Green energy technology services provider New Southern Energy (NSE) is aiming to secure a supply and finance contract at a game lodge in the Kruger National Park, in north-eastern South Africa, for a 250 kW photovoltaic (PV) solar panel system to replace diesel-powered generators currently in use at the game lodge, NSE director Deepak John tells Engineering News.

NSE is also targeting game lodges outside South Africa that use diesel-powered generators for electricity, as the sites where many of these game lodges are situated are not connected to the respective country’s national grid. “Diesel-powered generators cost about R6/kWh when all cost factors, such as the transport of diesel and maintenance of the generators, are considered. With the equipment NSE provides and finances, customers pay about R4.50/kWh,” he explains.

Different sites will be charged different rates, owing to factors such as the terrain, the remoteness of the location and the logistics costs involved in transporting the equipment to these locations.

The company also aims to secure contracts in Botswana and on two islands, off the coast of Mozambique and the Seychelles respectively.

Meanwhile, in April, NSE successfully financed and installed a PV system for a Cape Town-based Moyo restaurant, notes John, explaining that NSE helps businesses finance energy efficient systems owing to the high cost of these new technologies.

The company’s PV solar panel system is an alternative to grid-based electricity. This type of technology is more costly based on kilowatt hours saved and it takes longer for clients to realise return on investment. PV systems are, however, a better option for sites using more expensive alternatives, such as diesel-powered generators, and attractive financial returns can be expected in the long term.

He adds that it does not make sense to use PV to power inefficient systems. Therefore, NSE focuses on the fundamentally important task of making a site as energy efficient as possible by installing and financing more efficient light bulbs, air-conditioning systems and waterheating systems. Once the site is using as little power as possible and is still operating as required, NSE provides a PV system to further reduce diesel use.

Equipment is leased to customers over six years and NSE charges a rate based on the amount of kilowatts the equipment uses, which is structured to ensure that the user spends less on electricity than before. The rate includes installation, rental, maintenance and servicing.

NSE started with ten-year contract agreements, as this was the typical period it would take to pay off the investment. However, John notes that some clients wished to pay off the investment quicker, which led NSE to structure the repayment process over six years. Once the six years have passed, NSE offers its clients a rollover option on their payments and, should they not choose this option, NSE will repossess the equipment. NSE also offers a leasing structure, requiring clients to pay a deposit and the kilowatt-hour rate. Once the lease period expires, the system will change ownership from NSE to the client.

He adds that it was challenging for NSE to secure finance for the type of energy efficient systems that it provides, as people are not familiar with these new technologies and are, therefore, hesitant to buy such equipment. This is a result of the risks associated with these unknown technolo- gies, making finance conditions inflexible in terms of the rates being charged and the restrictions placed on the type of finance.

However, NSE obtained reasonable financial conditions through a partnership with Mauritius-based renewable- energy, energy efficiency and carbon mitigation project development and investment company New Vision Investments (NVI). This partnership enables NSE to provide finance for equipment to be installed on site according to terms beneficial to NSE and NVI.

“It has taken NSE a long time to secure a partner that is flexible and willing to accept the associated risks of new technologies. NVI receives capital from investors who are actively involved in develop- ment projects, such as energy efficiency or environmental sustainability projects, which has allowed NVI to secure capital for all NSE’s African projects,” says John.

NVI requires that NSE limit its risk profile by spreading its investment over a minimum of 20 sites. Should one of the 20 sites go bankrupt, revenue will still be generated by the clients that are still operational, John notes.

Another challenge of this technology, he says, is that potential clients are concerned about the upkeep of the equipment, as they do not have the personnel with the necessary skills to maintain the equipment supplied by NSE.

To address this issue, NSE offers a full maintenance and service package covered by the kilowatt-hour rate it charges, which enables the company to set up 24-hour support infrastructure within the specific geographical area of its clients. “For example, in Botswana, NSE has partnered with a local electrical services and plumbing company to service the equip- ment it provides. This has limited clients’ risk, as they do not have to pay for repairs or maintenance,” explains John.

The systems NSE provides are automated and remotely monitored. They only require input from personnel should a challenge, such as the PV systems not producing enough power, arise.

However, NSE and its local service partner provide two- to four-week training for some on-site staff members. They will receive training not only in identifying potential challenges and in repairing certain problems of the system, but also in contacting the appropriate maintenance services personnel for repairs that require different skills.

The staff will also have to submit a checklist, which includes information, such as equipment settings, either monthly or fortnightly, to NSE, depending on the complexity of the system. The equipment is also installed with monitoring devices that send alerts to NSE regarding problems with the equipment, providing the company with an early-warning system and highlighting potential equipment failures.