Posted in: Solar Power Systems

The definitive guide to solar PPAs

There’s been growing interest in solar PPAs over the past few years, and they are now much more mainstream. However, you may still have some questions about PPAs and solar finance. What are PPAs, and how can they benefit your business? We’ve put together a definitive guide to help. 

What is a solar PPA?

The term “PPA” is swung around quite a lot in the solar industry. PPA stands for “Power Purchase Agreement”, and it signifies a type of contract between an electricity generator (or Independent Power Producer – IPP) and an electricity consumer (or offtaker) – such as a commercial operation. A solar PPA is therefore a contract between a solar generator and an offtaker, stating that the generator will provide solar power and the offtaker will buy the solar power from them.

As a form of electricity, Solar PV is an easily-deployable, very safe option without any moving parts that produces electricity during light hours of the day, and therefore it often makes sense to embed the solar PV system directly into the factory, retail centre, warehouse, etc. where it will be consumed. As such, many commercial and industrial solar PPAs include the construction of an embedded generation solar facility on the site where the power will be used. In this instance, a solar PPA is a way for the customer to procure clean electricity and save on their electricity bills without deploying any CapEx, and only paying for the electricity that the system generates.

However, PPAs can also be entered into for clients where there is either too little space or too much energy demand to generate solar electricity directly on the site. In these situations, solar wheeling agreements can be entered into, which allow the purchase of solar power from a remote solar facility, such as a large solar farm, to be “wheeled” through the electricity grid and to the customer. Wheeling typically suits energy-intensive operations such as mines, smelters, data centres, and other large commercial operations.

Typically, the larger the size of the PV system, the lower the tariff. This is why solar PPAs are best suited to energy-intensive operations, where there is little chance of exporting excess energy. The most suitable size of the PV system depends on the client and type of operation, and is typically determined during a detailed feasibility process between the generator and offtaker. 

What are the benefits of a solar PPA?

There are several benefits of entering into a solar PPA, but they can be summarised into four main points:

  1. Cost saving

The major reason for entering into a solar PPA is the significant cost saving that customers tend to encounter. While grid tariffs have been increasing, the cost of solar PV components has reduced dramatically over the past 10 years, meaning that the cost per kWh of solar electricity tends to be much cheaper than power from the grid and other forms of onsite generation (diesel genset etc.). In addition, the solar PPA tariff includes all expenses relating to the solar system: upfront installation costs, part replacement, comprehensive asset insurance and ongoing operations and maintenance, meaning that the client will not have any hidden or unexpected costs over the life of the PPA.

  1. Carbon emissions reduction

Solar PV systems generate energy by converting the sun’s rays directly into electricity, forming a low-carbon, renewable energy source. A solar PPA is an easily accessible way for businesses to decrease their carbon footprint and meet their sustainability targets. 

  1. No outlay of CapEx or ongoing maintenance costs

If a customer wishes to procure their embedded solar PV facility outright, they will need to pay a supplier for the engineering, procurement and construction (EPC) of the project, which will have a large capital outlay. This is not always the best option for a business whose core operations are completely different to electricity generation, as the ongoing maintenance and performance of the plant will be their responsibility to manage. Whilst most EPC companies provide additional Operations and Maintenance services, it will be the responsibility of the client to ensure that those contracts are fully up to date and to log any issues with the service provider. 

  1. Future electricity cost perspective

Typically PPAs will have fixed tariff increases baked into the contract, ensuring that the future costs of electricity will be predictable and manageable. Historically, Eskom tariffs have risen an average of over 11% annually over the last 20 years, with a 15% increase announced in 2021. A solar PPA will have an escalation that is fixed and typically well below Eskom’s average and can be set in consultation with the client. 

How long is a solar PPA?

The main component of solar PV systems are the solar panels, with a market standard performance warranty of minimum 25 years. As such, typical PPAs range from 10 – 25 years. Although the length of the PPA is adaptable, the longer the PPA is, the lower the starting tariff will be. 

