The decision of government to increase the allocation for distributed generation in the Cabinet-approved Integrated Resource Plan (IRP2019) comes as the International Energy Agency (IEA) is forecasting a strong acceleration in the installation of distributed solar photovoltaic (PV) systems across homes, commercial buildings and industrial sites in the coming five years.
The IRP2019 has raised the yearly allocation for distributed, or embedded, generation to 500 MW, from the initial yearly allocation of 200 MW in the draft IRP, published in 2018.
In addition, the approved document has placed no yearly limit on the allocation for distributed generation for the four years covering 2019 to 2022, stating that any allocation during the period will be determined by the extent of the short-term capacity and energy gap.
The Department of Mineral Resources and Energy (DMRE) will release a request for information in the coming weeks to test the market for supply- and demand-side solutions to close the gap, which is currently estimated at between 2 000 MW and 3 000 MW.
It is anticipated the solar PV solutions will capture a large share of the allocation set aside for distributed energy both in the coming four years and for the period to 2030.
The DMRE has already confirmed that it has been inundated with requests from companies, municipalities and private individuals seeking a deviation from the IRP in terms of Section 10(2)(g) of the Electricity Regulation Act, in order for the National Energy Regulator of South Africa to approve applications for embedded generation licences.
Mineral Resources and Energy Minister Gwede Mantashe has thus confirmed that the increase in the yearly allocation to distributed generation is designed to do away with the need for Ministerial deviations for the licensing of generation for own use for plants above 1 MW.
Meanwhile, the IEA’s Renewables 2019 market report, released on October 21, forecasts that the world’s total renewable-based power capacity will grow by 50% between 2019 and 2024. The increase is equivalent to 1 200 GW, or the current total power capacity of the US, and will result in the share of renewables in global power generation rising from 26% currently to 30% in 2024.
The agency expects solar PV to account for 60% of the increase and for distributed PV to account for almost half of the growth in the overall solar PV market.
“Contrary to conventional wisdom, commercial and industrial applications, rather than residential uses, dominate distributed PV growth, accounting for three-quarters of new installations over the next five years,” the IEA reports states.
Nevertheless, the number of solar rooftop systems on homes is set to more than double to some 100-million by 2024, with the top markets on a per capita basis that year forecast to be Australia, Belgium, California, the Netherlands and Austria.
The report warns, however, that important policy and tariff reforms will be needed to ensure the sustainability of the growth of distributed solar PV. “Unmanaged growth could disrupt electricity markets by raising system costs, challenging the grid integration of renewables and reducing the revenues of network operators.”
By reforming retail tariffs and adapting policies, utilities and governments can attract investment in distributed solar PV while also securing enough revenues to pay for fixed network assets and ensuring that the cost burden is allocated fairly among all consumers, the report adds.
The South African Photovoltaic Industry Association (SAPVIA) is also alive to the potential market opportunity that has been opened by the IRP2019 in the areas of distributed generation.
In a response to the release of the plan, SAPVIA welcomed the 6 000 MW allocation for utility-scale solar PV and estimated that a further 6 000 MW could be added through embedded generation over the period.
“We are also pleased to see the allocation to embedded generation increased from 200 MW to 500 MW annually which has the potential to unlock significant new investment,” SAPVIA COO Niveshen Govender said in a statement.
He also welcomed the waived requirement for a Ministerial deviation for distributed projects of less than 10 MW. “We encourage the department to swiftly Gazette an amendment to Schedule 2 of the Electricity Regulation Act, thereby allowing for licensing exemptions for projects with a generating capacity less than 10 MW.”