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2020 Africa Renewable Energy Forum: Photovoltaic Digitalization and Auction Mechanism Hotspots

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The annual African Renewable Energy Forum (AEF) is dedicated to power infrastructure projects on the African continent. Leading companies in the photovoltaic industry, investors, and key decision makers from the African energy sector gather to find opportunities, express opinions, and reach cooperation relationship. At the same time, necessary measures are taken to improve the photovoltaic industry. The 24-day forum discussed photovoltaic policies, auction and procurement processes, challenges brought by the Covid-19 epidemic, and emerging trends such as photovoltaic digitization.

AEF 2020 opened on October 20th and will last until this Friday. Several major photovoltaic markets in Africa, including South Africa, Morocco, and Egypt, shared some experiences and lessons in photovoltaic development. In addition, several important sub-forums included the "Digital Dialogue: Promoting Large-scale Photovoltaic Power Plants on the African Continent" on October 29, 10 "How photovoltaic technology and applications will change the African continent" on November 30 and "Digitalization and Solar Energy in Emerging Markets" on November 3.

The continent with the "most photovoltaic potential"

According to Daniel Schroth, Acting Director of Renewable Energy and Energy Efficiency of the African Development Bank, Africa is the world's most solar-rich continent. However, from 2011 to 2018, photovoltaic installed capacity only increased from less than 300MW to about 6GW, accounting for only 1% of the energy composition of the African continent. In addition, most of these installed capacity are concentrated in South Africa and North African countries, while other regions in sub-Saharan Africa are not fully served at all.

Nambuya Imbega, sales manager of Trina Solar's Middle East and Africa region, commented on the uneven development trend of photovoltaic power generation capacity on the African continent. Of the 1.067GW newly installed photovoltaic capacity in 2018, Egypt added about 581MW, and South Africa added about 373MW, bringing the cumulative total to 2.5GW. He said that Trina Solar is optimistic about the growth of photovoltaic applications in Africa, which will bring a series of investment opportunities. One of the most promising markets is electric vehicles-electric motorcycles and electric vehicles in Africa are currently growing rapidly. Investors are looking for opportunities to penetrate into this field and provide necessary smart solutions, such as building solar charging stations.

Where should the African photovoltaic market go?

Photovoltaic companies find it difficult to enter the large-scale clean power consumption markets in West and East Africa. You must know that consumption habits will dominate the development trend of photovoltaics in Africa.

Mark Davis, vice president of the clean energy department of the Norwegian Fund, said that Africa is slowly adopting a competitive auction mechanism for large-scale photovoltaic project development, while gradually getting rid of the feed-in tariff mechanism. Regular auctions ensure the government's power purchase plan and inject confidence into the market. This also creates a long-term market that can boost investor enthusiasm. From a broader perspective, many speakers participating in the AEF Forum believe that more 100-500MW photovoltaic projects will emerge in Africa.

The 1.8GW Benban project in Egypt has taken the lead and will become a benchmark for photovoltaic power generation in Africa. The 400MW that has been built is a milestone achievement.

Photovoltaic digitalization

Photovoltaic digitalization is another important topic of AEF in 2020, especially in terms of its potential to promote photovoltaic applications in sub-Saharan Africa. As emerging technologies such as artificial intelligence, data analysis, cloud computing, and the Internet of Things rapidly phase out previously outdated and ineffective systems, digitalization will likely change the way many public utility companies operate. By implementing these modern tools, these companies can remotely monitor power stations and make timely decisions from the perspective of operation and maintenance to improve power generation performance.

Jörg Althaus, the regional manager of German testing agency TÜV Rheinland in charge of Germany, India, the Middle East and Africa, said that the application of drones is rapidly spreading. The development team can use real-time information to keep abreast of project progress."

One of the most important challenges facing photovoltaics in Africa

At present, one of the biggest problems facing the African photovoltaic market is that the government's financial support for public utilities is insufficient. Due to the huge purchase price pressure and the inefficiency of public utility companies, the payment speed is slow, which in turn leads to more losses.

As Mark Davis of the Norwegian Fund said, “Africa’s utility sector has many problems that affect the power generation industry’s ability to attract investment.” Although he advocates fiscal feasibility and changes to government regulations, this problem has existed for many years. It is believed that this problem will not be resolved in the short term.

In addition, the lack of transparency in the procurement process and the low bankability of photovoltaic projects are considered to be deeper issues affecting African photovoltaics. However, as in any other field, challenges are inevitable. Enhancing credit, mitigating risks, and adopting an open and transparent procurement process will overcome many obstacles in development. African countries should also review policies to enable emerging utility companies to maintain operations and reduce losses.

Other challenges

It is said that the high cost of energy storage is another issue affecting the development of photovoltaics in Africa. However, according to Peter Lilienthal, CEO of Homer Energy, a US distributed power generation and microgrid modeling company, with the advent of cheaper and more efficient technologies, the cost of photovoltaic energy storage will drop significantly in the next few years.

The Covid-19 epidemic has brought great challenges to Africa and will affect the photovoltaic sector in the next few years. This has led to the suspension and closure of many photovoltaic projects. Governments have also changed their priorities and turned to control the spread of the epidemic. What is even more troublesome is that African governments are still not sure how much photovoltaic power generation capacity will be needed in the future, which may be a stumbling block to the recovery of the photovoltaic industry.

Despite many uncertainties, South Africa is still a photovoltaic hotspot in Africa, with an 11.81GW power generation project (including 6.4GW of photovoltaic power generation, 513MW of energy storage, 3GW of natural gas and 1.5GW of coal-fired power generation) and the 2GW risk mitigation power generation project announced this August will operate at the same time. The latter adopts a technology-neutral bidding program, which will make photovoltaic power generation one of the most competitive technologies.

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