Clean Captive Installations in sub-Sahara Africa - Focus: Industrial clients in South Africa
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Clean Captive Installations in sub-Sahara Africa
Focus: Industrial clients in South Africa
Kick-off meeting presentation
FS-UNEP Collaborating Centre
November, 2019
Supported by:
based on a decision of the German Bundestag
Overview of project
Snapshot of the various stages in the project
Initiating the project Assistance from FS-UNEP Expected outcomes
1 3 6
Desk study Development of tools Implementing the best chosen
through research identifying business models showcase project and replicating the
in-house & consultative expertise selecting financing mechanisms model
2 4
Stakeholder consultation
scoping missions Identifying relevant & key partners
relationship building
5
Selection of replicable designs (best
model); designing selection criteria
for national showcase project
Design process to monitor and verify Understanding best practices & replicability
Awareness creation within both public and
performance of chosen model and showcase by increasing uptakes
private stakeholders, whose feedback will be
viability of said model for easy access to Help countries meet climate and
integrated into project design
public development goals of the Paris Agreement
2
Preliminary findings from the desk study
What have we understood so far
1
South Africa has an acute The national power utility Eskom has over R440 billion of debt due to problems in bill collection from
undersupply of electricity and its customers in recent years and ageing infrastructure
national power utility faces
financial crisis >85% of the country’s electricity is generated by coal power plants which are nearing the end of their lifetimes
2
Growth in local RE markets crucial Since 2011, capacity totalling 6GW has been procured from 92 utility-scale projects
to achieving its NDC targets for
2030 Implementing the proposed 2018 IRP will bring South Africa closer to it the upper-end of its 2030 NDC targets
3
Municipal support for SSEG fosters As of 2018, there were 165 municipal electricity distributors with own tariff structure
commercial and industrial sectors
(Preliminary findings from the desk study
What have we understood so far
1 South Africa has an acute The national power utility Eskom has over R440 billion of debt due to problems in bill collection from customers in
undersupply of electricity and its recent years and ageing infrastructure
national power utility faces financial
>85% of the country’s electricity is generated by coal power plants which are nearing the end of their lifetimes
crisis
The power situation South Africa's installed capacity as of 2018 (totaling 52,404 South Africa’s electricity supply & demand balance
MW) without imports or exports
Electricity market is
dependent on the
state-owned utility 270
Coal 37149
Eskom
Eskom‘s government Gas/ Diesel 3830 260
bailout - plans to
Storage 2912 250
restructure it by 2021,
by separating Eskom Hydro
Electricity (TWh)
2100 240
into Generation,
Transmission and Large Wind 1980 230
Distribution operations Nuclear 1860
220
South Africa still depends
mostly on coal plants Large Solar PV 1474
210
which do not comply with Other (CoGen Biomass Landfill) 499
environmental regulations 200
and are nearing the end of Dist. Gen. (1-10MW) 300
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
their lifetimes
CSP 300
Electricity demand has
steadily decreased in 0 10000 20000 30000 40000
recent years, among other
factors, mainly due to low Demand Production Production less losses
economic growth and rising Capacity (MW)
electricity tariffs
4Preliminary findings from the desk study
What have we understood so far
1 South Africa has an acute
The national power utility Eskom has over R440 billion of debt due to problems in bill collection from customers in
undersupply of electricity and its
recent years and ageing infrastructure
national power utility faces financial
crisis >85% of the country’s electricity is generated by coal power plants which are nearing the end of their lifetimes
2
Growth in local RE markets crucial to Since 2011, capacity totalling 6GW has been procured from 92 utility-scale projects
achieving its NDC targets for 2030 Implementing the proposed 2018 IRP will bring South Africa closer to it the upper-end of its 2030 NDC targets
Is there a need for captive RE? Eskom’s installed capacity and available capacity
In South Africa there are still cases of
multiple load shedding with Eskom’s Customer Demand Current Demand, 30
unplanned breakdowns being the main
contributor Diesel Plants (no fuel left), 2
Eskom's unplanned
Eskom Outages Maintenance, 5
The ageing infrastructure calls for new breakdowns, 17 Imported
Hydro, 1
build ups soon: RE as part of this build up
South Africa has both, the need as well as Supply Resource
Load-
Eskom's available capacity, 23 IPPs, 3
the demand for captive solar. Regulatory shedding, 4
uncertainty, however, holds back
implementation of large-scale projects 0 5 10 15 20 25 30 35
>1MW.
