Unlocking the Green Economy and Solar PV Industries 11 March 2015
AGENDA Introduction Overview of the sector in South Africa Views on the RE market in South Africa progress, successes, future challenges The future opportunities in South Africa building on the successes of the IPP Programme; scaling up; supporting the NDP and policy objectives; building a thriving solar / RE investment environment shared views Formalising ongoing engagement with the DTI PPC 2
1. Introduction to SAPVIA 3
Introduction to SAPVIA The South African Photovoltaic Industry Association (SAPVIA) is a not-for-profit association representing members largely made up of developers, manufacturers and service providers operating within the Photovoltaic (PV) industry. SAPVIA currently has over 100 registered members The association is devoted to promoting the growth of South Africa s solar PV electricity market, and aims to represent the PV industry before provincial and national authorities, as well as inform decision makers as to the current state of the industry, both in South Africa and abroad. SAPVIA strives to work with government to ensure a successful and sustainable implementation of solar renewable energy into our supply mix, and provide a conduit through which communication between industry and government can be channelled. 4
Introduction SERVICES OFFERED BY OUR MEMBERS Modules CSI Other bos Services/monitoring 8% 13% 0% 4% 5% 3% 10% 4% 0% Bank Modules Thinfilm Developer Research 10% 14% Investor Modules cpv 11% 8% 4% 4% Installer Consultant Manufacturer 2% Inverters EPC Government Wholesalers 5
Global distribution of membership GEOGRAPHICAL DISTRIBUTION OF OUR MEMBERS Belgium 3% 1% 5% 6% 2% 2% 1% 1% 2% 2% 1% Canada China South Africa France 1% Germany Hong Kong 73% Italy Spain UK USA Switzerland Greece Netherlands 6
2. Overview of the Sector 7
From Hopeful Start.(BUT NO SOLAR IN IRP). 2001 : Project started On part of Sunnyside dairy farm, outside Jeffrey s Bay Originally 16MW wind and 5MW pumped storage 1st EIA s for wind farms Focus on supplying energy to strengthen grid in the area poor supply 2011: Project awarded preferred bidder status in REIPPPP 2012: Financial Close, 5 November 2012: NTP 15 November 2013: Ground breaking Feb 2013 Project online, generating: May 2014 8
..To Tangible Reality (AND 8400MW OF SOLAR IN IRP) 9
R120 bn+ Industry Delivering Benefits to SA 10
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3. Overview of the REIPPPP and PV Market 13
THE RE IPP PP 3 933 MW of RE procured to date i.e. in 3 bid windows with a total of 64 projects approved to date BW 1 submitted Nov 2011: 53 bids received; 28 preferred bidders BW 2 submitted March 2012: 79 bids received; 19 preferred bidders BW 3 submitted August 2013: 93 bids received; 19 preferred bidders BW 4 submitted August 2014: 77 bids received; award still awaited BW 5 submission date announcement is awaited but so far it remains August 2015 This represents South Africa s most prominent market in the eyes of investors and developers Procurement process has received international awards / recognition robust, transparent, fair 14
REIPPPPP Evaluation Source: DoE; UCT Energy Resource Centre 15
Value for South Africa? Private Sector investment into SA of R120 billion + Approximately R11bn of benefits to flow to communities adjacent to projects This is just from the Enterprise Development/ SED % committed by projects Savings to SA : In 2014: the projects from BW 1 and BW 2 alone derived significant benefit for SA R3,64 billion in coal and diesel savings (fuel savings) R 1,67 billion by reducing unserved energy by 177 hours (load shedding hours) saving SA The ACTUAL fuel replacement as calculated by the CSIR (Feb 2015) led to a net benefit to SA of R800m By comparison: Medupi will cost SA R120bn+, and then on average R11-13bn per annum to run - R6bn pa coal charges, R3bn operating costs, R 4bn carbon tax 16
Benefits to Local Economies Benefits to the local economies is many-fold. Bidders are required to make commitments to ED (0-0,6% of total revenue) and SED (1-1,5% of revenue) within a 50km radius of projects. In addition 2,5 5% of shareholding to local entities. SED R8, 8 bil ED R2, 6 bil Local Ownership R12 bil Local Ownership R23, bil Over 20 years This is contributed by the 64 IPP s in BW 1 and BW 2 17
4. Local Content 18
Local content in REIPPPP BW1 BW2 BW3 Capacity awarded to PV (MW)** 1 049 435 Peak hourly generation from PV (MWh) 909* 0 Local content (%)** 38.4 53.4 53.8 Jobs (Construction)** 2 381 2 270 2 119 Jobs (Operations and Maintenance)** 6 117 3 809 7 513 Number of PV projects ** 18 9 6 * As at 17 January 2015. Increased 35 percentage points from 673MWh on 17 October 2014. ** Sourced from Public Private Infrastructure Advisory Facility (PPIAF). 19
Local content in REIPPPP and other segments REIPPPP BW 4 - SAPVIA submitted proposal to dti in March 2014 that only modules laminated in South Africa should be considered to be local Proposal not implemented for BW 4 - currently being considered for implementation in BW 5 SAPVIA is also considering broadening approach to other components (e.g. mounting structures) Unpredictable roll-out of REIPPPP wreaks havoc in value-chain. In one instance 250 jobs that had been created to supply mounting structures during BW 1 and BW 2 have been lost due to uncertainty about BW 4 and rest of REIPPPP. Company is considering exiting the sector. In another instance, an international company that was planning to set up an inverter manufacturing plant in South Africa has decided to look elsewhere due to delayed roll-out of BW4 and uncertainty about rest of REIPPPP. 20
Local content in REIPPPP and other segments Designation of PV components In recognition of potential size and growth of embedded PV segment (rooftop solar PV; commercial and industrial systems), as well as role of public sector procurement in promoting local production SAPVIA working with the dti to provide necessary information related to local production of PV modules, mounting structures, balance of DC plant, as well as inverters and transformers Successful implementation presents substantial opportunity for local production and job creation. 21
5. Strengthening the Transition to a Green Economy 22
2 3 Powering the Green Economy. Putting SA to Work. Rework/realign REIPPPP with NDP & Green Economy Accord objectives 2000MW a year for next 4 years jobs, skills, new clean investment, clean industrialisation, poverty alleviation Set up medium scale procurement programme (5MW to 60MW): fixed tariffs, high thresholds re local content, job creation, local ownership, skills development. This category of projects will pursue greater value for SA Inc, more than price create more local RE companies/operators Roll-out Rooftop PV Programme at scale SMME s at core, high job creation Pursue solar water heating with the greater focus and urgency Auction building of new grid REIPPP connections, finance smart grid, rural mini-grids