If your business is looking to procure sustainable power quickly, then the time of procurement should also be taken into consideration. For a simple solar PPA to take effect, there is typically a 5 – 6 month procurement time before the site establishment and construction, which incorporates the negotiation and signing of the commercial PPA as well as the design and licensing of the solar PV system. Here’s an example of the typical timeline of a solar PPA negotiation period:

Off-site PPAs that include a wheeling agreement may take longer to initiate because a solar generating site needs to be identified and permitted in addition to the normal PPA process. 

What’s the difference between a solar PPA and a solar lease?

Over the years, the terms “solar PPA”, “solar finance”, and “solar lease” have come to be used interchangeably, so what is the actual difference between these terms? The answer has to do with the history of energy legislation in South Africa and the allocation of risk.

Before November 2017, it was not possible in South Africa for Independent Power Producers to sell energy directly to consumers without a generation licence. As such, solar leases were utilised as a way for a private energy consumer to make use of a solar PV system by leasing the system instead of paying per unit of electricity the system generates. Then, in November 2017, an amendment to Schedule 2 of the Electricity Regulation Act allowed for private energy sale without the need for generation licence of projects less than a 1MW in size, which opened up the opportunity for Power Purchase Agreements to take effect. 

So the main difference between a solar lease and a solar PPA is contractual, and dependent on where the performance risk of the asset lies. In a solar lease, the performance risk lies with the customer or user of the solar PV system as they pay a fixed monthly fee for the system not linked to the output it generates. Whereas in a solar PPA the entire risk of the asset lies with the solar PV operator as only energy generated is paid for on a take-or-pay basis, making it a purely cost-saving mechanism for businesses.

Are there risks associated with a solar PPA?

As with any large commercial decision, the risks need to be understood up front. The main risks in entering into a PPA agreement include:

  1. The length of the contract

Whilst most business contracts are typically renewed on an annual basis, a PPA term is typically 10 years and longer to ensure the most cost effective solar tariff. As such, senior management will want to ensure that the cost and carbon savings associated with procuring clean electricity are worth the risk of entering into such a contract. This can be mitigated through various exit options including an option to purchase the system, which can be a condition of PPAs that allows the client to buy the solar PV system after a set amount of time for a periodic price that is agreed upfront, should the operational requirements of the business change.

  1. Changing operational requirements

The risk of changes to the business’ operational requirements is a standard business risk that should be considered for every new venture and/or product that is introduced, as it will have an impact on the overall efficacy of the plant or operation. If, for example, a product is no longer required and its manufacturing operation suddenly starts to use less electricity, this could impact on the cost-saving aspects of the PPA. Most PPAs are arranged on a “take-or-pay” basis, meaning that the client is responsible for paying for all the electricity that the system generates, including instances where the customer cannot take the energy not at the fault of the generator. In addition to careful business management, this risk is also mitigated through careful feasibility and design phases, which look in detail at the electricity requirements of the building or facility before suggesting the total size of the solar PV system to the client. Similarly, a PPA has a fixed tariff increase each year, meaning that electricity costs will be very predictable into the future, allowing for better business planning. 

Is a solar PPA right for my company?

Understanding if a solar PPA is the right option for your company is a decision that comes down to business management decisions around cost saving and sustainability. On cost saving, does your business have energy-intensive operation(s) around South Africa, and is a large amount of your company’s operational budget spent on electricity procurement? If so, a solar PPA is a great way to reduce electricity costs quickly, with low risk to the business, improving the profitability of your operations. Similarly, a PPA also ensures that future electricity costs are predictable, hedging against unpredictable Eskom increases.  

From a sustainability perspective, does your business have sustainability targets that require a reduction in carbon emissions or a requirement to procure renewable energy? If so, a solar PPA is a great capex-free way to reduce reliance on grid-supplied electricity, which in South Africa is highly carbon-intensive. For example, the CO2eq for South Africa’s grid is just under 1 kg per kWh, whilst solar is less than 0.01kg per kWh. From a procurement perspective, solar PV is considered 100% renewable, so the more solar PV that fuels your operation, the closer you will be to your renewable energy procurement target.

