low and middle income rooftop solar pv approaches … · innovative approaches need to be designed...
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LOW AND MIDDLE INCOME ROOFTOP SOLAR PV APPROACHES IN SOUTH AFRICA
Slide deck – summary and recommendations
29 January 2018
Project background
2
Project purpose and objectives
Purpose: Identify and pilot promising policy and technology
approaches to make rooftop PV accessible to more of the South African population
Objectives:
• Determine suitable approaches for deployment of solar PV initiatives targeting low- and middle-income households
• Consult with stakeholders
• Identify potential strategic partners
• Recommend an implementation plan
3
Setting the scene
4
Study boundary and principles
1. Consider opportunities for greenfield and brownfield projects
2. Draw on local and international experience
3. Target low- and middle-income HHs with existing connection to the grid▪ Focus on initiatives that provide economic benefits to HHs, rather than a
mere improved access to electricity
4. Consider market-driven approaches:▪ Promote ownership
▪ Systems needs to be paid off by HHs one way or another - not a giveaway
▪ Maintenance costs to be paid by HHs
5. Take cognisance of affordability levels of targeted HHs
5
TARGET MARKET PROFILES AND BARRIERS OF ADOPTIONS
Low-income HH
6
TARGET MARKET PROFILES AND BARRIERS OF ADOPTIONS
Middle-income HH
7
Key considerations
8Low income market will not scale or develop under the same incentives
structures designed for the middle to high-income market
Targeted, intentional incentives required
Innovative approaches need to
be designed
Accessibility and affordability
• Deep energy cost savings
• Direct support
Community engagement
• Putting communities at the center
• Partnering with local organisations
• Community ownership
Consumer protection
• Protection from predatory lending/exploitation for financial gain
Sustainability and flexibility
• Encourage long-term market development
• Be flexible to accommodate changes in conditions an circumstances over time
Compatibility and integration
• Do not undermine existing RE and EE programmes
• Complement and be integrated with existing programmestargeting low-income HH
KEY SUCCESS FACTORS
Reviewed international case studies
9 Tunisia’s on Bill Financing Programme
China’s Solar Energy for Poverty Alleviation Programme (SEPAP)
India’s Rent-a-Roof Programme
Mexico’s Subsidised Solar Rooftop PV System
RISE initiativeSASH/MASH programme
10
Tunisia’s on Bill Financing Programme
China’s Solar Energy for Poverty Alleviation Programme (SEPAP)
India’s Rent-a-Roof Programme
Mexico’s Subsidised Solar Rooftop PV System
Purpose/objective of the initiative
• Provide access to more affordable electricity• Reduce subsidy burden born by the national distributor• To improve energy security in Tunisia (demand > supply)
Implementing agent
Tunisian government via The National Agency for EnergyManagement (ANME)
Target groupLow income, underserved, residential households eligible for 1kWp – 2kWp solar PV systems
Approach
• System installations were funded through credit from a bank and subsidies from the government:• 30% subsidy on the system• 70% loan at low interest rate over seven years
• Systems were designed for self-sufficiency; excess electricity was “banked”, i.e. NET METERING
• Distribution company paid for bi-directional metering installation
• Authorised installers were responsible for applications on behalf of willing consumers
• Loan repayments were guaranteed through payments by distribution company’s billing infrastructure• Monthly repayments – lower than electricity bills
Replicability in SA
• Hugely dependent on subsidy• Different energy mix to Tunisia and relative cost of
electricity – motivation and financial model very different • Similar rollout model (and similar challenges) as with SA
SWH subsidy program, though ‘on bill’ important mechanism
MASH programme
11
Purpose/objective of the initiative
• Long-term goal - making its capital, Gandhinagar a 100% solar powered city
• Starting point - 5MW solar rooftop public-private partnership project
Implementing agent
• Provincial government of Gujarat• The International Finance Corporation
Target group• Public buildings (schools, hospitals and offices)• Private residences
Approach
• A Public Private Partnership through 25 year-concession• Implemented by two project developers
o SunEdison and Azure Power• Build, own, operate model (BOO)• About 500 private residences receive rental income form
hosting the panelso Residential systems – 1 kW in size
• Generated electricity is sold to the distribution company at Feed-In-Tariff
Replicability in SA
