As excessive rates of interest, value of dwelling crises, and the monetary disruption brought on by warfare in Europe eat into help budgets, enlargement of Africa’s power networks is more and more falling to small photo voltaic arrays, with C&I techniques main the way in which.
The earlier emphasis on massive photo voltaic initiatives funded by developed international locations is making manner for a business photo voltaic revolution as shopkeepers and companies of all sizes develop pissed off with the intermittent power equipped by ageing grids and debt-saddled utilities.
The sudden scale of the market opening up for C&I photo voltaic installers in Africa has pushed a wave of merger and acquisition (M&A) exercise as photo voltaic corporations try and hold tempo with the alternatives in entrance of them.
In December 2022, oil main Shell accomplished its acquisition of West African business photo voltaic installer Daystar Energy Group. The latter said the transfer would allow it to broaden into East Africa and southern Africa with the goal of getting 400 MW of era capability by 2025.
Main mergers
The Shell deal was first introduced in September 2022, the identical month plans emerged for the merger of C&I photo voltaic corporations Starsight Power and SolarAfrica Power. With Starsight having operations in Nigeria, Ghana, and Kenya, and SolarAfrica primarily based within the south of the continent, the transfer was credited with creating “the primary really pan-African renewable power companies supplier.” The brand new enterprise would have 220 MW of put in era capability, 40 MWh of battery storage, and a gigawatt-plus challenge pipeline, in keeping with the press launch saying the deal.
When pv journal spoke to Hery-Zo Rajaobelina, common supervisor of Madagascan firm GC Photo voltaic SA, in regards to the developments rising within the C&I photo voltaic scene, the enquiry proved a well timed one. Rajaobelina revealed that GC Photo voltaic SA’s business photo voltaic enterprise was about to merge with Anka Madagascar, a female-led firm that makes a speciality of mini-grids, based in 2008.
Rajaobelina defined the merger, at the moment on the due diligence stage and set to be finalized in the midst of subsequent yr, will convey apparent advantages to each events. “We all know that the place between the 2 corporations is totally totally different as a result of we’re specialised in C&I,” mentioned Rajaobelina. “It appears the higher method to handle the market as a result of the mini-grid operator didn’t have EPC [engineering, procurement, and construction] experience in its DNA. For us, it’s the chance to broaden our market. We will act as an EPC for mini-grids and their clients.”
Surging demand
It’s a repeating sample, famous Adam Fitzwilliam, director of Spark Power Providers. Spark funds C&I renewables techniques and power effectivity initiatives for companies in sub-Saharan Africa and is a part of London-based non-public local weather and affect fund supervisor Camco. Fitzwilliam agreed the market is altering as the size of C&I photo voltaic demand surges.
“When the market began it was fairly fragmented,” he mentioned. “There have been numerous smaller builders doing perhaps 2 MW of PV. Because the market matures, we’re seeing extra M&A exercise, acquisition of initiatives from builders in addition to acquisition of corporations and mergers. A push to achieve economies of scale is driving individuals to purchase property.”
That fragmented nature of the enterprise phase was one of many issues, added Rajaobelina, who mentioned there have been too many C&I suppliers relative to the variety of purchasers who may doubtlessly afford rooftop PV.
Fitzwilliam mentioned the instance of Daystar, which had grown organically in its dwelling West African markets however wanted Shell’s velocity to “get to the following stage.” So far as Starsight Power is worried, he mentioned, “what’s attention-grabbing is it appears to be going alongside the merger route and partnering with regional consultants. They’re bringing in regional competency. Every [African] market is totally different and has its personal nuances. Firms and people that perceive the person territory are necessary.”
Intermittent provide
The underside line for C&I photo voltaic in Africa is a determined want for dependable electrical energy. The monetary travails of closely indebted state-owned utilities is a narrative that has emerged repeatedly throughout the continent and the result’s that producers and outlets, from Nigeria to Madagascar to South Africa could be left with out energy for hours at a time.
South Africa is a primary instance. Cape City councilor Beverley van Reenen, town’s mayoral committee member for power, advised pv journal again in June that the nation’s second metropolis is planning so as to add 650 MW in unbiased, non-utility energy era capability inside 5 years. Cape City will use unbiased energy producers (IPPs), residential and C&I arrays, third-party dispatchable energy vegetation, and its personal photo voltaic initiatives as a part of a 1 GW plan to complement the electrical energy sourced from cash-strapped state utility Eskom.
Wealthier economies, together with South Africa and North African nations, can entice IPPs due to their means to supply ensures of cost for the electrical energy produced, mentioned Madagascan installer Rajaobelina. Elsewhere in sub-Saharan Africa, corporations nonetheless have the identical electrical energy wants however within the absence of big-solar initiatives, particular person companies are filling the void, typically with leasing presents that imply little or no upfront capital value is required for photo voltaic rooftops that, alongside battery storage, can assure energy when wanted.
