Navigant Research Blog

Solar PV Becoming Miners’ Friend

— May 12, 2014

At the Zwartkop Chrome Mine, near Thabazimbi, South Africa, mining company Cronimet Chrome SA has established a technological innovation – not below the ground, but above it.  To help power the mine, Cronimet installed a hybrid solar-diesel system that includes 4,158 solar photovoltaic (PV) panels, producing 1.8 GWh of electricity – about 60% of the mine’s power.  According to a report released by Carbon War Room in March, the Cronimet system will not only reduce fuel costs and carbon emissions for the mine, but also has the potential to “power local communities and improve the local economy.”

Like natural gas and wind power, solar PV and mining are becoming odd bedfellows – seemingly incongruent players in the energy landscape that are increasingly being paired to create win-win situations for each party.  Solar PV is increasingly being utilized to reduce the costs and lower the environmental damage of extracting coal and other minerals.  Chile, South Africa, and Australia are three of the leading countries where solar PV is being installed on mining operations, due to the remote location of the mining sites, unreliable (or nonexistent) electricity from the grid in the mining area, and the heavy use of diesel gensets in every aspect of mining operations.  Navigant Research’s Renewable Energy in the Mining Industry report forecasts that renewable technologies will supply between 5% and 8% of the world’s mining industry power consumption by 2022.

Winning Combination

The world’s largest solar PV company, U.S.-based First Solar, is now aggressively targeting diesel replacement solutions for African mines.  The company acquired Solar Chile, a Chilean project development company with a pipeline of 1.5 GW of solar PV, in 2013.  Much of this pipeline is in the Atacama Desert region, which boasts some of the highest solar irradiance in the world.  Combining high solar irradiance and high cost of electricity is a recipe for solar company success.  First Solar says its levelized cost of electricity is as low as 7 cents per kWh in such places – making it competitive with grid prices without subsidies.

In Australia, First Solar says it expects to develop as much as 200 MW of capacity for the mining industry over the next 3 years.  First Solar’s Sydney-based vice president of business development for Asia Pacific, Jack Curtis, tells Bloomberg News that mines are not as profitable as they used to be, meaning cost control is a bigger concern, and solar PV can be a hedge against volatile fuel costs.

Similar to wind, the solar PV market of today has evolved into a sophisticated global industry and has distanced itself in some ways from the us versus them approach of renewables and fossil fuels.   There can be synergies, albeit uncomfortable ones.

 

Hungry Solar Developers Look to Booming South Africa

— May 8, 2014

South Africa leads the renewable energy market in Africa.  The country has established a target of nearly 3.7 GW of renewables installed by 2030; in November 2013, it completed its third round of bids under the Renewable Energy Independent Power Producer Program, bringing the country to 86 MW of solar operating and nearly 1.5 GW in development.  The program provides power purchase agreements (PPAs) over 20 years with the country’s primary utility, Eskom, for projects up to 75 MW.  In the third round of bidding alone, the country procured 787 MW for wind projects, 450 MW for solar PV, and 200 MW of concentrating solar power (CSP).  There were also bids for 16.5 MW of biomass and 18 MW of landfill gas power.  Not bad for one of the top coal producing countries in the world.

As is common practice with bidding processes for any large infrastructure projects, the government included a local content requirement (LCR).  In the third round of bidding, the LCR was increased to 45% and, in a unique twist, the local company had to have a black South African shareholder majority.  Together, these requirements were expected to reduce the attractiveness to foreign companies and increase bid prices – both of which proved untrue.  The average price for solar PV projects dropped from around $3.50/W in the first round to less than $2.50/W in the second and third rounds.  This is competitive with solar being installed anywhere in the world today.

Open and Fair, Mostly

This is largely because the companies bidding include leading international project developers, such as Spain’s Abengoa, Italy’s Enel, China’s Longyuan Power, Norway’s Scatec, and SunPower Corporation (where France’s Total is now the majority shareholder).  China’s Trina Solar and U.S.-based First Solar are also active in South Africa.  While the market has either slowed down or become saturated in their home countries, international players are looking to emerging markets to grow sales.  This is a strong indicator of the hunger level of international power producers and the mature state of the solar PV industry in South Africa.

In general, bidders reported that they were generally pleased with the transparency of the process, typically a gripe when operating in emerging markets, including much of Africa.  There were construction delays for the first two rounds of projects and delays in announcing the third round of preferred bidders due to the overwhelming number of applicants – but these are to be expected as the country gets its first gigawatt under its belt.

The question is whether this apparent success can be replicated in other African countries.  Large-scale solar PV projects are operational in Reunion (15.6 MW), Mauritania (15 MW), and Cape Verde (5 MW), with a number of projects on the continent in development – notably Rwanda, with 8.5 MW.  Kenya, Tanzania, Nigeria, and Ghana are other countries with strong prospects and abundant activity in both on-grid and off-grid solutions.

