to mining here. SOLA Future Energy has also developed a solar feasibility tool to assist mines with creating a high-level assessment of the business case for solar at their operations. Click here to access the feasibility tool.