• Viability for a low-income households is a concern:o Roof size (India’s system required 240 - 320 sq m of
rooftop space)o Roof ‘s structural integrity o Theft and vandalismo Selection process
Tunisia’s on Bill Financing Programme
China’s Solar Energy for Poverty Alleviation Programme (SEPAP)
India’s Rent-a-Roof Programme
Mexico’s Subsidised Solar Rooftop PV System
MASH programme
12
Purpose/objective of the initiative
• To alleviate energy poverty in remote areas of China• To provide a market for solar PV manufacturers during a
slump in demand
Implementing agent
National Energy Administration (NEA) and State Council Leading Group Office of Poverty Alleviation and Development (CPAD)
Target groupPoor rural communities especially in the less developed region of Western China e.g. the Tibetan Plateau (2 million HHs in 3 5000 villages)
Approach
• Fully subsidised programme (US$4 billion)• Funding was made available through CSR of companies
and two development banks• No investigation of local needs - poor consultation with
beneficiaries • No planning and no provision for maintenance • Benefits to HHs were a fraction to what was planned
originally
Replicability in SA
• Highly capital intensive – SA can not afford such programmes
• Not a sustainable solution • Limited benefits to the targeted groups
Tunisia’s on Bill Financing Programme
China’s Solar Energy for Poverty Alleviation Programme (SEPAP)
India’s Rent-a-Roof Programme
Mexico’s Subsidised Solar Rooftop PV System
MASH programme
13
Purpose/objective of the initiative
• Largest domestic electricity subsidy amongst OECD countries
• Goal - phase out the subsidies without affecting the living standards
• 27.1 GW of distributed generation through the installation of rooftop solar panels
Implementing agent
The Mexican Energy Secretariat (FFE), SENER, supported bythe Mexican Climate Initiative (ICM)
Target group • 70% homes over 15 years (25.5 million people)
Approach
• Funding through loans from DFIs• Solar panels are bought in bulk• Regional auctions to install and maintain systems• Case for HHs:
• Solar PV systems are subsidised - 80% initially (declined to 30% by 2030)
• A low-interest long-term loan to buy the system• Repayment - lower than current electricity bill• Selling electricity back to the grid • No longer eligible for government electricity subsidy
• Breakeven – nine years • Funds not paid through subsidies are used to invest in
more systems
Replicability in SA
• Can be replicated among low- and middle-income HHs• Limited current subsidisation of low-income HHs • Small consumption levels among low-income HHs• Financing and regulatory hurdles • Policy risk
Tunisia’s on Bill Financing Programme
China’s Solar Energy for Poverty Alleviation Programme (SEPAP)
India’s Rent-a-Roof Programme
Mexico’s Subsidised Solar Rooftop PV System
MASH programme
14
Purpose/objective of the initiative
• To provide qualifying single-family homeowners with access to solar technology and reduce their electricity bills
• Provide green jobs training, employment, and community engagement opportunities
Implementing agent
Grid Alternatives (NPO)
Target group • Owner-occupied, deed-restricted, single-family housing
Approach
• Funding:o Funded by the Investor-Owned Utilities o Prescribed by a passed law, which forces private
utilities to allocate certain funds to social programmes (10%)
o Budget – US$54 million• At the start of 2017, 6 402 systems were installed
o Fully subsidised 1kW PV systems to “very low-income households” HHI <50% Area Medium Income - AMI) (a maximum of 20% of the total budget)
o Highly subsidized systems (up to 5kW) to low-income households (HHI 50-80 % of AMI)o Funding gaps bridged through personal
finance, sponsorships, or donations
Replicability in SA
• The system will need to be largely fully subsidised considering the affordability levels of the low income HHs
• Other concerns:o Theft and vandalismo Selection process
Tunisia’s on Bill Financing Programme
China’s Solar Energy for Poverty Alleviation Programme (SEPAP)
India’s Rent-a-Roof Programme
Mexico’s Subsidised Solar Rooftop PV System
SASH programme
Reviewed domestic case studies
15
SunExchange initiative
City Power PV Mini-grid Supply Augmentation for Grid Constrained Informal Areas
iShack project NMBM off-grid pilot project
16
Purpose/objective of the initiative
• To unlock the scaling potential of crowd-sourcing to fund mid-sized (15-100kWp) grid-tied or off-grid Solar PV installations
Implementing agent
Private start-up business, led by Abraham Cambridge
Target groupSchools, villages, businesses, off-grid conservation and tourism initiatives
Approach
• SunExchngae – intermediary linking private investors (from R100 and up) with organisations that need fixed-price long-term electricity supply
