Soventix: “We are tired of depending on politics” – Interview

pv magazine: Africa seems to be central to Soventix's solar strategy. How did this happen?

Thorsten Preugschas: In Europe, we had a situation where markets were increasingly consolidating. But it was not only for this reason. There were also retroactive cuts on incentives in, for example, Spain. With the exception of some players in Europe, a whole industry was led to the slaughterhouse.

We made the step into emerging markets in good time, and today we are very well positioned. Our competitors, like Phoenix Solar, did not make that step on time and are now disappering. We have been active in South Africa for more than five years, with conditions similar to those in Europe. In Tanzania, on the other hand, we are now entering the market at an early stage, working together with a local partner. The third focus is in Nigeria, where we also plan to build large-scale solar projects, in addition to smaller projects with banks, supermarkets or factories.

In Nigeria, it has been reported that Soventix is developing a pilot project with a local bank. The hybrid installations used in the project are planned to provide ATMs with power during weekends. Can you disclose more details?

It is an unusual combination of a relatively small eight kW PV system, a relatively large storage tank with 80 kWh of storage capacity, and the diesel generator that powers the entire bank. We have designed the hybrid system so that the PV system feeds exactly the same amount of power into the battery storage system during the week, so that it can supply the ATM with electricity over the weekend. In doing so, the diesel generator can be switched off when the bank is closed.

The control electronics of such systems are a major engineering challenge for the project and, in particular, in a country like Nigeria. Usually these facilities are provided with power through a ramschackle grid, a gas generator and a diesel generator as a back-up. In this triple combination with some old systems, we have to integrate the PV system and the battery. The control of these five elements is a great challenge.

Why did Soventix enter the Nigerian market?

Because there are many geopolitical factors favoring this move. On the one hand, they have a refugee problem, and on the other, Nigeria is a country with a huge energy demand, with only around 20% of the population having access to electricity.

How popular is PV in Nigeria? After all, the country is rich in natural resources, especially oil and gas?

The infrastructure is very bad. With PV, you can generate cheaper electricity today than with diesel generators, because of the optimal climatic conditions. Of course, without diesel generators, it will not work for the foreseeable future. The challenge is to make the PV plant as big as possible, and as small as necessary. Because in Nigeria, unlike in Ghana, there is no adequate power grid in which they could simply feed in surplus solar power.

Which are the main challenges?

In Nigeria, they have a high country risk, but also higher returns. In countries like these, extreme currency fluctuations are a big problem. To protect against this, it is best to secure a PPA with international currencies. Furthermore, it must be noted that the cost of capital can ben 20% higher in Nigeria today. Returns on investments are large, but are not enough to recover these costs. Therefore, projects are only possible with external financing, for example by European banks with a return of 6 to 7%.

Are you receiving a grant for your Nigerian projects?

You have a defined PPA for large ground-mounted systems here – but we are now tired of making our projects dependent on politics. Especially in countries with a high country risk, we do not want to bet on politics. Instead, we would rather go directly to the companies and institutions with our local partner, and show them how they can reduce their energy costs by using PV and hybrid systems.

What about security?

In Nigeria, of course, there are conditions that we do not know about from here – think about Boko Haram in the north, for example, which regularly kidnaps people. For such cases, we have an insurance policy that would step in and re-launch the employees professionally in the event of a case. The insurance also trains our employees in terms of behavior. From Nigeria, we also look after projects in neighbor countries.