A study by climate change and sustainable development consultancy Camco has indicated that large-scale solar photovoltaic (PV) power projects (over 1 MW) could easily be added to South Africa’s existing renewable energy feed-in tariff (Refit).

Admittedly more expensive, the suggested tariff for these large scale solar PV projects was R2,98/kWh. Camco said that although solar PV was a relatively expensive technology, there were a number of overall socio-economic benefits and long-term opportunities that could be achieved through the growth of the solar PV market in South Africa.

Under the existing Refit, a wind tariff of R1,25/kWh was sanctioned, while small-scale hydro would receive 94c/kWh, landfill gas 90c/kWh and concentrated solar would receive R2,10/kWh.

The National Energy regulator of South Africa (Nersa) released its Refit in March this year, and included the technologies of wind, small-scale hydro, landfill gas and concentrating solar power. Solar PV was excluded, although Nersa indicated that it, and biomass could be included at a later stage.

“There is a good chance that we will see solar PV, large-scale, on the feed-in tariff before the end of the year. The regulator has indicated that they are very keen for this, they are looking at it, but it will still be dependant on the price – if they believe that that price will not have a negative impact on electricity costs,” explained Camco South Africa director Jonathan Curren.

Global solar PV manufacturer Sharp said it was keen to explore the potential for a solar PV feed-in tariff in South Africa, and contribute to the advancement of the technology and the market in the country. This was why the company commissioned the study through Camco - to prepare a discussion paper on the regulatory framework requirements, market potential, and socio-economic impacts of a solar PV feed-in-tariff in South Africa.

Curren further noted that globally, the solar PV market grew by 110% in 2008, with the market in Spain increasing by 285% last year, and this, he added, was largely because enabling regulations, such as a solar PV feed-in-tariff were put in place.

Importantly, because demand increased dramatically, this translated to the cost of production decreasing as well. In some countries, such as Italy, the technology was said to be reaching ‘grid parity’ price – where the cost of power from a solar PV installation was almost at the same level as the larger grid generation price.

In South Africa, where the average Eskom tariff was about 22c/kWh, this grid parity could take some time to reach, even though imminent electricity price increases were almost certainly on the cards.

Currently, sunshine-rich South Africa has an installed solar PV capacity of 12MW.
However, Sharp Energy Solutions Europe (SESE) government affairs manager Barbara Rudek emphasised that South Africa had very good conditions for solar PV. With its high levels of irradiation, South Africa could achieve between 4,5kWh/m² and 6,55kWh/m² from a solar PV panel.

Globally, the total production of electricity from solar PV was about 6 941 MW in 2008. SESE vice president Peter Thiele noted that some 473 MW of this generation capacity was from Sharp’s solar PV cells. The company was the fourth-largest manufacturer of solar panels in the world.

In addition to the proposed R2,98/kWh tariff for large scale solar PV, the Camco study showed that a feed-in-tariff of R4,11/kWh for commercial solar PV projects under 1 MW was suggested, and a tariff of R5,43 for small residential systems.

The study also stated that there was sufficient international experience on the technical aspects of solar PV projects, which can be used and adopted in South Africa. There was a particular need to put in place quality standards for PV modules and standards for grid connection, especially for small-scale projects.

Camco highlighted that there were inherent socio-economic benefits from solar PV in terms of job creation, skills development, increasing energy security, and stimulating small to medium-sized enterprises and local economic development. 

“Recent studies indicate that there is significant potential for job creation in the renewable energy field in general and in the region of 10 000 potential jobs could be generated by solar PV by 2020,” the study said.

South Africa has been urged to diversify its energy mix away from the heavy reliance on coal, and towards more environmentally friendly renewable energy technologies. Because these are often more expensive than coal-fired power, the feed-in-tariff is designed to ensure that independent power producers would cover generation costs, as well as a decent return on investment. Eskom, as the single buyer, would pay a higher tariff for energy generated from renewable resources.