• Investors purchase solar panels (15-100Wp) and lease them to the end-user over a 20-year period:o Decent rate of return to the lessor and o Fixed prices of electricity to end-user (10% savings)
SunExchange
NMBM off-grid pilot project
iShack project
City Power PV Mini-grid Supply Augmentation for Grid Constrained Informal Areas
17
Purpose/objective of the initiative
• Develop and demonstrate a model for underserviced communities
• Develop ‘green’ skills and create jobs
Implementing agent
The Sustainability Institute Innovation Lab (Pty) Ltd (SIIL)
Target groupLow-income HHs in large urban and peri-urban informal settlements who are entitled to 50-100kWh of free electricity/month
Approach
• Applications:o An off-grid Solar Home System o Informal settlement in Stellenbosch
o Size – 50-70Wp systemo Funding :
o End-users opt for a system voluntaryo End-users pay a joining fee and a deposito Municipality covers overhead costs through FBE
(equivalent to 100kWh)o Help-to-buy pilot is underway (transitional stage)
Replicability
SunExchange
NMBM off-grid pilot project
iShack project
City Power PV Mini-grid Supply Augmentation for Grid Constrained Informal Areas
18
Purpose/objective of the initiative
• Address the energy needs of informal settlements with no grid connection
Implementing agent
NMBM Electricity Department
Target group2 700 unelectrified HHs in informal settlements far from the grid
Approach
• Context:o 80Wp – 100Wp PV panel, battery, charge controller,
lights & socket (all DC system)o Costs ~R9500 per household
• Funding:o Run initially from DoE grant funding. o Applied for more funds, and the DoE has directed
one of the Stand-Alone PV concession holders to install in NMBMM urban areas
o No support during usage – for maintenance and replacement of parts
SunExchange
NMBM off-grid pilot project
iShack project
City Power PV Mini-grid Supply Augmentation for Grid Constrained Informal Areas
19
SunExchange
NMBM off-grid pilot project
iShack project
City Power PV Mini-Grid Supply Augmentation for Grid Constrained Informal Areas
Purpose/objective of the initiative
• To supply grid constrained informal communities with additional power from a PV mini-grid with storage
Implementing agent
City Power (Utility of City of Johannesburg)
Target groupHighly grid constrained informal communities supplied by 1MVA distribution transformer - Thembalihle (7306 dwellings) and Lawley Station (2100 dwellings) informal settlements
Approach
• Fully funded by the City Power• Around 119 clusters have been installed
o Each cluster – 6 houses (recipients of FBE)o 3 kWp PV mini-grid with battery storage
o The municipality own and maintain the systemso Some challenges:
o Affordability and willingness to pay - untestedo Integration with LPG (not yet implemented - for
cooking)o Acceptance of “limited power” by community o Overload of circuitso Admin burden
Other initiatives
1. Project Sunshine (Dieplsot)
2. Zonke Energy off-grid pilot in Jabula, Phillippi, Cape Town
3. eThekwini solar rooftop PV initiative ▪ In partnership with the CISR
▪ Aim – capacitate the municipality to prepare for higher uptake of PV under controlled environment
4. GreenCape▪ Initial pilot on unelectrified HHs
▪ System: ~180Wp solar PV and few kgs of LPG
▪ Financial mechanisms:
– Property Assessed Clean Energy
– Pay as You Save
▪ Role – project management
20
KEY FINDINGS
1. Initiatives/case studies differ significantly: ▪ Targeted groups (individuals, home groups, public
buildings)▪ Approaches
2. Two commonalities:▪ Poor/low income households ▪ Partially or fully subsidised initiatives (with one exception)
3. The composition and objectives are driven by:▪ Domestic/local policy (i.e. RE uptake)▪ Domestic economic situation (electricity shortage, rising
costs of electricity, sluggish demand for PV panels)
4. Key funding sources: ▪ Repurposed electricity subsidies
– To finance discounts on solar PV systems to make them more affordable/increase ROI
▪ Green bank▪ On-bill/recovery financing
International case studies and literature review
21
KEY FINDINGS
1. Dominant focus on low-income unelectrified households ▪ Expensive to connect to the grid – offers cheaper
alternative▪ In line with government objectives ▪ Easier to obtain funding
2. Two major funding sources:▪ Partially or fully subsidised initiatives▪ Crowd funding
3. The composition and objectives are not integrated into any broader initiative targeting low-income households
4. Implementing agents comprise of:▪ NGO’s and philanthropic organisations▪ Municipalities and local government agencies
Domestic case studies and literature review
22
Approaches and opportunities for partnership
23
The case for low-income rooftop PV in South Africa?