Is installing embedded solar PV in new property developments worthwhile?

Embedded solar PV generation is often retrofitted in industrial buildings due to its immense cost and carbon benefits. However, new buildings and greenfield property developments stand to benefit greatly from incorporating solar PV into their designs as well. 

According to the International Renewable Energy Agency (IRENA), the costs of solar PV modules have fallen over 90% since the end of 2009, and energy storage components show similar trends. This translates to power systems that are increasingly affordable to integrate into new developments – particularly in sunny countries like South Africa.

So is it worthwhile to integrate solar PV into the design and construction of new buildings and property developments? Absolutely. In fact, according to Architizer, a leading architecture website, incorporating PV into building design is becoming increasingly popular as the options for mounting solar modules and integrating PV into building design expand.

Installing embedded solar PV on new property developments has a host of benefits:

  • Understanding the electricity load and how large the solar PV system will be upfront helps to integrate it into the building design, ensuring that it is aesthetically pleasing and/or seamless with the architect’s vision.
  • Incorporating solar PV modules into the roof design ensures that the roof can bear the weight and prevents the need to strengthen the roof at a later date
  • Inverter or battery rooms can be incorporated into the building design, which will keep them cool and dry, allowing them to function optimally and saving maintenance costs 
  • Solar PV is much cheaper than other forms of energy, so it makes the building costs more cost efficient from the start
  • Incorporating solar PV and/or energy storage into a new development can shield it from load shedding, making the property more attractive to tenants 

Integrating solar PV design into greenfield developments has become an obvious choice because it is one of the cheapest and most reliable forms of electricity available today. Several new developments are exploiting that: DSV Park opted to implement a large-scale solar PV system into their new 140,000 m² logistics facility, incorporating a 1.3 MWp solar PV system integrated into the Park’s electricity supply, alongside on-site diesel generators that allow it to safely operate during load shedding events. 


With alarming increases in electricity tariffs and grid unpredictability and load shedding in South Africa, many like DSV are opting for cleaner power supply. Solar PV systems last 25 years, so incorporating them into building electrical design is a way of ensuring that the assets have a stable power supply way into the future.

New report shows that job creation in the PV sector is inevitable

In the most conservative case, we’re looking at over 30 000 jobs created per year in the solar PV industry 

Job creation is one of the most important considerations for the South African economy. Sitting at around 29%, unemployment is a serious hindrance to the South African economy. The creation of solar PV systems for the government and private clients brings down costs and increases energy reliability, bolstering profitability and growing businesses. However, the question of how many jobs the PV industry creates has been a hot topic for several years. 

A new study, completed by the CSIR and commissioned by the South African Photovoltaic Industry Association (SAPVIA) with sponsorship from SOLA, has set out to look at just how many jobs solar PV has created in South Africa so far, and what we can expect from the industry in the future. 

Measuring jobs in the PV sector is tricky, because of the variability of jobs throughout the life-cycle of each plant. Typically, both large-scale and embedded generation plants will have quite a lot of employment during the construction phase, which taper off when the plant goes into Operation & Maintenance (O&M). However, these jobs last the lifetime of the plant, and thus are cumulative over time. 

How are solar jobs measured?


There’s been much discussion about how to measure jobs in the solar PV sector,  which has not had a unified approach or metric, resulting in confusion about the numbers of jobs created by the industry. As such, the first step in the research was coming up with a useful way to measure jobs, particularly those in the solar PV sector that tend to undulate based on construction times. 

Based on an international literature review and experiences in other survey approaches, the CSIR used “Full Time Equivalent” (FTE) as a metric to measure jobs. A FTE job looks at the amount of time that a worker spends at a job compared to a full time employee. For example, if an employee only works half-time, their FTE score would be 0.5. As a result, the metrics represented by FTE show what the equivalent full-time employment would be per annum for a particular job.

