Increasing opportunities for power purchase agreements in SA
Solar power generation continues to gain traction in South Africa, and an increasing number of businesses in the country are showing interest in acquiring solar photovoltaic (PV) systems for private power generation. Over the past year, it has also become evident that power purchase agreements (PPA) offer some of the best models for utilising solar generation for private use.
This is according to Manie de Waal, CEO at Energy Partners Solar – a division of Energy Partners and part of the PSG group of companies – who says that, following regulation changes by the Department of Energy in November of 2017, businesses are able to enter into PPAs with service providers in the private sector, which has helped to solve a number of challenges associated with private power generation.
“Embedded generation (electrical power consumed on the premises where it is generated) is automatically allowed for projects under 1MW by the National Energy Regulator of South Africa (Nersa). Organisations requiring more power are still severely limited, as applications need to be made to Nersa for a generation license once projects exceed 1MW. In addition to this, embedded generation projects still require approval from Eskom and local municipalities. As a result, we continue to see companies whose renewable projects are delayed, sometimes by months, because they do not receive this approval.”
De Waal explains that PPAs overcome these challenges by allowing businesses to buy electricity from solar power providers at reduced rates, without the need to own or maintain the associated infrastructure. “This means that the responsibility of gaining approval from Eskom and local municipalities, as well as registering large renewable projects, is taken on by expert service providers with extensive experience in making these types of processes go through seamlessly and within the required time frames. It is in the service provider’s interest to gain all necessary approvals (as well as roof structural approval from a professional structural engineer), as the service provider will ultimately be investing the capital for the project.”
Another important factor to take into account, is that owning a PV system has its own set of challenges. “The most important thing about owning a PV system is to make sure that it provides optimal return on investment throughout its entire life cycle. This means that it needs to be actively monitored and maintained to ensure maximum efficiency at all times. In the case of a PPA the client does not need to worry about any of this, as the service provider has put its own capital at risk and is well-incentivised to generate the optimal return – for all parties concerned.”
“A PPA service provider is contractually bound to deliver electricity at an agreed (should be below national grid tariffs) rate, leaving the responsibility of maintaining and optimising the system up to them. This allows the client to achieve optimal savings at all times, while not diverting any time or resources away from the company’s core functions.”
As a market leader in alternative payment structures for renewable energy generation, De Waal states that Energy Partners Solar has extensive experience in devising and implementing flexible energy solutions for private sector clients. “Flexibility is crucial for any operation, since no two companies are alike in their energy requirements. Partnering with a service provider that can structure a PPA to the needs of the client is crucial,” De Waal concludes.