Increasing environmental awareness was driving South Africans to invest in a more sustainable future by installing solar photovoltaic (PV) rooftop panels, global professional services company Accenture resources associate director Ashley Maistry said at the African Utility Week, held in Cape Town last month.
Moreover, she noted that residential PV could generate electricity at R1.10/kWh to R1.20/kWh, cheaper than the R1.5/kWh to R1.80/kWh offered by State-owned national electricity provider Eskom. “[As a result], the market for solar distributed energy has grown from 3 MW in 2010 to 200 MW in 2016 – a compound annual growth rate of 101.4%. This is expected to grow to 500 MW/y, with novel financing models emerging and making it easier for prospective solar PV owners.”
Increasing use of solar PV rooftop panels in South African homes is aligning the country with global trends toward distributed generation (DG). According to Accenture’s research, called Digitally Enabled Grid, and now in its fourth year, the greatest risk utilities face is lost revenues from distributed generation. The uptake of residential solar PVs and fuel cells is a major contributor.
The Accenture survey – of more than 100 utility executives across more than 20 countries – revealed that 58% of distribution utility executives believe DG will cause revenue reduction by 2030.
Although the concern is particularly acute in North America and Asia-Pacific, as vertically integrated utilities in these regions face declining energy sales revenue and increasing network costs to support reliable energy delivery, these growth figures suggest that South Africa will also be affected.
Executives surveyed said the biggest DG- related stress on utilities’ network hosting capacity will be caused by energy prosumers who are driving small-scale DG, followed by medium- or high-voltage connected DG, such as a large-scale solar plant.
Accordingly, nearly six out of ten executives expect grid faults to increase by 2020, owing to more volatile use of their networks triggered by the deployment of distributed renewable generation. The executives believe that they will exhaust their DG hosting capacity within ten years. After that, accommodating new DG on the distribution network will require increasingly high capital reinforcement costs. In the face of such disruption, only 14% of distribution utilities have a very clear forecast of their potential DG network hosting capacity.
“The rapid evolution of the technology, better economics and the growing accessibility and environmental appeal of residential PVs have pushed DG from the fringe to being a mainstream factor on the grid,” said Accenture transmission and distribution MD Stephanie Jamison.
She added that the combination of solar PV and more economical battery-storage options, as well as demand response and energy efficiency, would provide consumers with more buying power, which would force distribution utilities to provide more flexibility and different types of services.
“Despite the challenges that the integration of these new technologies at scale bring, it is essential to meet the growing expectations of consumers . . . to position utilities to provide services-based business models that could drive much-needed new revenue.”
Utility executives identified the integration of DG as the business challenge that has grown the most over the past two years. In response to the disruptive network impact of DG, a majority of utilities expect to deploy a broad set of new capabilities over the next decade in network capacity planning, storage support and DG operations.
“A balanced, networkwide approach is required to successfully integrate DG and enable utilities to benefit from its proliferation,” Jamison asserted. She added that the key would be to strike a balance between prudent capital investment, optimising operations and maintenance spend, while managing regulatory constraints on deployment and investing in smart solutions. “This investment offers the opportunity to reduce the anticipated capital spending on network reinforcement and operating costs, while maintaining the quality and reliability of the power supply.”
Complementing the survey, Accenture economic modelling revealed that, in the US and Europe, deploying customer- facing smart grid solutions could reduce capital spending for small-scale DG network reinforcement by about 30% by 2030, equating to reductions of $6-billion and €16-billion respectively.
The reductions in cost will be enabled by technologies that significantly improve networks for greater efficiencies across a more dynamic operating range. For example, locational incentives could steer investment to parts of the network with higher reinforcement costs; curtailment of DG output could be made at critical times, and storage and demand response services could be deployed.