Efficient PPAs may propel solar-diesel micro-grid deployment , says study

Standard templates for PPAs cannot be used for hybrid micro-grids since the framework is far more complicated, finds Munich-based micro-grid consultancy THEnergy, identifying mining as the pioneer in integrating PV and wind power plants and battery storage to reduce their diesel reliance.

Noting that in recent years solar-diesel hybrid plants have become extremely popular with remote commercial and industrial off-takers, the consultancy underlines that the synchronization of generation and consumption remains the main hurdle, as the off-takers are often not interested in buying a certain amount of electricity, but see it only as a means for reducing diesel consumption.

According to the consultancy’s data, Africa, Asia and Australia are turning to solar hybrid applications for mining hubs, whereas Canada and South America lead the charge in wind-diesel hybrid deployment.

As mines feel more comfortable entering long-term agreements due to increasing trust in renewable energy off-grid solutions, the number of renewable energy-based plants in other industries such as cement, food and beverages, textiles and salt is also on the rise. In addition, falling battery prices are making the business case even more attractive.

However, clear responsibilities between the parties have to be defined for the operation of hybrid plants located at remote mine site, where grid connection is not possible and where there is no alternative off-taker in case the contract partner does not pay.

Meanwhile, as the solar-diesel hybrid is a rather new field, many potential off-takers are not experienced and fear production losses which also need to be covered in PPAs. Finally, many solar-diesel hybrid applications are built in countries with certain legislative risks that must be considered in the PPA.

“As a consultancy specializing in microgrids, we have been pushed by our clients to specifically cover the PPA topic. We have conceived workshops for optimizing PPA negotiations and also accompany our clients individually in the process. Our offer is aimed at both sides, renewable energy developers as well as commercial and industrial off-takers,” says Thomas Hillig, Managing Director of THEnergy.