Modelling findings and other explorations
24
Approach
• Drawing on existing feasibility assessments (limited)
• What are the conditions under which there is a financial case?• For households
• What are the financing options?
• For municipalities
• Is there a social and economic case?
• Where are the areas of opportunity?
25
26Factors to be considered in the municipal case
…so what savings/subsidy (if any) could the municipality direct to PV system costs?
Reduced sales (loss)
PV export compensation (loss)
Reduced bulk (Megaflex) purchase (gain)
Resale of PV export (gain)
27Factors to be considered for the household case
Reduced purchases (gain)
PV export compensation (gain)
…so what savings could be used for PV system loan repayment?
28Factoring in storage…
…where is the cost of megaflex higher than the cost of storage?
29
MODEL
1 year of hourly solar data(location-based)
vs1 year of hourly HH demand
(‘constructed’ low-Income demand profile)
HOUSEHOLD LOAD PROFILES
Average load profiles (above) don’t reflect the PV export situation adequately - better to use ‘typical’ profile for a household
30
CURRENT SUBSIDIES FOR LOW-INCOME HOUSEHOLDS
Graph Source: Briefing Paper 3 - Implications of electricity demand and supply dynamics for South Africa’s cities (Eberhard et al 2015)
31
Net profits (provide cross subsidies to low consumers)
Net losses (cross subsidised from
higher consumers)
Costs (losses) made up of:
- Mostly grid operation & maint, billing & admin ~R500/mth (doesn’t change with PV installation)
- kWh costs (losses at winter peak times largely)
- FBE costs (~R50/mth)
Test Case: Tshwane
Low-income: 350kWh – 550kWh/monthSize of installation: 2kWpCost of PV system/Wp: R20
32
Electricity costs - times of the day and seasons
33
84c
R2.59
58c 78c
37c
43c
Tshwane Tariffs
34
Tshwane Municipal Tariffs: YEAR 2017/2018 (excl. VAT)
Range Threshold Unit cost
kWh kWh cents
1-100 100 132.7
101-400 400 155.3
401-650 650 169.2
>650 182.4
Tshwane Municipal Feed-in-Tariffs
Fixed Rate 150 R/month
Export Tariff
Flat 10 cents/unit
Time Of Use n/a
Inclined Block Tariff n/a
low
Demand Profiles
35
550kWh/month
350kWh/month
Because of low self consumption levels, viability
very dependant on export tariff
Model assumptions and variables
36 VARIABLES/ASSUMPTIONS ADJUSTABLE
PV installation size (Wp): 2,000
Installed cost of PV (R/Wp) R20
Average monthly HH use (kWh) 350
Time-controlled Water Heating? n
With Centralised Storage? n
Cost of Storage (cents/kWh) 2017 154
Municipal Savings per kVA avoided during peak R20
Eskom & Munic Annual Tarrif Escalation (above CPI) 4.0%
Cost of Capital (above CPI) 3.0%
Capital Repayment Term (yrs) 15
Annual PV Degradation Rate 0.7%
PV Hardware Maintenance Insurance/month R55
Installation Size: 2.0kWp
Household Consumption
Pool Pump? (timed for mid-day)
with/without timed mid-day water heating
Eskom & Munic annual escalations (above CPI)
Capital recovery period (years)
Cost of Capital (above CPI)
FIT/unit (flat rate)
SSEG Fixed chargeCost of Municipal Storage/kWh
RESULTSSelf consumption (% of monthly consumption)
Surplus (% of monthly consumption)
MAX. CONTRIBUTION TO COST OF CAPITAL FROM SAVINGS OR INCREASED INCOME Rands % Rands % Rands % Rands % Rands % Rands %
CAPITAL REQUIRED R40,000 R40,000 R40,000 R40,000 R40,000 R40,000
