Sparks Electrical News February 2019

ENERGY EFFICIENCY

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2019 RENEWABLE ENERGY INDUSTRY OUTLOOK

ALLEVIATING ENERGY STORAGE CONCERNS T he International Energy Agency (IEA) predicts that by 2035, developing nations will constitute 80% of total global energy production and con- sumption alike. A greater portion of this new generation will be derived from renewable sources in response to adhering to international policies for cleaner energy. While the costs of renewable generation are declining, concern for energy storage that is essential for the effective utilisation of these renewable sources is on the rise. However, with the advent of a revolutionary concept known as Battery Energy Storage System (BESS), these concerns have been somewhat appeased. The Battery Energy Storage System (BESS) is a system that stores energy using a battery technology so that it can be utilised in the future. Spurred by the adoption of cleaner energy, declining prices and regulatory subsidies; solar photovoltaics, battery energy storage systems and mini-grids are being increasingly utilised across the electric system. These developments necessitate that utilities adapt their conventional centralised systems into more flexible, integrated and distributed power networks. This movement is evolving from preliminary phases to long-term investments that support the evolution of new business models. While still expensive, the cost of energy storage is rapidly declining. A report released by the International Renewable Energy Agency (IRENA) stated that the cost of battery storage for stationary applications could fall by up to 66% by 2030. This rapid decline has made the economics of energy storage more appealing to investors, grid operators, utilities and end-users alike. The developing technology has evidently demonstrated that economies of scale are now possible. The deployment of renewable energy is not only driven by cost efficiencies and environmental awareness, but when coupled with Battery Storage, a new dimension emerges where utilities are able to compete on a level playing field with conventional electricity power plants. Furthermore, energy storage remains a flexible, scalable and efficient solution. Energy storage thwarts the need for power utilities to unearth and replace wires or spend money and time on constructing new plants. As an alternative, they can build a network of battery storage within six months. Energy storage technologies are viewed as a potential game-changer for widespread adoption of renewable energy generation throughout Africa. They facilitate the management of renewable power intermittency, demand response services and the dispatchability of stable, clean and sustainable power into the local or national grid system. African power generation has traditionally been centralised fromcostly (often antiquated), poorly managed and maintained, inefficient fossil fuel based plants on unreliable grid infrastructure. Renewable energy and storage technologies offer low cost utility scale and distributed generation opportunities to African countries to break their dependence on such expensive plants. Policy-makers and state utilities in many countries face a challenging journey of market reform and infrastructure improvement in order to make this shift. This is needed before they will be able (and willing) to support widespread cheap and efficient generation capacity from distributed renewable energy with storage plants running alongside larger centralised plants, each selling power at cost- reflective tariffs and across robust and reliable grid infrastructure. The reality is that energy storage is going to unlock huge opportunities for more renewable energy investment in Africa at a utility and distributed scale that will totally disrupt the traditional African power sector model. Governments and state utilities will need to adapt quickly to embrace the evolution and to avoid more and more potential customers going off grid in the interim according to NortonRose Fulbright. Energy storage projects are now under development in various parts of the world thanks to the reduction of the technology’s costs and its necessity to manage the electricity networks and facilitate the renewable energy growth. But does this mean the time to develop energy storage in Africa has arrived too? The Africa Energy Indaba will be discussing the role and impact of energy storage in Africa through a focused dialogue, unpacking and exploring the opportunity for Africa.

