Farmer's Weekly (South Africa)
Financing models now make technology more affordable
Cost is one of the main reasons why farmers are struggling to adopt energy-saving technologies. Charl du Plessis, head of project development at Energy Partners Solar, spoke to Glenneis Kriel about the company’s solution to this problem and new developmen
Tell us more about Energy Partners
Energy Partners was founded in 2008 in response to South Africa’s first energy crisis, which resulted in widespread load shedding that started at the end of 2007. We initially offered management consultancy services with a degree of actual implementation, advising businesses on ways to improve their energy efficiency and implementing behavioural change processes and the use of improved technologies, such as LED lights, power factor correction, voltage optimisation, and refrigeration control optimisation. Our services helped Pick n Pay to almost halve its energy consumption.
In 2014, we expanded our services to address the affordability issue by offering turn-key engineer, procure, construct solar, refrigeration, steam, water and fuel as utilities by way of various power and utility purchase agreements.
Tell us more about PSG ’s involvement with the company
PSG Alpha Investments is a subsidiary of the PSG Group, with a mandate to support companies with exceptional growth potential. It has held the majority share in Energy Partners since 2011, after which it has made substantial investments in the company.
How has Energy Partners performed in recent years?
Revenue has grown by 82% over the past five years to R561 million and is predicted to grow to R790 million in the 2019 financial year.
What makes Energy Partners Solar different from its competitors?
We have integrated technology and financial structuring to an unprecedented level in the commercial, industrial and agricultural markets in sub-Saharan Africa. As far as we know, we have the biggest solar power purchase agreement footprint in Africa. In other words, we’re able to generate power more cheaply than the grid, with complete ownership flexibility for our clients.
Many companies claim that they can do this, but it has taken a couple of years to seamlessly integrate aspects such as contracting into our offering and build our current footprint of actual operational systems.
By the same token, we’re comfortable about building systems for our clients where they want to invest their own capital. We bring the same quality and project management to these projects that we would have if we were building for ourselves under a power purchase agreement. Where clients invests their own capital, we offer maintenance agreements that include a power generation guarantee, so clients can accurately predict the return on their investments.
All these are backed by the PSG Group, which has a track record that speaks for itself. This offers peace of mind to our clients over the long term, which is a major consideration when deciding on solar investments.
how do your prices compare with those of other utility suppliers?
At Energy Partners Solar, we sell electricity between 10% and 60% cheaper than the municipal or Eskom tariffs. Remember, though, that Eskom has more than 100 pricing tariffs, and some farmers have to buy their electricity via a municipality. Farmers on Ruraflex or Landrate usually pay significantly less than those buying it through a municipality.
A great advantage with our partnership agreements is that price escalations are fixed for the entire term of the agreement. In effect, users are protected against major price shocks.
We offer lower rates in our longer term agreements than in our shorter term ones.
WHAT are the factors that affect the economic viability of a solar project?
Three factors drive the viability of a solar project: cost, solar irradiation, and the price of alternative energy sources.
The most viable project will typically be in a high solar irradiance area with a high municipal or Eskom tariff.
What are the main mistakes farmers make when buying solar systems?
Farmers are often advised to buy technologies with a far larger capacity than they actually need. For the best results, a farm’s consumption throughout the year, seasonality of production, and times when most energy is required should be considered. For example, it’s of little use installing solar energy equipment to power irrigation pumps when most of your orchards are irrigated at night.
Can farmers sell their extra energy back into the grid yet?
Currently, most farmers who use our grid-tied technologies do not receive any remuneration for the energy they put back into the grid. There has been much talk about this, but only a handful of municipalities offer the net metering tariff. Farmers who do not want to ‘lose’ energy need to make use of batteries to increase self-consumption.
What is driving the uptake of solar energy?
Over the past decade, solar technology has seen major advances that have made the technology much more efficient and affordable. We primarily have three types of clients: those who want to reduce their electricity costs, those who have reached their cap and need additional energy to expand their businesses, and those who want to reduce their carbon footprint.
With carbon taxes looming and rising international pressure for carbon reductions, there will be a greater drive for companies to enhance their energy efficiencies and look to alternative, more environmentally friendly sources of energy.
What are the latest developments in solar technologies?
At the moment, the market is dominated by three types of solar technologies: poly- and mono-crystalline silicon, and thin-film cells. Silicon technology has been here since the 1970s, with most recent developments focusing on the improvement of production efficiency, which has greatly increased the affordability of the technology.
It might, for example, make more sense to install a solar pump than a wind pump for irrigation purposes, which would have been unthinkable a decade ago. The great thing about a solar pump is that it does not have the heavy, breakable parts found in a typical wind pump, and when the sun doesn’t shine to power the pump, rain will probably be irrigating the crops.
The latest technology is bifacial, which means it can generate energy from the sun overhead as well as from light reflected from the surface. This technology is up to 30% more efficient than mono-facial technologies.
What is happening in terms of power storage?
Batteries have seen many improvements in recent years, with the latest lithium types costing about half of what they did five years ago and being far more reliable. There is also a focus now on developing alternative storage solutions, such as super capacitors, which is a totally new technology that does not even look like a lithium battery. Advancements with storage technologies are bound to increase rapidly over the next five to 10 years.
Should farmers wait before investing in these technologies?
No. Their prices are decreasing each year, while the cost of electricity is going up. The adoption of solar energy is a global phenomenon and South Africa is ideally located for it.
• Phone Charl du Plessis on 021 941 5140, or email him at charl.dp@energypartners.co.za.