Africa’s cities of tomorrow won’t need power stations - CNBC Africa

Africa’s cities of tomorrow won’t need power stations

Special Report

by Jay Caboz 0

Every three days a wind turbine is being installed in South Africa. Photo: Wikipedia

Despite renewable energy reducing power cuts by half in South Africa, government is adamant about its nuclear power programme. On Monday the Department of Energy released a Government Gazette notice allowing it to procure nuclear energy and call for quotes for its 9 600 MW programme. Perhaps the piece below will change its mind. 

(Forbes Africa) When Luke Callcott-Stevens, Gavin James and Doug Jenman first talked to FORBES AFRICA in 2012, they struggled to imagine what their $274-million 100MW wind farm in Dorper, South Africa would look like.

“The first project people assumed big risks. We built a wind farm, we installed it. All those are effectively at the cost of capital. Now it’s done… Every three days a wind turbine is being installed in South Africa,” says Jenman.

Forty wind turbines and two and a half years later, this trio from Rainmaker Energy can not only take pictures of Dorper, a tiny town in the Eastern Cape province, they are now imagining that they can cover the rooftops of London with solar panels.

“The cities of tomorrow will produce their own electricity. We won’t need power stations,” says James.

With this bold idea, the trio set up shop at number 81 Rivington Street, an old electrical showroom, located in London’s tech hub Shoreditch, and also, by coincidence, labelled with a fitting coat of arms “More Light More Power”.

“A lot of our growth is happening in the solar field, and it’s out of South Africa. We’ve set up a separate company in the UK, Solar Stone Energy; effectively we are trying to create a utility scale solar project on rooftops. So we are aggregating a bunch of rooftops to build a big solar power plant,” says Callcott-Stevens.

It gets even more pie in the sky – especially when we are talking about a city where the sun doesn’t shine – the trio want to give them panels for free.   

“We cover the costs of the installation and on-going monitoring and maintenance. There is absolutely zero cost to you. You then get to enjoy the immediate benefit of reduced energy costs because the electricity, which is produced on you property’s roof is yours to use, for free. By generating electricity on your roof, we receive a Feed-in-Tariff (FiT) through a government-backed subsidy programme. This is how we fund the solar installations and make a return on investment. It’s a win-win for everyone.”

They feel it could find favour with London’s population of 8.3 million.

“If you look at what’s happening in the States and in Europe, in solar and wind energy, people are putting solar on their rooves and creating their own power. That is not a total solution, but it cuts back on the need to create new power plants, it changes the game. The utility business is now losing out on its most profitable market. That demand is now gone,” says Callcott-Stevens.

“Solar has gotten cheaper. Next storage is going to get cheaper. That’s not to say you won’t have coal or nuclear power stations. It just changes the game. It changes the dynamics,” says James.

Back home in sunny South Africa, where 39 renewable energy projects contribute 2,050MW to the grid, the trio’s 100MW wind farm in Dorper has been humming for more than a year. Although James says it will take another 16 years to see a profit, it couldn’t have come at a better time. Eskom, South Africa’s power supplier, regularly cuts the power – a legacy of under investment and delays in coal stations, such as Medupi and Kusile. The work of renewable energy dreamers has been a saving grace.

“Eskom’s troubles are our blessings in the whole [renewable] industry. It’s been good. The government has put its weight behind the programme,” says James.

“They are seeing results and they are happy with it, so the whole fear that renewables is erratic and unreliable actually is false. Apparently the first projects have reduced power cuts by half. We would have double the power cuts if it wasn’t for the renewable projects,” says Jenman.

The competition for new projects is stiff. Last year, Eskom announced that 77 bids were received for Round 4 of the programme, for a total of 5,804MW. Of these, 13 were accepted as preferred bidders, for a total of 1,121MW installed capacity at a cost of R23 billion ($1.8 billion).

“By the 4th round, the tariff prices have halved. The game’s changed. The perception of risk is gone. In Round 1 there was no market in South Africa; people were taking a lot of risk without knowing if there was going to be a market. They needed higher returns. Where we are now, the return expectation is lower, as it should be, as the market grows and matures,” says Callcott-Stevens.

“Without getting those high returns in the beginning we wouldn’t be in a place where we are established,” says Callcott-Stevens.

Hope of more business in Africa is in the wind. The trio have a further 330MW of wind and 290MW of solar photovoltaic (PV) projects under development.

“Africa is the future – solar is all over. There is potential everywhere. Sub-Saharan Africa is obviously closer to home so it’s easier to look at. The [solar rooftop] model works really well in a deregulated market. In South Africa, we are still highly regulated,” says James.

“The rest of Africa is highly regulated. Either badly regulated, or highly regulated. We don’t want to just get on a plane and go find a site. We like to have an angle before we choose a market. There needs to be a reason before we can just go into that market. We can’t just go into a country and just say we are building a solar plant. We need to have relationships, we need to know people, we need to understand the market first,” says Callcott-Stevens.

From the dream of a small windy farm in the middle of nowhere in Africa to the reality of free solar panels over the rooftops of London where the sun hardly shines. What next?

This article first appeared in Forbes Africa. Subscribe today by emailing Lieria Boshoff: [email protected] or visit www.forbesafrica.com

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