Solar power breaks through, expanding fast

ALOT of solar power has been installed in Zimbabwe, but almost all of it is connected in isolation to single buildings providing back-up power for businesses and homes, or in some parts of the country providing the sole source of power for a clinic, school, home or small business.

Not much has been commissioned for sale to the national grid, although the little over 60 megawatts now being supplied has filled in for the no-longer functioning 70-year-old coal generating equipment at the three old thermal stations.

But over the next few months quite a bit extra is expected from the independent power producers as they get their act together and before year end at least 10 percent of the grid supply should be solar, and that percentage is rapidly rising.

There are stations being built right now that will add another 100MW to the independent supply and this is just the start of the major expansion that is in the process of being created in this sector.

We now seem to have moved out of the stage usually described as proof of concept into the stage of a regular sort of business that companies are interested in expanding. This positive air of expectancy was seen last week at the International Renewable Energy Conference hosted in Victoria Falls with some definite progress being reported over funding and imminent commissioning, rather than the sort of stress on “planning in progress” that has tended to dominate previous discussions.

The conference also allowed the Government, United Nations agencies and others to make it practically clear how the policies had evolved, again from statements of intent towards the sort of detail that investors need to make decisions about spending money and actually buying solar panels and batteries.

On the policy side we had President Mnangagwa seeking conventional and unconventional solutions. The Government is keen on the concept of private owners of power stations, the independent power producers, going through the fairly easy licencing procedures, building solar stations and connecting these to the grid so they can sell what they generate. This is fairly standard and has already been done.

Having a business or institution such as a clinic or hospital or school fitting solar panels for private consumption is even more straightforward, requires nothing in the way of a licence and can be done by a competent contractor very quickly.

At present this must form the bulk of the installed solar capacity, in many cases replacing a diesel generator or being installed instead of one.

But the President is keen in something in between, what he termed a mini-grid. This would be a way to expand into more rural areas more quickly. This would be an installation in a village or other centre with a number of small businesses and houses wired in. It would be, at least for a while, separate from the national Zesa grid, although in time the grid would extend to the installation and it would become an independent power producer on the grid.

But while it was off grid it would still be supplying power to the community, not just one entity.

This would require some way of being able to charge for the power, and an approved and licenced scale of charges, so that costs were covered along with an agreed modest mark-up, but inefficiencies would not be subsidised by consumers and profiteering would be banned.

Many years ago this was done. When most power stations in Zimbabwe were owned by municipalities or the old Electricity Supply Commission and were being gradually linked up in a national grid, Nyanga had a private local diesel generator that connected the community at agreed charges.

It was a bit more expensive than grid power, and was not always 24/7, but it was a lot cheaper than each business or house having its own generator and a lot better than using paraffin and candles.

The energy regulator has the necessary authority to licence such local grids and set the charges, and it has shown that it can check the sort of calculations that are given to it, everyone from Zesa on downwards, to make sure charges fulfil the double requirement of being adequate and fair.

And Zera has always been dubious about profiteering and dislikes inefficiencies adding to costs. But a well-run investment will be profitable.

The President did stress affordability, although in the mini-grids this needs to be related to the costs of alternatives, entities buying their own panels or generators.

In almost every case, and definitely in the case of a functioning investment, the economies of scale and the economies that arise from combining requirements into a mini-grid, will ensure that the power to consumers will be significantly lower in cost than everyone having their own.

Another major advance that was announced at the conference came in the area of financing the independent power stations. Agreements have been made with external investors for some, and they are welcome in Zimbabwe as has been made clear. But we could also do with some of our own. Perhaps the largest single private investor in buildings and infrastructure, Old Mutual, has stepped up to the mark.

This company has a reasonable investment cashflow, collecting premiums of private pension schemes it manages plus its insurance premium income, that both need to be locked up for decades at times to ensure that future commitments are paid, and that meanwhile they should be producing regular income to fund the monthly pension payments.

Old Mutual has now added a private power station to its investment mix, both for its own funds and what looks like having some sort of way for ordinary Zimbabweans wanting to buy in, with an initial mark set of US$10 million. This investment appears to be an extension of what the company has already done to wire up its own headquarters.

The scheme appears to have passed other tests. The United Nations family and the Government both see the renewable energy fund being a suitable vehicle for some of their funding, with its tight management and already serious commitment in the form of investment.

The conference also brought up the need again for the “future plans” to make batteries being firmed up and brought forward. Zimbabwe has suddenly leapt into the top rank of lithium producers, and thanks to Government policy and economics all producers are in the process of building processing plants or working out arrangements with companies that have gone that route. This means Zimbabwe will have the pure salts that a battery factory requires.

Other mineral inputs are largely available, especially nickel, with that now being refined locally as well. Cobalt, a lower level requirement, is not mined in Zimbabwe but is available on the Zambian and Katangese copperbelt and buying in the odd truckload is not difficult.

With the bulk of materials on site, and the rest nearby, there is a need for the technology and investment, but again this should be something that can be put together. Economically it would probably reduce costs to ship out batteries rather than sacks or containers of lithium salts and bars of nickel. And at the same time it would start creating the higher end engineering industry that Zimbabwe really needs to add value.