In addition, the CSIR used a standardised unit output of MW per annum in order to be able to compare jobs across the value chain. As such, the jobs in the analysis and in the future scenario modelling are represented FTE jobs per MW per annum. This allows the job statistics to be comparable across different sectors and in relation to other forms of employment creation, and takes a conservative view on estimating jobs.

The predicted scenarios for job creation in the solar PV industry in South Africa

The report looked at historical data in order to create a model to predict future employment scenarios in the sector. It modelled three different scenarios, the IRP 2019 scenario, the accelerated case scenario, and the high road scenario.

  1. The IRP 2019 scenario

This scenario looks purely at the jobs resulting from the Integrated Resources Plan 2019 by the South African Department of Mineral Resources and Energy. In this scenario, the solar PV industry would create between 33 000 – 35 000 jobs per year from 2022 and 2030, but there would be little consistency and large variations between years. 

  1. The accelerated scenario

This scenario takes into consideration the growth of the market outside of the IRP guidelines, and assumes that utility scale solar PV will be built in addition to embedded generation, owing to the government’s intention to allow more embedded generation to plug the energy supply gap in the short term. In this scenario, an initial spike in job creation of 51 580 FTE jobs will be created during 2022, followed by a dip back to 31 131 FTE jobs in 2023 and climbing to consistently to 37 975 jobs by 2030

  1. The high-road scenario

In this scenario, the predicted import of solar modules is expected to increase, in addition to the building of both Utility and embedded generation solar PV facilities, which continue to grow post-2022. In this scenario, jobs are expected to bounce up in 2022 to 53 422 FTE jobs, and return to 33 972 in 2023, growing steadily to 39 817 FTE jobs in 2030.

What does this mean for the sector?

The jobs report paints a picture of what the expected job creation trajectories will look like. The research highlights the fact that the halting of renewable energy procurement in 2015 was devastating to the jobs in the sector, but has not prevented it from recovering in the recent years. There are some important aspects to consider in order to ensure the maximum job creation:

  • O&M jobs are the most sustainable, as they run throughout the lifetime of each PV facility (usually around 20 – 25 years). They have the potential to create substantial, lasting job opportunities in the sector.
  • Localising PV component manufacturing could have a significant effect on the growth of PV-sector jobs in South Africa, particularly if there is a clear path to how much the sector will grow each year.
  • The embedded generation market is a very important player in the creation of PV jobs, but has been hindered by policy uncertainty. 

Overall, the report shows that whichever scenario ends up playing out, there is likely to be significant growth of solar PV jobs in the coming years. 

Download the full report here.

Interested in working for us? Have a look at our careers page for possible vacancies.

South Africa electricity grid supply

The great opportunity to reform South Africa’s power sector

Over the past few weeks, there has been encouraging movement in South Africa’s electricity sector that indicates a gradual opening of the electricity market. NERSA recently confirmed that licensing of electricity generation over 1 MW will be allowed without ministerial sign-off, which could make the processing of renewable energy generation licences more efficient; and municipalities were recently granted the freedom to procure their own power. In addition, the prospect of the renewable energy bid window 5 (REIPPP 5) opening in December indicates that South Africa is starting to take the procurement of renewable electricity seriously. 

And whilst renewables still make up a small share of South Africa’s total generation capacity, the growing cost gap between the grid and solar, along with falling battery prices, means that South African electricity consumers are faced with something new in the context of our traditionally monopolistic electricity market: choice.