Hybrid techniques
“Energy safety is certainly a pattern we’re seeing and C&I for us is just not all the time simply photo voltaic, we get numerous requests for solar-plus-battery techniques, to work alongside diesel energy sources in hybrid techniques,” mentioned Spark’s Fitzwilliam. “Power effectivity is one other massive space for us with initiatives to make industrial manufacturing extra power environment friendly.”
It isn’t simply safety of provide that’s driving C&I photo voltaic demand, nevertheless.
“Energy high quality is just not getting higher and is, arguably, getting worse,” mentioned Fitzwilliam. “Utilities are having to extend their costs to recoup a few of their Covid and foreign money devaluation losses.”
It’s a view echoed by Rajaobelina who, when requested why his purchasers usually categorical a need for photo voltaic, responded, “Due to rising tariffs, due to the unreliability of the general public grid, and due to CSR politics.”
The latter level is noteworthy. Concurrently the circulate of unpolluted power finance from the developed world has ebbed in recent times, the company social duty (CSR) necessities laid down by family manufacturers in Europe are having an impact on suppliers, not least in sub-Saharan Africa. Garment producers and the like are having to do much more with much less.
With leased photo voltaic rooftop arrays accessible, that monetary double whammy is opening up alternatives for C&I installers large enough to satisfy the ensuing demand.
“Most of our clients are free-zone factories,” mentioned Rajaobelina. “They make merchandise for [English department store] M&S, [French luxury brand stable] LVMH and comparable corporations which need their manufacturing unit sub-contractors and their provide chains to scale back their carbon emissions for CSR duty.”
Utility travails
Whereas African state utilities are struggling underneath mountains of debt – a state of affairs that was already evident earlier than being exacerbated by authorities orders proscribing their means to chop off clients throughout the pandemic – the other is true on the subject of worth pressures for unbiased renewables suppliers. Fitzwilliam mentioned the value of photo voltaic panels, inverters, and batteries is usually following a downward pattern, giving enterprise the choice of taking dependable, clear electrical energy provide into their very own fingers.
That’s welcome information for Rajaobelina, who was caught by the spike in panel costs and cargo prices that occurred as demand rebounded within the wake of easing pandemic restrictions in 2021. He identified, nevertheless, that offer chains are nonetheless not again to their pre-pandemic state.
“Now, the value of photo voltaic panels has decreased once more but when we wish to purchase from JinkoSolar, or JA Photo voltaic, or Suntech, the Chinese language corporations can’t preserve their worth above one month, generally two weeks,” he mentioned. “If we wait two weeks, it could rise once more. Now we have acquaintances at Complete Power and Engie and, in the event that they wish to purchase 200 MW or a gigawatt of photo voltaic panels, they will’t get a worth for a yr forward. It’s not possible to get a worth one yr, three months, or two months forward.”
The state of affairs for inverters will also be tough. Rajaobelina mentioned his firm made a 100% cost for SMA photo voltaic elements in July 2022 and supply was additionally delayed.
Large photo voltaic
Fitzwilliam believes the dearth of large-scale, typically publicly and donor-funded photo voltaic initiatives in Africa will ease as soon as a enterprise mannequin could be discovered that can remedy the conundrum brought on by the specter of non-payment. “We’re simply making an attempt to determine the best construction and the chance administration options,” he mentioned.
The Spark Power director advised pv journal that governments are additionally more and more acknowledging the position non-public sector corporations can play in filling within the gaps in power provision. He additionally emphasised the necessity to keep away from contemplating public utilities and privately-installed off-grid photo voltaic suppliers as opponents.
“There’ll all the time be a necessity for the grid,” he mentioned. “One of many frustrations of working within the sector is the same old dichotomy: C&I versus the grid. The 2 can coexist fairly effectively.”
Whereas donor funds and African governments grapple with find out how to make massive photo voltaic engaging to backers once more, the surge of demand for PV that’s being pushed by corporations which have misplaced persistence with their utilities is about to proceed. That seems more likely to drive extra consolidation among the many sector and will change the face of African clear power.
“A load of cash has been raised to deploy C&I photo voltaic within the subsequent 5 years,” mentioned Fitzwilliam. “My intestine feeling is we’ll see one other step change in C&I provision within the subsequent 5 years, significantly in among the bigger markets which have poor energy high quality, similar to South Africa and Nigeria. But in addition, we’ll see improvement in among the smaller markets, pushed by smaller builders, together with these previously targeted on mini-grids and rural electrification, which look to extend profitability.”
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