 

Solar Market for Base of Pyramid Not So Pico

— April 14, 2014

In an upcoming report on pico solar lighting products (<10W) and solar home systems (<200W) sold primarily to rural communities in Africa and Asia, I cover the unit sales, revenue, and capacity of these small solar photovoltaic systems globally.  One of the most important trends covered in the report is that pico solar has transitioned from a humanitarian aspiration to big business – more than $100 million in 2014.  Corporate involvement in rural electrification has traditionally come in the form of corporate social responsibility initiatives, but real money is now flowing to solar companies serving the base of the pyramid market.  The success of a number of off-grid solar lighting companies and social enterprises has attracted interest from major corporations such as Panasonic, Schneider Electric, and Philips, as well as funding from investors.  Some of the more notable investments include:

  • In early 2014, d.light raised $11 million in Series C funding from DFJ, Omidyar Network, Nexus India Capital, Gray Ghost Ventures, Acumen Fund, and Garage Technology Ventures.  The company is one of the leading pico solar manufacturers, and has now raised $40 million and sold an estimated 6 million pico solar systems reaching 30 million people.
  • In early 2014, Persistent Energy Partners acquired Impact Energies, a pay-as-you-go, off-grid solar service provider working in West Africa that has reached 30,000 customers since 2011.  The renamed company, Persistent Energy Ghana, installs village solar microgrids and solar home systems.
  • In late 2013, Khosla Impact invested $1.8 million in a Series A round with BBOXX, a U.K.-based company that sells portable solar kits ranging from 7W to 185W and plug-and-play solar systems that range between 2 kW and 4 kW.  The company also provides a mobile pay-as-you-go service enabled by remote battery monitoring, which was the primary interest of Khosla.
  • In 2012, Greenlight Planet, one of the leading designers and distributors of solar light-emitting diode home lights, raised $4 million from Bamboo Finance and Dr. P.K. Sinha, co-founder of ZS Associates.  The investment followed previous financing by Dr. Sinha.  Greenlight Planet has sold more than 1.8 million solar lamps since the company was founded in 2008.
  • In 2012, Barefoot Power, one of the largest pico solar manufacturers, raised $5.3 million from three social investment funds (d.o.b. Foundation, ennovent, and Insitor Fund), existing shareholders (The Grace Foundation and Oikocredit Ecumenical Development Cooperative), and a number of private angel investors.

The full report will be released in the next few weeks.  It will discuss industry market drivers and challenges, and includes more than 20 company profiles and country-specific forecasts from 2014 to 2024.

 

Advanced Energy Is $1.13 Trillion Market

— April 11, 2014

The publication of the Fifth Assessment Report by the Intergovernmental Panel on Climate Change (IPCC), Climate Change 2014: Impacts, Adaptation, and Vulnerability, made headlines recently with a familiar message: The climate is warming, people are causing it, and we are ill prepared to deal with the direct and indirect effects of climate change.

Indeed, it is a grim outlook, but when looking at one indicator not covered in the IPCC report – revenue from deployment of smart energy technologies – there are signs that things are moving in the right direction to reduce emissions.

One group, the Advanced Energy Economy (AEE), is a national association of businesses and business leaders who seek to make the global energy system more secure, clean, and affordable.  The group takes a big tent approach to clean energy.  It is bankrolled by one of the leading advocates and funders for the United States taking a leadership position in deploying clean energy, Tom Steyer.  AEE has identified seven core segments that make up the advanced energy industry: transportation, electricity generation, fuel production, electricity delivery and management, fuel delivery, buildings, and industry.

For the past 2 years, AEE has commissioned Navigant Research to quantify the advanced energy industry market sizes for the United States and globally.  We have identified 41 categories and 80-plus subcategories that meet the AEE definition and put the detailed findings and key trends in the report, Advanced Energy Now 2014 Market Report.  Below are some key findings from the report that illustrate the breadth and depth of technologies that are capable of reducing emissions and U.S. activity in those markets.

Key Findings

  • The global advanced energy market reached an estimated $1.13 trillion in 2013.
  • In the United States, the advanced energy market was an estimated $168.9 billion in 2013 – 15% of the global advanced energy market, up from 11% in 2011.
  • Advanced transportation is booming: Navigant Research forecasts annual plug-in electric vehicle sales will reach approximately 467,000 vehicles in the United States and 80,000 in Canada by 2022 – slightly faster than hybrid electric vehicles sales grew in their first decade.
  • The United States accounted for an estimated 18% of the global solar PV market that approached $100 billion annually in 2013 and far surpassed 100 GW of cumulative installations in 2013.
  • LEDs are expected to be the leading lighting technology over the next decade, with LED lighting products (including lamps and luminaires) in commercial building markets forecast to grow from $2.7 billion in 2013 to more than $25 billion in 2021.
 

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