Johannesburg - Increasing the proportion of energy South Africa generates from solar photovoltaic (PV) cells could help it lower the price of electricity beyond 2020 as the renewable power could potentially cost half of Eskom’s coal-powered electricity, which is expected to reach R1.69 a kilowatt-hour (kWh) then.
A report by Frost & Sullivan that compares solar PV to other energy sources concludes that it could be the cheapest generating technology in South Africa in 2020, costing between 74c/kWh and R1.36/kWh to produce power.
The report, which was commissioned by the SA Photovoltaic Industry Association (Sapvia), shows that PV costs have been decreasing by 8 percent to 10 percent a year and that this price path exceeded even the most optimistic scenarios between 2008 and last year.
With this price trend, PV is expected to reach grid parity, or the same cost as coal-derived electricity, from 2018 with the approved 8 percent yearly tariff increases that Eskom will apply in the next five years.
And if the National Energy Regulator of SA allows the utility to implement even higher tariff increases, that point of grid parity will be reached sooner.
“From our observation, we’ll start to see grid parity a lot earlier. Just wait for the Window 3 projects to be announced,” Sapvia chairman David Chown said.
“The cost has been a lot lower than anticipated. I think grid parity will be achieved between 2014 and 2015 for big projects.”
In the first two windows of the Department of Energy’s renewable energy independent power producers (IPP) procurement programme, a total of 1 049 megawatts of PV allocation was announced.
The first PV project, in Kalkbult in the Northern Cape, was connected to the grid last month, three months ahead of schedule.
Chown said outside the IPP programme, between 15 000MW and 20 000MW of solar PV projects were under development in South Africa.
“Other PV projects are likely to be ahead of schedule too. We are up for the challenge. We can handle more,” Chown added.
Eskom is also making progress in its solar projects after it secured e100 million (R1.35 billion) from a French institution, the Agence Française de Développement, to finance solar power on Monday. Eskom said the loan would be used to finance its 100MW concentrated solar power (CSP) plant project in the Northern Cape.
The plant is one of Eskom’s first utility-scale projects using renewable energy, outside of the existing hydro portfolio. This CSP project is expected to produce 525 gigawatt-hours a year and to power 200 000 homes.
Eskom has also been looking to roll out solar PV across all its facilities after the utility had installed solar PV panels in two of its coal-fired power stations to provide auxiliary power.
Frost & Sullivan’s report shows that solar PV will create more jobs than Medupi and Kusile. Each megawatt of solar PV capacity created between 10 and 16 jobs in the construction phase.
The projects chosen under IPP programme are currently in the process of creating 14 943 jobs. Solar PV projects that are less than 1MW are expected to create even more jobs per megawatt than utility-scale plants. This is because the development of small projects will result in the duplication of roles which would support the creation of small businesses. - Business Report