Renewables takes mainstage in Africa’s race of reduction
Renewable energy companies are slowly but surely making a dent in the debilitating shortage of electricity in Africa, writes Leon Louw, founder and editor of WhyAfrica.
A lack of sufficient power and infrastructure are two reasons why many African economies could not fire on all cylinders in the past.
However, in most countries across the continent, the problem is being addressed. Renewable energy projects are being rolled out at a rapid pace as governments ease restrictive regulations to lure more foreign investors, where a lot of technological knowledge still resides.
Renewable energy specialists from around the world have realised the potential in Africa, and the competition to get a foothold on the continent is fierce. The future of renewable energy in Africa is great and first movers in the market will reap the rewards within the next few years.
Environment, social and governance (ESG) criteria will play a critical role in how many socially conscious investors these companies attract on international markets. Moreover, companies with a high ESG rating will no doubt have a head start in the bidding process for major projects.
Meanwhile, mining companies have realised the benefits of building a renewable energy project on site, especially if they operate in remote regions. Running part of the operation on solar power or other forms of renewable energy (and not on diesel generators or other forms of fossil fuels), not only reduces costs but it slashes carbon emissions, which in turn, increases ESG rankings.
Release by Scatec makes inroads
One renewable energy company that has drawn my attention over the past few months is Norwegian headquartered Scatec. The Oslo listed outfit is not a stranger to Africa and it knows how to negotiate the pitfalls. The company, under its Release by Scatec initiative, is now targeting the mining sector, and making great progress.
Scatec has developed, build, financed and operated more than 1GW of solar PV and hydro projects in, amongst others, South Africa, Egypt, Mozambique, Rwanda and South Sudan.
The company was recently awarded preferred bidder status on three projects by the Department of Mineral Resources and Energy in South Africa under the technology agnostic Risk Mitigation Power Procurement Programme. The three projects totalling 540 MW solar and 225 MW/1,140 MWh battery storage are located in the sun drenched Northern Cape Province of South Africa. The projects have a total estimated capex of USD 1-billion.
Furthermore, Scatec was recently rated by the Governance Group as a leader in ESG reporting on the Oslo Stock Exchange. This means that out of the 100 companies on the Oslo stock exchange, Scatec, along with Norsk Hydro, are the best at reporting ESGs. In a country where sustainability is non-negotiable and where the standards are high all round, that is impressive.
Raymond Carlsen, CEO at Scatec sums it up when he says: “Sustainability is at the centre of everything we do in Scatec, and we work steadily to identify and manage ESG risks and impacts in our business and value chain. This recognition reflects the high priority sustainability is given in our company, and strong reporting is key to better monitor and measure our performance.”
On the radar of the majors
The fact that Release by Scatec is now on the radar of major mining companies in Africa is telling. The company recently signed a 2-year lease agreement with French energy company Engie to provide a mobile plug and play solar PV plant at Anglo American Platinum’s Mogalakwena mine in the Limpopo province of South Africa.
According to Hans Olav Kvalvaag, SVP Release at Scatec, this is Release by Scatec’s first involvement with powering hydrogen production, and further proves the potential for pre-assembled and containerised solar PV in the mining industry.
This is the first involvement in powering hydrogen production for Scatec as a company, and will be delivered by its scalable power solution, Release. The plant will produce 616kWp of solar energy.
“The agreement is another important milestone for us in delivering reliable and renewable power to the mining industry, but also as a way of powering hydrogen production. The Release model is gaining traction, and with its flexibility both with regards to contract term and capacity, has great potential in mining,” says Kvalvaag continues.
“The new plant will be a model for how to decarbonise hydrogen production in the mining industry for the future. Release by Scatec has great expectations for the project and its potential to be rolled out on a greater scale,” he adds.
Reducing operating costs and carbon emissions
The cost savings for a mining operation to invest in solar power or other forms of renewable energy can be as high as 40%. Regardless of whether the renewable supply consists of only solar or wind power, or solar/wind backed up with battery storage; or whether it is a hybrid system including diesel or gas-driven generators, solar/wind generation and/or battery storage, the cost of operating a mine will be significantly reduced compared to an operation driven solely by fossil fuels.
The initial capital cost of investing in a solar PV solution might be high, but the long-term benefits for a remote mine are substantial. Reducing costs and CO2 emissions are the main drivers, however, other advantages include creating redundancy in the energy supply, and the ability to obtain better reliability of power. Less outages typically do not only impact the cost of power, but more importantly reduces the cost and increases the predictability of their core mining operations.
The big question mark has always been around the ability of solar power to drive the mining operations on its own. To date, that goal has not been achieved, and the system needs to be combined with a battery storage facility and hybridised with other sources of energy. However, installing a good solar PV system could potentially reduce up to 30% to 40% of the mines’ energy load.
Scatec’s Release, for example, was especially designed as a flexible hybrid solution that can easily adapt to any significant changes in the load that the mine might experience because of expansions or closures. Release can quickly be installed, recommissioned, or expanded.
“Solar PV only produces power during the day, and currently the combination of PV and storage would typically off-set 25-40% of the mine load in the cases we are looking at now to be cost efficient. With lower battery storage costs going forward, we foresee that the renewable penetration will increase as we can install higher capacities to replace more of the thermal or alternative power currently being used,” says Kvalvaag.
In the race to provide the African continent with enough energy to kickstart lacklustre economies, the first movers are digging in their heels, and expanding at a rapid pace. The energy space is currently one of the most exciting sectors to follow, and if you are of the betting type, there is no harm in rolling the dice.
Leon Louw is the founder and editor of WhyAfrica. He specialises in natural resources and African affairs.
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