Maximum HOUSEHOLD contribution (NPV of savings) R31,914 80% R11,086 28% R18,625 47% R49,917 125% R46,436 116% R31,914 80%
Maximum MUNICIPALITY contribution (NPV of gains) R1,297 3% R22,125 55% R12,954 32% -R16,706 -42% -R511 -1% R7,201 18%Shortfall -R6,789 -17% -R6,789 -17% -R8,421 -21% -R6,789 -17% R5,925 15% -R885 -2%
NO
VARIABLES
20% 20% 20% 20%
3% 3% 3% 3%
Mid-Income
550kWh/month
4%
15
3%
69
without
R229No storage
69c
without
4%
15
69
R150R1.54
NO
without
R150No storage
NO
without
4%
20
20% 20%
NO
4%
15
69
R150No storage
NO
without
4%
15
10c
R150No storage
NO
without
4%
15
3%
120c
R150No storage
33% 33% 33% 33% 33% 33%
37
Subsidies needed
Some results – Mid-Income(yellow cells show key variables changed)
Installation Size: 2.0kWp
Household Consumption
Pool Pump? (timed for mid-day)
with/without timed mid-day water heating
Eskom & Munic annual escalations (above CPI)
Capital recovery period (years)
Cost of Capital (above CPI)
FIT/unit (flat rate)
SSEG Fixed chargeCost of Municipal Storage/kWh
RESULTSSelf consumption (% of monthly consumption)
Surplus (% of monthly consumption)
MAX. CONTRIBUTION TO COST OF CAPITAL FROM SAVINGS OR INCREASED INCOME Rands % Rands % Rands % Rands % Rands % Rands %
CAPITAL REQUIRED R40,000 R40,000 R40,000 R40,000 R40,000 R40,000
Maximum HOUSEHOLD contribution (NPV of savings) R31,914 80% R11,086 28% R18,625 47% R49,917 125% R46,436 116% R31,914 80%
Maximum MUNICIPALITY contribution (NPV of gains) R1,297 3% R22,125 55% R12,954 32% -R16,706 -42% -R511 -1% R7,201 18%Shortfall -R6,789 -17% -R6,789 -17% -R8,421 -21% -R6,789 -17% R5,925 15% -R885 -2%
NO
VARIABLES
20% 20% 20% 20%
3% 3% 3% 3%
Mid-Income
550kWh/month
4%
15
3%
69
without
R229No storage
69c
without
4%
15
69
R150R1.54
NO
without
R150No storage
NO
without
4%
20
20% 20%
NO
4%
15
69
R150No storage
NO
without
4%
15
10c
R150No storage
NO
without
4%
15
3%
120c
R150No storage
33% 33% 33% 33% 33% 33%
Some results – Mid-Income(yellow cells show key variables changed)
38
Subsidies needed
Installation Size: 2.0kWp
Household Consumption
Pool Pump? (timed for mid-day)
with/without timed mid-day water heating
Eskom & Munic annual escalations (above CPI)
Capital recovery period (years)
Cost of Capital (above CPI)
FIT/unit (flat rate)
SSEG Fixed chargeCost of Municipal Storage/kWh
RESULTSSelf consumption (% of monthly consumption)
Surplus (% of monthly consumption)
MAX. CONTRIBUTION TO COST OF CAPITAL FROM SAVINGS OR INCREASED INCOME Rands % Rands % Rands % Rands % Rands % Rands %
CAPITAL REQUIRED R40,000 R40,000 R40,000 R40,000 R40,000 R40,000
Maximum HOUSEHOLD contribution (NPV of savings) R31,914 80% R11,086 28% R18,625 47% R49,917 125% R46,436 116% R31,914 80%
Maximum MUNICIPALITY contribution (NPV of gains) R1,297 3% R22,125 55% R12,954 32% -R16,706 -42% -R511 -1% R7,201 18%Shortfall -R6,789 -17% -R6,789 -17% -R8,421 -21% -R6,789 -17% R5,925 15% -R885 -2%
NO
VARIABLES
20% 20% 20% 20%
3% 3% 3% 3%
Mid-Income
550kWh/month
4%
15
3%
69
without
R229No storage
69c
without
4%
15
69
R150R1.54
NO
without
R150No storage
NO
without
4%
20
20% 20%
NO
4%
15
69
R150No storage
NO
without
4%
15
10c
R150No storage
NO
without
4%
15
3%
120c
R150No storage
33% 33% 33% 33% 33% 33%
Some results – Mid-Income
39
Attractive tariff to incentivise households (munic loss)
Installation Size: 2.0kWp
Household Consumption
Pool Pump? (timed for mid-day)