Power (Gigawatts)
5Preliminary findings from the desk study
What have we understood so far
1 South Africa has an acute
The national power utility Eskom has over R440 billion of debt due to problems in bill collection from customers in
undersupply of electricity and its
recent years and ageing infrastructure
national power utility faces financial
crisis >85% of the country’s electricity is generated by coal power plants which are nearing the end of their lifetimes
2
Growth in local RE markets crucial to Since 2011, capacity totalling 6GW has been procured from 92 utility-scale projects
achieving its NDC targets for 2030 Implementing the proposed 2018 IRP will bring South Africa closer to it the upper-end of its 2030 NDC targets
3
Municipal support for SSEG fosters As of 2018, there were 165 municipal electricity distributors with own tariff structure
commercial and industrial sectors
Under REIPPPP, c. 6GW from IPPs has been successfully procured
(Preliminary findings from the desk study
What have we understood so far
4
Many of the major commercial banks have funded large utility-scale solar PV projects as part of REIPPPP; variety of
RE financing is well-established for financing mechanisms offered for rooftop-scale installations, loan products for RE projects by four main retail banks
some market segments
Nonetheless, scalable financing solutions that lower the upfront costs for most captive customers are still lacking
Industry sectors and power consumption
RE financing sector is well-established with major commercial banks funding large utility-scale projects as part of REIPPPP.
Moreover there are five commercial banks (Nedbank, FNB/RMB, Standard Bank, Absa, Investec) as well as public banks
which include local development finance institutions such as the IDC an the DBSA
South Africa’s five main commercial banks have multiple loan products to assist with financing RE projects. Though,
rates tend to be fairly high relative to international standards as they are typically tied to the local prime lending rate (e.g.
10.25% in July 2019)
With the help of international development finance institutions a number of donor and development agency programs for RE
have been introduced. AFD targeted the private EE and RE sectors and KfW, as well as RMB, launched South Africa’s first
debt-fund focused on small RE-projects (Stakeholder consultations
What information do we need to streamline the process of installing captive PVs
1 … through customised and tailored approach in reaching out to potential stakeholders
South Africa has an acute
undersupply of electricity and its
national power utility faces
financial crisis
Bridge gap in data and information…
2
Growth in local RE markets crucial
to achieving its NDC targets for
2030
3
Municipal support for SSEG fosters
commercial and industrial sectors
(Streamlining the process
How does the FS-UNEP collaborating centre help?
1
A. Ownership model C. Equipment leasing model Financing mechanisms
Development of tools B. ESCO financing model
identifying business models
selecting financing
mechanisms
2
Associations/Public Sector Banking sector Financial Institutions
Identifying relevant & key
partners RE private sector Power sector Private Renewable Sector
3
Currently, there is a lack of monitoring and verification of installed captive PV projects
Selection of replicable designs There is also not enough publicly available information explaining the advantages of captive
(best model); designing solar PV and potential risks that exist (e.g. for industrial users: payback period of installations,
savings per year, etc.)
selection criteria for national Implementing one project to showcase it as a replicable model will improve transparency in
showcase project this captive PV market. Monitoring performance of the selected model will prove it to be used as
a viable design for other industrial users
9Final expected outcomes and timeline
Project will run from 2019 - 2023
2019
Component 1: Baseline studies and awareness
raising
2019 - 2020
Component 2: Economic and financial tools and
assessments
2020 - 2023
Component 3: Realisation of one showcase project
per country
2019 – 2023
Component 4: Knowledge dissemination and
outreach
10Thank you for your patience! For further information please visit: Tobias Panofen Madhumitha Madhavan www.captiverenewables-africa.org Email: t.panofen@fs.de Email: m.madhavan@fs.de Supported by: based on a decision of the German Bundestag
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