South Africa's PV market

18. February 2014 By:  Susanne von Aichberger

NPD Solarbuzz analyst Susanne von Aichberger examines the current state of PV development in Africa's biggest energy market.

PV installation, Cape Town, South Africa

"South Africa's potential as a PV roof market based on net-metering is huge but ... remains largely untapped."

South Africa's PV market is mainly based on large-scale solar parks realized under the Renewable Energy Independent Power Producers Program (REIPPP).

The results of the program's third bidding round were published in November. The Department of Energy (DoE) is expected to continue the program, albeit under revised terms.

The South African PV rooftop market is still small and primarily driven by commercial installations with on-site consumption. A national legal framework for commercially viable net-metering schemes that would boost the residential and commercial PV roof segments is under development but timeline and terms are unclear.

Since the end of apartheid in 1994, the South African economy has stimulated a rapid growth of the country's economic and electricity demand. South Africa is the continent's largest energy consumer, with a major demand driver being the mining industry. The country's heavily coal-dependent power generation capacity can no longer meet demand and the electricity consumption is projected to continue strong growth.

After major power cut-offs in 2008, South Africa's government started to develop a sustainable energy system. In May 2011, the government published the long-term outline of the development of South Africa's generation capacity in the "Integrated Resource Plan." The target for a cumulatively installed PV capacity was set at 8,400 MW by 2030. In November 2013, the target was increased to 9,770 MW.

The Renewable Energy Independent Power Producer Program (REIPPP), launched in 2011, had the scope of allocating 1,450 MW of PV capacity in up to five tender rounds. The program provides PPAs over 20 years with South Africa’s major utility, Eskom, for renewable energy plants of up to 75 MW. The tender criteria place high importance on socio-economic factors like Black Empowerment and job creation. The target capacity for PV has been allocated with the third bidding round, the results of which were published on November 5, 2013.

The DoE is committed to continue the REIPPP, albeit under revised terms. The amended program is envisaged to be more simple and efficient. New capacities will be added and the local content requirements are expected to be further increased. The bid registration date for the fourth bidding round is July 21 while the bid submission date is August 18. Preferred bidders are set to be announced on October 28, 2014.

The first round of the DoE’s tender scheme for small scale installations (1-5 MW) has been completed. The second bidding round started on February 10, 2014. While this program is open for all PV system types, most developers in this size segment prefer ground mounted projects. Due to the relatively high compliance costs, however, the interest in this program is low.

A growing market segment is made up by installations based on self-consumption or PPAs with consumers, off-grid or hybrid systems.

Applications include shopping malls, vineyards or installations in the mining industry.

A legal basis for PV net-metering is outlined in Standard Conditions for Small Scale (< 100 kW) Embedded Generation within Municipal Boundaries. The paper falls under the Energy Regulator Act 204, published by the National Energy Regulator South Africa (NERSA) on September 22, 2011.

The Standard Conditions only serve as a guideline. Concrete legal regulations are yet to be introduced and technical requirements and procedures need to be determined. While pilot net-metering projects have been launched successfully in Port Elizabeth and Cape Town, net-metering via Eskom's national grid is not allowed for the time being.

In 2013, nearly all of South Africa's PV market was made up by large ground-mounted systems and this market segment is set to remain strong in the next years. The results of the third round of REIPPP are pointing, however, at a concentration of projects submitted by large international companies. South Africa's potential as a PV roof market based on net-metering is huge but pending necessary regulations, the segments remains largely untapped. For the time being, the country's PV roof market relies on systems based on self-consumption.

The March issue of pv magazine will offer an in-depth focus of South Africa's PV sector.

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