with/without timed mid-day water heating
Eskom & Munic annual escalations (above CPI)
Capital recovery period (years)
Cost of Capital (above CPI)
FIT/unit (flat rate)
SSEG Fixed chargeCost of Municipal Storage/kWh
RESULTSSelf consumption (% of monthly consumption)
Surplus (% of monthly consumption)
MAX. CONTRIBUTION TO COST OF CAPITAL FROM SAVINGS OR INCREASED INCOME Rands % Rands % Rands % Rands % Rands % Rands %
CAPITAL REQUIRED R40,000 R40,000 R40,000 R40,000 R40,000 R40,000
Maximum HOUSEHOLD contribution (NPV of savings) R31,914 80% R11,086 28% R18,625 47% R49,917 125% R46,436 116% R31,914 80%
Maximum MUNICIPALITY contribution (NPV of gains) R1,297 3% R22,125 55% R12,954 32% -R16,706 -42% -R511 -1% R7,201 18%Shortfall -R6,789 -17% -R6,789 -17% -R8,421 -21% -R6,789 -17% R5,925 15% -R885 -2%
NO
VARIABLES
20% 20% 20% 20%
3% 3% 3% 3%
Mid-Income
550kWh/month
4%
15
3%
69
without
R229No storage
69c
without
4%
15
69
R150R1.54
NO
without
R150No storage
NO
without
4%
20
20% 20%
NO
4%
15
69
R150No storage
NO
without
4%
15
10c
R150No storage
NO
without
4%
15
3%
120c
R150No storage
33% 33% 33% 33% 33% 33%
Some results – Mid-Income
40
Longer loan period benefits household
Storage improves the case for the municipality
Installation Size: 2.0kWp
Household Consumption
Pool Pump? (timed for mid-day)
with/without timed mid-day water heating
Eskom & Munic annual escalations (above CPI)
Capital recovery period (years)
Cost of Capital (above CPI)
FIT/unit (flat rate)
SSEG Fixed chargeCost of Municipal Storage/kWh
RESULTSSelf consumption (% of monthly consumption)
Surplus (% of monthly consumption)
MAX. CONTRIBUTION TO COST OF CAPITAL FROM SAVINGS OR INCREASED INCOME Rands % Rands % Rands % Rands %
CAPITAL REQUIRED R40,000 R40,000 R40,000 R70,000 R70,000
Maximum HOUSEHOLD contribution (NPV of savings) R30,023 75% R22,906 57% R48,138 125% R54,339 78% R79,571 114%
Maximum MUNICIPALITY contribution (NPV of gains) R2,843 7% R15,407 39% -R13,626 -34% R6,777 10% -R15,356 -22%Shortfall -R7,134 -18% -R1,687 -4% -R5,488 -14% -R8,884 -13% -R5,785 -8%
23%
61%
3%
15
NO
without
4%
15
3%
VARIABLES
33% 23% 26%
R150R1.54
69
R150No storage
26%
69
3% 3%
NO
without
4%
without
4%
15
3%
NO
with
4%
15
69
R150No storage
3.5kWpLow-Mid Income
350kWh/month
NO
without
4%
15
NO
69c
0No storage
69
0No storage
51% 61% 121% 121%
41
Some results – Mid-Low Income
Subsidies needed
Installation Size: 2.0kWp
Household Consumption
Pool Pump? (timed for mid-day)
with/without timed mid-day water heating
Eskom & Munic annual escalations (above CPI)
Capital recovery period (years)
Cost of Capital (above CPI)
FIT/unit (flat rate)
SSEG Fixed chargeCost of Municipal Storage/kWh
RESULTSSelf consumption (% of monthly consumption)
Surplus (% of monthly consumption)
MAX. CONTRIBUTION TO COST OF CAPITAL FROM SAVINGS OR INCREASED INCOME Rands % Rands % Rands % Rands %
CAPITAL REQUIRED R40,000 R40,000 R40,000 R70,000 R70,000
Maximum HOUSEHOLD contribution (NPV of savings) R30,023 75% R22,906 57% R48,138 125% R54,339 78% R79,571 114%
Maximum MUNICIPALITY contribution (NPV of gains) R2,843 7% R15,407 39% -R13,626 -34% R6,777 10% -R15,356 -22%Shortfall -R7,134 -18% -R1,687 -4% -R5,488 -14% -R8,884 -13% -R5,785 -8%
23%
61%
3%
15
NO
without
4%
15
3%
VARIABLES
33% 23% 26%
R150R1.54
69
R150No storage
26%
69
3% 3%
NO
without
4%
without
4%
