Microgrids or minigrids, small-scale power networks that can operate independently of the national grid, in SA are stepping in where big power utilities fail to.
The global microgrid market reached a value of $15.3bn in 2016 and is expected to grow to over $30bn by 2022, with a rate of return of about 12% over this time. According to a report by leading market research company IMARC Group, in SA, which has the highest energy demand in sub-Saharan Africa, Sola Future Energy is one of the companies leading the charge.
After completing the design and construction of a microgrid on Robben Island in 2017, the company was called in for a proposed microgrid for a mall in Clanwilliam, in the Western Cape, which was left in the lurch by Eskom.
The Cedar Mill Mall was launched amid much fanfare last month and is expected to create 300 jobs and become a hub of economic activity for the area.
Chris Haw, chairman of Sola Future Energy, says he believes the project could well become the poster child for communities located at the end of power transmission lines and wanting to develop their economies beyond what the public power utility can provide.
The mall microgrid integrates three power sources, all of which are managed by battery intelligence.
Unlike on Robben Island, which is cut off from SA’s power transmission network, the energy solution for the Cedar Mills Mall includes some power from the national grid. The developers turned to independent power production when Eskom informed them that it would meet only about half of the property’s power needs.
Additional to that are 2,580 solar panels with a capacity of 851kW installed on the mall roof as well as a 696 kWh lithium-ion battery, which will store energy and discharge in times of need, such as a power outage. Diesel generators are also part of the mix.
The developers, Noble Property Group, say incorporating a microgrid turned out to be a financially attractive solution when considering how much energy could be harvested and stored from solar PV. Five years ago, the Cedar Mill Mall solution would have been no solution at all. “A number of economic factors came in line,” said Haw.
For one, the price of battery storage has come down about 70%, making it viable.
The levelised (or average) cost of energy from microgrid systems now are at a level where they compete with Eskom, Haw says. The levelised cost is the net cost to install a renewable energy system divided by its expected energy output over its lifespan.
In a World Bank report, Africa’s Pulse, April 2018, the authors place a great deal of emphasis on minigrids, which, they say, “are a very interesting possibility for scaling up electricity availability in areas where grid extension is costly or can only be accomplished some ways into the future”.
Technical advances raise the question of the extent to which sub-Saharan Africa could “leapfrog” over the traditional stages of national grid-based electrification that took place in today’s advanced economies, through much greater reliance on microgrids, the report says.
Whether monolithic power utilities like Eskom are willing to allow competition into the energy sector is besides the point. Competition has arrived and in the Robben Island and Cedar Mill instances, it is providing a service that the utility cannot.
“Battery prices are going to come down. Solar prices will stay where they are if not drop a bit. The business case is only getting better and better,” Haw says. “Ultimately the economics will win — the consumer wants the cheapest kilowatt.”
[This story first appeared in Business Day newspaper. Read the online version at this link. ]