As was discussed in our previous piece on going off grid, it is clear that many consumers are choosing to go entirely off grid. However, mass grid defection is not necessarily the most optimal system for the majority of South African consumers. If the government suppresses private and distributed electricity generation, forcing customers to choose between staying on grid with expensive, unreliable power, and quitting the grid entirely, there may be large-scale grid defection as businesses choose to forego the unreliable and expensive grid. This will erode both Eskom and municipal revenue streams, driving more tariff increases that impact many South Africans

However, effective grid modernisation will turn potential defectors into ‘prosumers’, who choose to remain grid-connected and participate in a more open and mutually-beneficial electricity market. There are already some municipalities in South Africa that allow for grid feed-in (see this convenient list), which helps grid-tied solar PV systems become more profitable. However, we’re still a long way from a mature electricity market, where the cheapest electricity can be generated and consumed when it is required, enabling overall cost reductions of electricity. 

A modern grid will make use of enhanced infrastructure for better management of variable renewable energy, and ensure equitable electricity pricing that allows consumers to generate their own electricity and/or buy electricity from independent power producers whilst paying fees to utilise the electrical grid. This could generate new revenue that would enable better maintenance of the existing infrastructure, further replacing outages. 

However, we are still a way off from this “modern grid” idea. Some of the immediate steps that could be taken to enable grid modernisation, preventing mass defection and price increases, could include:

  • Laws and standards must be updated to cater for all technologies in the energy mix. 
    • We’re starting to see some progress on this, but there is still a fair way to go, according to Anton Eberhard:

  • Grid operators should be assisted with tariff modernisation
  • Arbitrary size restrictions on embedded generators should be reset based on rational technical and cost considerations. 
  • Permitting and licencing authorities must be held to their mandates and assisted and upskilled where needed.

If we can ensure that these factors are considered, there will be a hopeful outlook for South Africa’s electricity future. The alternative picture is not as sunny, as our power system could devolve into something undesirable for businesses and inequitable for South African citizens. 

Is it possible for your business to go off-grid?

A question many businesses are asking in 2020, particularly with the onslaught of load shedding, is the possibility of going entirely off grid. This is unsurprising – grid reliability has been severely reduced over the past few years and Eskom tariffs are substantially higher than the costs of solar on an average lifetime basis. As such, many companies are looking at the possibility of severing ties with the grid and managing their energy needs independently.

Historically, solar has not been viable as an alternative primary electricity supply to the grid primarily because of its variability. Because the sun only shines during the day, the deployment of solar has often been limited to partial offset of daytime electricity demand – a solution which tends to save companies significantly on their electricity bill. But for solar to be a ‘dispatchable’, 24-hour alternative to the grid, it needs to be coupled with storage, or with other flexible sources of demand or generation, which has often made it an expensive choice.

This, however, is changing. In South Africa, overall costs of solar-plus-storage have historically compared unfavourably to most grid tariffs, limiting off-grid projects to areas with no grid access or grid capacity constraints. However, there are already several industrial and commercial grid tariff structures that make off-grid solutions a cheaper and more reliable alternative than remaining on grid, particularly for industrial operations that have high power requirements and tend to supplement their supply frequently with diesel generators to keep their electricity supply consistent.

How do you know if it is viable for your company to go off grid? One of the key questions to ask is how much your business currently relies on diesel generators. If you use them around 15 – 20% of the time, it is almost certain that a solar + storage solution will save your business money. Secondly, if your facility has large power (kVA) requirements and is on a high industrial tariff, the business case of going off grid could be advantageous.

Cost reductions and improved efficiency in energy storage technology have major implications for the future of South Africa’s power system: it means that some electricity consumers on expensive tariff structures can already choose an alternative to Eskom or their local municipality. Even those on cheaper tariffs are likely to follow as grid tariffs rise and solar and battery equipment gets cheaper.

Of course, large-scale grid defection might not be the ideal outcome for all South Africans. It will erode the economies of the national grid and increase costs for many segments of society. This is why power sector reform must urgently facilitate an efficient and equitable transition to renewable energy.