15
3%
NO
with
4%
15
69
R150No storage
3.5kWpLow-Mid Income
350kWh/month
NO
without
4%
15
NO
69c
0No storage
69
0No storage
51% 61% 121% 121%
42
Some results – Mid-Low Income
Storage improves the case for the municipality
Installation Size: 2.0kWp
Household Consumption
Pool Pump? (timed for mid-day)
with/without timed mid-day water heating
Eskom & Munic annual escalations (above CPI)
Capital recovery period (years)
Cost of Capital (above CPI)
FIT/unit (flat rate)
SSEG Fixed chargeCost of Municipal Storage/kWh
RESULTSSelf consumption (% of monthly consumption)
Surplus (% of monthly consumption)
MAX. CONTRIBUTION TO COST OF CAPITAL FROM SAVINGS OR INCREASED INCOME Rands % Rands % Rands % Rands %
CAPITAL REQUIRED R40,000 R40,000 R40,000 R70,000 R70,000
Maximum HOUSEHOLD contribution (NPV of savings) R30,023 75% R22,906 57% R48,138 125% R54,339 78% R79,571 114%
Maximum MUNICIPALITY contribution (NPV of gains) R2,843 7% R15,407 39% -R13,626 -34% R6,777 10% -R15,356 -22%Shortfall -R7,134 -18% -R1,687 -4% -R5,488 -14% -R8,884 -13% -R5,785 -8%
23%
61%
3%
15
NO
without
4%
15
3%
VARIABLES
33% 23% 26%
R150R1.54
69
R150No storage
26%
69
3% 3%
NO
without
4%
without
4%
15
3%
NO
with
4%
15
69
R150No storage
3.5kWpLow-Mid Income
350kWh/month
NO
without
4%
15
NO
69c
0No storage
69
0No storage
51% 61% 121% 121%
43
Some results – Mid-Low Income
No significant benefit for oversized PV system
Business case for households is precarious at best
2kWp with HHs consumption at 350-550 kWh pm▪ Break-even can be achieved if:
– Solar output is high
– Favourable long-term financing options are available
– Above CPI grid-electricity tariff escalation expected
– Ideal roof orientation
▪ HHs would need to benefit financially from the start:– Savings on HHs’ utility bills should be from Month 1 to get the
necessary uptake
– Downside: longer repayment period and more expensive financing
44
Business case for municipalities without 3rd party support is weak; could be improved with storage 1. Setting SSEG tariffs can assist municipalities to avoid revenue losses
▪ Care should be take to determine the tariff – it should not be punitive for low and middle-income HHs
2. Subsidies are required to make the price of feed-in units paid by municipalities financially attractive for HHs▪ Municipalities can not pay for feed-in units above the Eskom’s tariffs during off
peak hours
▪ Third party subsidies need to be sought, including consideration of climate change and/or industry development indirect benefits to be achieved
3. Targeting individual HHs may not be the most cost-effective and equitable approach
4. Using storage to reduce purchases from Eskom during winter peak-demand is potentially attractive ▪ Will need to serve a greater community
▪ Will need to address more than avoidance of peak Eskom tariffs
45
Options to consider
Based on a workshop conducted in November 2017
46
Key opportunities
47O1: Embedded solar PV ‘farms’ and storage installations in local distribution areas
O2: Solar PV on apartment blocks
• Municipal –owned PV system installed at local secured electricity depot, with storage
• Installed, owned and operated by the LM with local community’s shareholding scheme
• Equitable distribution of socio-economic benefits to the localcommunity
