Today marks the beginning of our newly consolidated group: a renewable-energy powerhouse that will transform Africa through clean energy.
You may be familiar with our group already: Aurora Power Solutions started in 2008 as a utility-scale solar PV project developer and financier, with over 313 MW of developed projects under its belt; SOLA Future Energy was started in 2013, concentrating on solar PV opportunities in the private sector, building 37 MW solar projects for commercial clients, and continuing to operate over 55 projects.
Although operating in different market segments, the decision to join both companies together as the SOLA Group is a reflection of the changing global market in renewable energy. With its vertically integrated solar PV offering expanding across the entire value chain, SOLA now has the ability to meet diversifying energy needs in Africa’s growing renewable energy market.
Responding to a growing market in Africa – and a changing market globally
Over the last 10 years, the cost of solar PV technology have declined so rapidly that the technology, once an expensive investment, is now able to compete globally with other, more “traditional” methods of large-scale electricity generation. This is largely due to the 80% cost reduction of solar power modules since 2010, making solar PV the cheapest form of energy worldwide.
In addition, electrification models are starting to change. With the rise of renewable technology, flexible electricity markets are becoming the norm – allowing offtakers to purchase the cheapest electricity at a given time, and changing the way in which electricity is produced globally.
The same developments are happening in Africa. In South Africa, 2018 held much in the way of energy sector developments. The renewables-vs-nuclear stalemate came to an end when then South African Energy Minister Jeff Radebe gave the approval 27 long overdue renewables projects. In August, the much-awaited draft Integrated Resource Plan (IRP) was released, showing favour toward renewables and gas and less coal and nuclear.
The IRP draft, combined with the ANC’s policy manifesto, showed willingness to dissolve the electricity monopoly, bring private players into the market, reduce the costs of electricity and stimulate the economy, allowing the government to focus on the key areas of the country that need it most: in other words, following global market trends for electricity generation.
In addition, the Carbon Tax Act No 15 of 2019 came into effect on 1 June, as announced by the Minister of Finance in the 2019 Budget. Government has outlined its commitment to play its part in global efforts to mitigate GHG emissions as outlined in the National Climate Change Response Policy (NCCRP) of 2011 and the National Development Plan (NDP) of 2012. This move, along with a recent announcement that Nersa would start to issue electricity generation licenses before the release of the IRP, bodes well for both government and commercial buyers of electricity.
Structured for growth
The merger of the SOLA Group comes at a time where there has never been a greater need for new energy generation. In March this year, the World Economic Forum’s Energy Transition Index, South Africa ranked second last out of 115 economies, on the scale of progress in transition towards a more sustainable and secure global energy system. This, coupled with Eskom’s on-going state of emergency and 15% tariff increase, has created an urgent need for collaboration between government and the private sector.
The unique structure of the SOLA Group – an Assets division that focuses on large-scale utility project development and actualisation, as well as financed commercial projects – and a Build division, that is able to see projects build and continue to operate effectively – enables the business to move into the growing market for renewable energy in South Africa, and Africa more broadly.
The merger brings together a large solar project pipeline, including 48MW in Zambia and 79MW in South Africa with various government, commercial and industrial clients. There are also commercial-scale microgrid projects being built in Mozambique and the Seychelles, and solar PV wheeling projects, which will see energy being produced remotely in high-irradiance areas and transported via grid infrastructure to commercial offtakers.
Existing projects of the group include a diverse range of renewable electricity generation projects, with varying ownership structures.
Our Group carries forward four projects awarded in South Africa’s Small Projects Programme. In phase two, the group was successfully awarded Castor (5MW) and Capella (5MW) projects as the EPC contractor, following successful award of Adams (5MW) and Bellatrix (5MW) projects in the First Phase of the Programme.
The Cedar Mill Mall project is a unique project in that it utilises both the efficacy of solar PV and batteries with the existing electricity grid to optimise the affordability for the client. The islandable on-grid microgrid enabled 300 jobs to be created and this particular project has served as a significant boost for the local economy of Clanwilliam. Since the system began operating in August 2018, over 800 000 kWh of clean energy has been generated.
Another exciting pioneer project for us was the Robben Island solar project. The project was launched in October 2017 and it continues to provide clean energy to the island today. Robben Island has had to rely solely on diesel generators for its electricity production as it has never been connected to the main grid of South Africa. We were tasked with developing a complete microgrid project, combining solar PV with the diesel generators and lithium-ion batteries in order to reduce diesel consumption significantly. We were, at the time, pioneering the largest off-grid battery project in the southern hemisphere.
As part of a consortium with a leading independent power producer, Globeleq, we will soon be starting the development of 40 MW of solar power in Zambia. The project forms part of the country’s GET FiT programme, designed to assist the Government in the implementation of renewable and sustainable energy.
This is an exciting time for the SOLA Group, as it enters the next stage of growth. Joining the two companies will enable the Group to provide extensive solar PV services as a consolidated offering to further clean energy in Africa.
We have an extraordinary opportunity for electricity reform in Africa and indeed in the world more broadly. In Africa, if our renewable resources are harnessed efficiently we not only have 20 years of upskilling and job creation ahead of us, but with our natural resources we could have, sustainably, the cheapest electricity in the world.
If we get the structure right and manage the transition in the best interests of all of our people, it will be a positive boon for Africa’s economy. This is a major task, but if achieved, we have a lot to look forward to.