How electricity generation has changed over the past 10 years – and what it bodes for our future

Alongside the global pandemic, electricity has been on many South African’s minds this year. And rightly so: South Africans can expect a 15% increase in their electricity costs from mid-2021, based on a recent court ruling which grants Eskom the right to recover operating costs through additional tariff escalations. This will mark more than a decade of average annual increases of 14%, relative to average inflation of just under 6%.

These escalations have fundamentally changed South Africa’s economy: the manufacturing and mining sectors have been particularly affected by the rising tariffs, and are doubly affected by the inconsistent supply caused by load shedding. South Africa’s electricity supply from the grid is subject to decreasing reliability, with 2020 already shaping up to be the worst on record for load shedding.

What South Africa is experiencing is not unique, but exposes the global trends that expose the high costs of maintaining an aging and centralised coal fleet. A decade ago, average Eskom tariffs were two times lower than they are today, and the costs of installing solar PV were two to three times higher. That situation is very different today: Eskom and municipal electricity tariffs are now substantially more expensive than solar PV installations on an average, lifetime cost basis. This is driving strong uptake of own-use solar generators, despite persistent policy and regulatory barriers.

This is because the electricity market has fundamentally changed over the last 10 years. The growing cost gap between the grid and solar PV means that the benefits of solar are more economically viable, even if the PV plants generate more power than required (for example on weekends, when a factory does not operate). 

For private electricity consumers, solar electricity is typically used to offset daytime electricity consumption through ‘own-use’ or ‘embedded’ generators that service the electricity needs of the facility on-site. The uptake of embedded solar generation has exploded in South Africa, particularly amongst the retail and manufacturing sectors, because of the cost savings generated by the plants. Despite this, embedded generators are largely restricted from selling power into the grid, although it is looking hopeful that this might change

The fact that solar PV is so much more affordable than Eskom’s grid is also changing the way in which solar PV is consumed by large commercial and industrial facilities. For example, some facilities choose to oversize their solar PV system relative to on-site electricity demand in order to increase morning and afternoon solar electricity production, generate more power in winter, save more diesel during load shedding, reduce peak grid demand charges, and achieve higher overall reductions in grid electricity consumption. 


Other commercial and industrial facilities are opting to oversize their solar PV systems and store the excess affordable power in battery banks – something that, 10 years ago, would have been ludicrously expensive. However, with Eskom’s tariffs increasing the way they are, and with the reduction in the costs of energy storage components, the business case is starting to emerge. The advancement in electricity generation technology gives businesses more flexibility and options when it comes to their energy choices. Own-use solar – whether on or off grid – is an affordable and, by now, well-used option.

Mining in africa

Why remote mines in Africa should be considering energy storage

There is no doubt that solar PV is the cheapest form of electricity generation globally. However, how does its application apply to remote mining operations? Africa is blessed with great solar resource, as well as mineral and metal resources – making mining an important industry on the continent. But remotely-located mining operations often mean that energy generation is an important concern. 

If a mining operation is located close to a utility grid, there could be an option to commission a new power line or grid connection to the mine. Whilst this may seem like an appealing option, there are many uncertainties in the creation of a new power line, and even in connecting to an existing one. How long will the powerline take to build? How will it be maintained and/or repaired when necessary? What would the costs be of such a connection? These questions need to be asked in conjunction with the political, regulatory and logistical risk considerations in taking on such an intervention. There is also the risk of the existing grid or utility being unreliable with frequent outages. 

Another consideration is the risk of using an outmoded form of technology, and what the implications of this might be for the future of your mining operation. Using mobile technology as an example, Africa has been able to leapfrog fixed line telecommunications straight to mobile phones, which has improved livelihoods on the continent substantially. A similar argument can be made for the fixed line electricity grid: decentralised electricity supply enable the opportunity to leapfrog outdated technology and maintenance that comes with fixed power lines to provide decentralised, reliable power. 

As such, many mines in Africa do rely on decentralised power, either in the form of diesel or solar PV. In addition to these decentralised power generation sources, battery storage is a great option to reduce costs and risks of power supply. 