• Collaboration opportunities with the private sector• Reduced installation and maintenance costs• Local business stimulus and training and local job creation
potential Grid constraints reduced; upgrades deferred• The potential for centrally raised finance for a number of such
installations• Can help stabilise electricity prices for the municipality and
customers
• Municipalities do not have experience with such installations• Municipal capacity to operate such a plant is not in place• Local benefits may not be direct
Pros
Cons
Key opportunities
48O1: Embedded solar PV ‘farms’ and storage installations in local distribution areas
O2: Solar PV on apartment blocks
• Installation of solar PV SSEG on low- and middle-income apartment blocks in cities
– Social or affordable housing projects
– Privately-owned dwellings
• Reduced installation and maintenance costs• Support stabilisation of electricity costs for households (as
national grid prices increase)• Maintenance consistency• Potential local job creation (operation and maintenance)• Carbon reduction for municipality• Could be paired with storage in grid constrained areas• Improved security of infrastructure
• Financial and ownership model untested• Requires adequately orientated roof-spaces (limiting feasibility
for existing buildings)
Pros
Cons
Other opportunities
49 Opportunity Prerequisite/Condition/Enabler
1Direct market-driven SSEG implementation in low-to middle-income areas
• Solar PV price decrease• Appropriate SSEG fixed charge
2Larger solar PV SSEG systems on rooftops of low to middle-income household dwellings
• Carefully designed tariffs• Ownership considerations• Affordable and innovative
financing schemes
3 Systems with storage in grid-constrained areas • Fast-decreasing storage costs
4Solar Pv as a first-phase electrification scheme under national housing policy for “phased in-situinformal settlement upgrading”
• Small installations (400-800Wp)• Use of subsidies for FBE• Initially accompanied with
battery storage and a “grid-ready” inverter
5Greenfield development without access to the grid at the time of development
• Buy-in from developers and potential owners
Recommendations
1. Further develop the financial and socio-economic case for PV ‘farm’ and storage installations in local distribution depots
2. Further explore the implementation of SSEG on low to middle income apartment blocks
3. Periodically evaluate the feasibility of SSEG on low to middle-income household rooftops
4. Periodically draw together the work of the many stakeholders active in this area
50
Acknowledgements South African Local Government Association (SALGA), the Council of Scientificand Industrial Research (CSIR), the Development Bank of Southern Africa (DBSA),the Department of Economic Development and Tourism (DEDT), the Departmentof Environmental Affairs (DEA), Gender CC, Eskom, GreenCape, National Treasury,the National Energy Regulator (NERSA), South African Photovoltaic IndustryAssociation (SAPVIA), Centre for Renewable and Sustainable Energy Studies(CRSES) at Stellenbosch University, the City of Tshwane, Department of Energy(DOE), SA-LED, Africa Business Concept, the Western Cape Government, ABSA,South South North (SSN), and the City of Cape Town
51
52
Thank you
Christopher Gross
+27 (0) 12 423 7953
Elena Broughton
+27 (0) 12 342 8686
Mark Borchers
+27 (0) 21 702 3622
Damian Conway