Energy investors flock to solar

THERE is a wave of applications by potential investors to invest in solar energy generation, amid indications that the lower generation costs for the renewable energy source – compared to hydro-electricity – is the major attraction.

In recent weeks, the Zimbabwe Energy Regulatory Authority (Zera) has been running adverts to notify the nation of firms that have applied to invest in solar energy.

Several companies – including the Zimbabwe Power Company (ZPC) – have applied to start solar power generation projects.

The biggest project has been applied for by ZPC, which wants to set up three solar power plants – each with 100MW capacity – to be situated in Gwanda, Matobo and Munyati.

ZPC wants to construct, own, operate and maintain the proposed 100 MW Insukamini solar photovoltaic power plant at Valindre Farm of Matobo district, Matabeleland South Province.

The Ministry of Finance and Economic Development has already awarded prescribed asset status and national project status to the Gwanda Solar Project and the Gairezi project.

ZPC managing director Engineer Noah Gwariro had hinted on August 8, 2017 that the national power generation firm had been granted approval by the State Procurement Board (SPB) to “negotiate all solar projects in view of the downward trends in solar project prices”.

As from 2009 to August 31, 2017, Zera has received and processed 17 applications and, if consummated, the projects have capacity to generate 684,8MW.

The figure is just about 65MW shy of Kariba South hydropower station’s current installed capacity, and would come in handy, especially at a time the nation is living with the threat of being switched off by South African power utility Eskom over debt estimated at US$45 million.

The combined estimated output from the solar projects is 1 555,029Gwh.

Eng Magombo said the surge in applications to develop solar energy projects could be motivated by the fact that project developers have realised that Zimbabwe has solar potential with a radiation of over 20 mega joules/ square metre (m2), which comes at “no cost as there is no fuel purchase agreement required to operate a solar plant project”.

Twenty mega joules per square metre translate to an average of 5,5 hours of peak sunlight per day.

“This explains why we have witnessed a number of solar applications more than any other technology. The increase in applications for solar projects is also attributable to the increased awareness globally on the need to develop clean sources of energy to curb emission of greenhouse gases.

“The increase of these applications is also stimulated by the country’s electricity supply deficit which is currently met by imports. In addition, solar energy is a clean and renewable source of energy and, as such, solar projects readily access investment funds in a bid to combat or mitigate climate change,” said Eng Magombo.

Funders of power generation projects have largely become averse to untie their purse strings for energy projects such as thermal, which is seen as harmful to the environment.

There is a campaign around the globe to ensure a drastic cut or elimination of all causes of gaseous emissions that negatively impact on the environment.

This has made solar energy, which is renewable, a natural magnet for funding.

Lower cost of generation

A renewable energy feed-in tariff study which was updated last year shows that the capital costs for setting up a mini-hydro power station is US$2,400/kW.

However, setting up a solar generation project costs US$1,150/kW, with projections that the costs can go further down.

Setting up a 2MW hydropower plant would therefore require a capital investment of about US$4,8 million while a solar plant with the same capacity would cost around US$2,3 million.

This implies that a solar project costs almost half of what one has to shell out for a mini-hydro project.

Eng Magombo said the costs of setting up energy projects of that magnitude vary depending on the source of funding, with funds obtained from private players usually considerably high.

“The above estimates exclude the cost of finance, which differs according to source and tenure.

“The cost of projects funded by funds of private financiers are likely to be higher compared to those funded through Government to Government arrangement,” said Eng Magombo.

The perspective rings true for the recently commissioned 1,6MW Kupinga Hydro Power Station in Chipinge, which was funded to the tune of US$5,7 million by Old Mutual Zimbabwe.

As part of reducing the cost of investing in solar projects, and cut down on grid electricity usage, Government is crafting a Renewable Energy Policy and Solar Water Heating Regulations.

Zera referred questions pertaining to the status of both the policy and regulations to the Ministry of Energy and Power Development.

However, no comment could be obtained as Energy and Power Development Minister Dr Samuel Undenge, and the ministry’s Permanent Secretary, Mr Partson Mbiriri, were not answering their mobile phones by the time of going to print.

In September last year, Zera said the policy was in the Attorney General’s office.

The renewable energy policy encourages adoption and deployment of green energy, with emphasis on development of solar power.

At the moment, all solar equipment – except for batteries – are coming in duty free, as part of efforts to reduce the cost of setting up solar projects.

This was enabled through Statutory Instrument 47 of 2010.

Only value added tax (VAT) is payable on all products.

Eng Magombo said it is critical to have solar power as part of the energy mix as it helps reduce the country’s carbon footprint by reduction of greenhouse gas emissions.

Solar is also available for over 300 days per annum in Zimbabwe and electricity supply from solar is reliable and sustainable.

“Solar energy can (also) be used mainly to meet the country’s day demand, thereby allowing a hydro-power station like Kariba to conserve water during the day as well as reducing electricity imports.

“Its portability allows it to be easily distributed in remote areas to allow for first tier access to modern energy which provide energy for entertainment, lighting and powering ICT gadgets in homes and schools.

“At household level, it is cheaper and is also scalable, thus meeting the minimum requirements which makes it ideal for isolated areas provided it comes with a robust storage system,” said Eng Magombo.

Nonetheless, solar energy has its own downside, including that it is expensive once combined with storage for it to meet evening peak demand.

Similarly, the technology remains intermittent as output fluctuates with changes in conditions of the weather, while the quality of equipment and the installation process can also have an impact on the quality of power supply and the durability of the system.

Not a local phenomenon

The rise in investments in solar are not limited to Zimbabwe. Already, solar energy contributes 20 percent to Germany’s energy mix and the International Energy Agency’s yearly review of renewable energy points to continuing massive uptake in the share of global electricity generation from renewable sources’ current 24 percent to 30 percent by 2022.

Denmark is expected to become the world leader with 70 percent of its energy coming from wind and solar power.

It is expected that Ireland, Germany and the United Kingdom will get over a quarter of their energy needs from wind and solar.

The IEA forecasts that Australia’s renewable generating capacity could grow by 49 percent in the next six years, hitting 28,4 gigawatts.

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