Lithium Ion Battery Storage solar PV microgrid

The most common go-to option for remote mining solutions is diesel generation, due to its portability and reliability for remote mining operations. However, diesel is a costly option. Typically, diesel costs in African gold mining countries are around US$1 per litre of diesel – which translates to US 30c per kWh. This is in comparison to US 5c per kWh of solar PV electricity. Another consideration is the transportation of diesel to the mine site, which ironically is burning diesel to, in turn, burn more diesel. Despite the greenhouse gas emissions implications of this, it also adds an unnecessary layer of costs to the mining operation.

But is there another way? As mentioned above, many remote mines in Africa, whilst distanced to the utility grid and/or high-voltage grid connections, have fantastic solar resource. With the affordability of solar PV solutions, it makes sense to explore a solar PV system for mining operations in Africa. However, to provide power after hours and/or during the early hours of morning or late hours of evening, solar PV needs to be used in conjunction with a backup supply to keep the energy supply consistent. This might take the form of diesel generators, but energy storage – particularly in the form of lithium-ion batteries – is quickly becoming a less risky option. This is, in part, to the falling costs of energy storage technology. 

With costs of storage rapidly decreasing, energy storage provides a much more stable cost profile than grid-powered or diesel generated electricity, which both have unknown future cost fluctuations and risks. Similarly, the increased interest in electric vehicles, as well as global uptake of off-grid electricity, have sparked a sharp decline in battery costs.  

In addition, battery manufacturing capacity is expected to increase significantly by 2021 from just under 150 GWh/year in 2018 to 350 GWh/year in 2021, with the bulk of manufacturing taking place in China and the US. A similar forecast predicts an increase in manufacturing capacity from 350 GWh/year, to ~700 GWh/year. Similarly, the average battery plant manufacturing size has increased significantly, from around 10 GWh/year to just under 30 GWh/year. 

In conjunction with increased global demand and manufacturing capability, the costs of lithium-ion batteries have decreased significantly from 2013 – 2019, from around US$ 446 per kWh in 2013 to US$ 112 per kWh in 2019. 

Should the application of a solar PV and battery storage microgrid system be unfeasible for a mining operation, battery storage can still assist mining operations to save money by extending the life of generators by creating spinning reserve. This can create a ~2% diesel saving – or 2 MVA of batteries of spinning reserve could save ~260 000 litres of diesel.

A solar PV and energy storage microgrid ensures the control of power and energy sources. A high concentration of renewable energy, such as solar PV, in conjunction with storage, enables complete control of energy costs, eliminating logistics risks and price fluctuations. There are also various financing options available, such as buying the system outright or entering into a power purchase agreement. 
As mentioned, solar PV on the African continent is a no brainer. However, for remote mines, it may be necessary to install solar PV alongside battery storage solutions. Whilst solar PV saves money, energy storage solutions solve a few problems: they provide consistent energy supply and handle load changes, and also ensure that the costs of supplying power to the mining operation are known. This reduces much of the risk of electricity supply for both planned and existing mining operations.

How Solar Power Systems Can Help Your Business?

Solar power systems are not only relevant to governments and large utilities looking to procure solar power, but to commercial and industrial businesses too. Currently, solar PV systems are the cheapest form of available power, and prices are continuing to drop. It is no wonder that businesses are keen to get on the solar trend. But how, specifically, can industrial businesses benefit from solar power systems? 

Solar power systems can assist businesses - ABInbev

Solar power systems reduce operating costs

The first and most obvious advantage of installing a solar power system is cost saving. Because solar is such an affordable form of electricity, it is an easy way to reduce operating costs dramatically, particularly for industrial businesses that have consistent loads or run 7 days a week. Two factors make solar PV a good investment for industrial businesses: they instantly reduce operating costs, and the great solar irradiance in South Africa means that they can produce a substantial amount of energy.

