Impact Partner Content: Absa | by Justin Schmidt, Head of New Sectors, Absa

In this series of four articles by Justin Schmidt, Head of New Sectors at Absa, he will unpack the three most topical renewable energy technologies and conclude the series with a view on the technologies which are changing the future state of the industry.

The 2030 Agenda for Sustainable Development, adopted by all United Nations Member States in 2015, provides a shared blueprint for peace and prosperity for people and the planet, now and into the future. At its heart are the 17 Sustainable Development Goals (SDGs), which are an urgent call for action by all countries - developed and developing - in a global partnership. They recognize that ending poverty and other deprivations must go hand-in-hand with strategies that improve health and education, reduce inequality, and spur economic growth – all while tackling climate change and working to preserve our oceans and forests. Goal number 7 is to ensure affordable, reliable, sustainable and modern energy for all.

Before unpacking the first technology (Solar Photovoltaic), renewable energy is any form of energy generated through natural processes (like sunlight) that can be replenished over a period. In contrast, energy that depends on finite resources such as coal or gas are called non-renewable. In recent years, renewable energy technologies have evolved at an incredible rate, with more options than ever for commercial and industrial use. It’s important to note that renewable energy technologies are no longer as expensive as you might think, and often last longer than you might imagine.

Solar Photovoltaic, an introduction

Solar Photovoltaic (PV) systems are one of the most commonly used renewable energy technologies. This is largely due to their cost-effectiveness and the abundance of sunlight, especially in Africa.

Solar PV panels convert solar radiation (sunlight) into electricity. The more light the PV panel is exposed to, the more current it generates. Maximising exposure will also maximise the amount of electricity it generates in the form of direct current (DC) electricity, which is not compatible with the electricity found in many homes or offices.

Inverters are needed to convert this DC electricity to alternating current (AC) electricity found in buildings. Therefore, major components for any PV system consist of the PV modules, that supply DC electricity to the inverters, which in turn supply AC electricity to the balance of system, which consists of the different electrical and safety equipment.

Our leading class renewable energy resource, the sun

Solar PV systems use solar radiation to generate electricity. Africa has an abundance of solar resources – even the cloudier regions are more suitable for PV than the best regions in some of the leading countries for PV, such as Germany and Japan.

The above map indicates the available solar resources across the globe for one year. You will note much stronger red colour across Africa compared to most other continents. This means we receive higher levels of sunlight per square meter than many other parts of the globe. While many countries require subsidies to make solar viable, our subsidy comes through the abundance of solar radiation we receive.

Financial considerations for your business and household when investing in Solar PV

The price of PV systems has declined significantly in the last decade. Despite this reduction, the initial capital costs of PV systems are relatively high when compared to non-renewable energy sources, such as diesel generators. However, unlike non-renewable energy sources, PV has no fuel costs and low operation and maintenance costs. It should therefore be considered as a long-term investment.

Solar PV’s financial feasibility is calculated through the offsetting of the electricity consumed from the local network, which results in a reduced electricity bill. If you compare these cost savings against the cost of repaying a loan, there is often a strong case for solar if finance is structured correctly.

Higher electricity prices have also resulted in a more feasible financial model for a PV system. Larger PV systems offer lower energy costs over the PV system’s lifespan when compared to smaller systems, due to the lower installation costs.

Lifespan and costs of Solar PV

Most solar PV panels on the market today come with a warranty of 25 years, meaning that the power output will not be below 80% of the rated power until after 25 years of service. Other components, such as the inverters, must be replaced after every 10 years of service – an important cost to consider.

Suitable implementation

Solar PV systems can operate as stand-alone units or tied to the local electricity network. Small-scale stand-alone units are commonly used in remote areas that are not connected to the grid. In typical stand-alone units, battery packs are installed for night-time operation. The electricity from small-scale stand-alone units is used for powering domestic appliances such as radios and refrigerators.

Grid-tied systems are connected to the national power grid. These systems are becoming increasingly popular, with many households installing small PV systems. It is also implemented increasingly in the commercial and industrial sector to offset electricity usage from the grid. Since PV systems only generate electricity when the sun shines, we have seen highest adoption with farmers, manufacturers, retailers, shopping centres and other businesses that operate in day light hours.

Conclusion

When thinking about your company or household’s future energy mix, solar PV is likely to be the most viable option for you. Given the reducing costs of technology, increasing energy costs, our abundant sunlight and the long lifespan of the technology the business case is increasingly attractive. Solar PV is therefore a key enabler to achieving goal number 7 of the UN Sustainable Development Goals by ensuring affordable, reliable and sustainable energy for all.