A ccording to Marlene Motyka, US and Global Renewable Energy leader, Deloitte Transactions and Business Ana- lytics LLP in her Deloitte’s 2019 Renewable Energy Out- look, the renewable energy sector remained remarkably resilient in 2018, gaining ground despite uncertainty about new tax and tariff policies. Output from utility-scale wind and solar capacity topped 8 percent of total US electricity generation through the third quarter of 2018, compared with 7 percent for the same period in 2017. “We see the fundamental drivers of this growth poised to continue in 2019, but we also see three trends coming into sharper focus that are likely to shape renewable growth in the coming year. Those trends include emerging policies that support renewable growth, expanding investor interest in the sector, and advancing technologies that boost wind and solar energy’s value to the grid, asset owners, and customers,” she found. Some of the core fundamentals that drove growth in 2018 were declining costs of wind and solar generation, advances in battery storage technology, and grid operators’ growing expertise and expanding toolset for integrating intermittent renewable power into the grid. And, perhaps most significant, was robust demand from most market segments. Utilities demonstrated strong ‘voluntary demand,’ as opposed to the demand driven by policy mandates we’ve seen in the past. Voluntary procurement represented 52 percent of utility-scale solar projects in development and 73 percent of projects announced in the first half of 2018. This demand was partly driven by corporations’ rapidly growing appetite A frica’s demand for energy is steadily increasing and solutions to meet this growth have become a major concern amongst the energy sector leaders within the continent. Key factors contributing to this soaring energy de- mand are Africa’s ever-growing population and the continent’s accelerating economic growth. According to projections published by the United Nations Population Division, Africa’s population has grown by 30 million people in the past year and by 2050, annual increases are expected to exceed 42 million people per year meaning that the total population will have doubled to 2.4 billion. This translates to 3.5 million additional people per month or 80 more people per minute. The vast increase in the number of people in Africa along with increased standards of living puts significant pressure on the demand for affordable energy. The past few decades have seen significant improvements and growth in the African economy. Africa’s per capita energy consumption is growing faster than that of any other continent, owed largely to increased infrastructure, investment and political stability. Africa’s population is characterised by young people and a growing labour force, together proving to be a considerable strength in this aged world. With 1.1 billion workers and rising, the continent is expected to boast the world’s largest working-age population by 2034. A progressive economy requires substantial energy for increased scale of manufacturing, provision of services and transport. Energy remains an essential input to stimulate and ensure uninhibited economic development, driving economic productivity and industrial growth. In fact, energy remains fundamental to the functioning of any modern-day economy. Furthermore, Africa is still undergoing rapid urbanisation transitions, further contributing to its economic development and energy consumption demands. More economic activity translates into higher levels of income earned and, as wealth increases, so does the demand for energy. Productivity in cities is cited as three times higher than in rural regions and the United Nations predict that over the next decade, 187 million more Africans will reside in cities. This increase in urbanisation will see a surge in the consumption of energy by households and businesses alike as it was reported that between 2010 and 2015, household energy consumption increased at a rate of 4.2% compounded annually. African economies are set to profit from rapidly advancing technological devices and as the advancement of such devices unfolds, there is an increase in availability across the continent. The use of these electronic devices places further demand on the energy equation. As people become wealthier, they naturally desire more consumer goods which subsequently utilise energy in both their manufacture and usage. It remains suffice to say that there are many positive factors at play, creating a sharp increase in the demand for energy in Africa. The continent’s expanding population numbers, together with a growing economy on account of

for renewables. As of mid-October 2018, corporations had purchased nearly 5 gigawatts (GW) of renewables through a variety of procurement routes. Demand from consumers was also robust in 2018, and the findings of the Deloitte Resources 2018 Study demonstrate some of the sentiment behind these trends. More than half of all residential survey respondents (53 percent) indicated that it is extremely or very important to them that part of their electricity supply come from renewable sources, trending upward since 2013. And about half (48 percent) of business respondents are working to procure more electricity from renewable sources. Motyka summarised by saying that strong fundamentals, emerging policies, an expanding investment community, and advancing technologies will likely underpin US renewable energy growth in 2019. Increasing customer demand for renewable energy across almost all market segments continues to expand opportunities, while market developments such as the entry of smaller corporations into the corporate procurement market, renewed interest from oil and gas players, and greater involvement of asset management companies offer new opportunities for renewable growth. Let’s hope that similar results filter their way down to South Africa. Read the full report at: https://www2.deloitte.com/ content/dam/Deloitte/us/Documents/energy-resources/us- renewable-energy-outlook-2019.pdf

AFRICA’S INCREASING DEMAND FOR ENERGY

improved infrastructure, a young, sizeable workforce, inward investment and increased political stability, all contribute to the energy system demand. Growing communities require additional energy to accommodate their rising numbers, as does a developing economy to support its growth through manufacturing and consumption activities. African Energy Ministers and large energy company CEOs will be discussing and unpacking what the future game changers for the Africa energy sector will be and how to meet the escalating demand for energy at the Africa Energy Indaba taking place on the 19-20 February 2019 in Johannesburg. The discussions will form part of the Indaba conference and will attract keen interest from parties able to provide solutions to meet the demand. The importance of technology in an evolving energy sector will be explored as the impact of digitisation can play a significant role in the implementation of energy access. The format will be panel discussions, providing opportunity for audience participation, culminating in some key findings and solutions. 2019 Theme: Africa’s Energy Future Africa’s power and energy sector is a critical driver of growth and development across the continent. With vast natural en- ergy resources ranging from coal, oil, gas, hydro, solar, wind and geothermal, there is ample choice for the discerning energy investor. Lack of access to electricity means that there is an op- portunity for regional governments, energy businesses, organi- sations and financiers to unlock electricity access to millions of people who have don’t have power. The Africa Energy Indaba is the continent’s premier energy conference and exhibition: bring- ing together leading African and global energy players to unlock energy and business opportunities across the African continent. The event is the World Energy Council’s (WEC) regional event for Africa and has strategic partnerships with the South African National Energy Association (SANEA) and the NEPAD Planning & Coordinating Agency (NPCA).

Enquiries: +27 (0)11 463 9184

Enquiries: www.africaenergyindaba.com

SPARKS ELECTRICAL NEWS

FEBRUARY 2019