How much will a solar PV system save industrial businesses? This largely depends on the type of business, times of power use, and other factors that may influence the cost of the solar electricity generated. For an estimation of how much your business could save with a solar solution, get in touch with us for a free analysis of your electricity tariff. 

Solar Power Systems - Alrode Brewery in Alberton - industrial solar power system

Solar power systems can reduce diesel costs during load shedding and other power outages

Whilst most solar power systems are grid-tied, meaning that they do not operate during load shedding or other power outages, solar PV can greatly reduce the cost of diesel that might be required for backup power during an outage such as load shedding if this is taken into account whilst designing the system. 

Solar PV systems continue to generate power as long as it is light – and this applies to periods of load shedding during the day. However, solar inverters are designed to switch off during a grid outage, which serves as a safety mechanism for personnel that might be working on transmission lines during outages. However, this does not mean that large buildings with solar PV systems do not have options for load shedding. With careful engineering, It is possible to replicate a fake grid-tied scenario to “trick” the solar inverters into staying on. 

In order to retrofit a grid-tied solar system to operate during load shedding, two essential steps need to be taken. Firstly, the system needs to be isolated from the grid to prevent any exporting of power that could affect the safety of maintenance personnel. Secondly, a voltage forming source is required, in order to provide a reference voltage and frequency to the solar inverter. With these mechanisms in place, a solar PV system can continue to function seamlessly during load shedding, and thus reduce the costs of diesel and extend the life of on-site generators greatly. 

When does it make sense to go entirely off grid? If your business has a weak grid connection and thus has inadequate kVA supply, or it uses diesel roughly 20% of the time, it might be worthwhile to look at the cost-benefits of installing a solar PV microgrid with batteries. 

Solar power systems reduce carbon emissions

It goes without saying, but supplementing your business’s electricity supply with solar power is a great way to cut down on carbon emissions. In South Africa, the Carbon Tax was gazetted on 1 June 2019 – meaning that companies will have to take their carbon emissions into account when filing for their tax returns. According to the South African Revenue Service (SARS), the first phase of the carbon tax is R120 per ton of carbon dioxide equivalent emissions, which will increase annually by inflation plus 2% until 2022. 

There is a minimum threshold for emissions allowances in order to allow for businesses to transition to cleaner energy and invest in energy efficiency projects, but in general the carbon tax is here to stay – and if avoided, could save the business from tax expenses. 

In addition many large companies are heeding their stakeholders’ requests to be more responsible in the way that they do business. Global support of sustainable business practices have increased dramatically over the last few years, particularly in the manufacturing sector. In response to global consumer trends, a group of multinational corporations established the RE100 as a commitment  to going 100% renewable energy. One signatory of the RE100 is AB InBev, who recently entered into a multi-tiered Power Purchase Agreement with SOLA to supply their South African Breweries with 8.7 MW solar power systems. For them, the commitment to renewable energy is a no brainer – both in terms of cost savings and their sustainability commitments. 

Solar Power Systems - AB Inbev

By giving you a better overview, solar power systems can increase operational efficiency

Solar power systems are not only a way to reduce operational costs and lower carbon emissions, but they also provide an opportunity for businesses to evaluate and improve on their energy consumption habits. In order to correctly size a solar PV system, it is important to examine the load of the building, and with this will come insights into your energy consumption patterns. Is it possible to run some of the plant during the day when solar PV is at its cheapest? Are there additional energy efficiency measures that could assist with bringing your load during peak hours down? By encouraging a monthly overview of a business’s energy consumption, solar power systems can help to further energy savings even more. 

Solar power carport systems can provide cool, protected parking

Whilst many businesses in South Africa have ample roof space for housing solar power systems, solar power systems are perfect additions to parking lots and convert them into shady, protected carports. Solar carports are very similar to ground-mounted solar systems, but they have the added advantage of not requiring any additional land if a parking lot exists. What is more, because of global demand, these systems are becoming increasingly affordable. The solar carport at Old Mutual head office is an example of how a solar power systems can utilise existing space to create savings for businesses.