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Energy Central Power Perspectives™: Surveying the Market for Solar PV in Africa, An Interview with Thomas Hillig of THEnergy

image credit: Source: Thomas Hillig

As clean energy gets built up in African nations, THEnergy is working to analyze the market for solar PV installations for commercial and industrial offtakers across the continent. Surveying to find out the type of solar installations, the size, the geographic tendencies, and more, THEnergy is looking to understand the African solar opportunity and learn more about this primed market. As Thomas Hillig of THEnergy notes:

At the moment, THEnergy is interviewing commercial and industrial offtakers in Africa to find out the key success factors of renewable energy and energy storage adoption. It covers on-grid and off-grid applications throughout the C&I segment. All kinds of off-takers are targeted: from consumers that have already committed to renewables to those who have not had any contact with renewable energy. The survey aims to assist renewable energy companies in optimising their offerings, according to the needs of commercial and industrial customers. It is also conceived in a way to give guidelines to political decision makers on how to set up optimal framework conditions in the energy sector.

This project sounded immensely interesting to those in the clean power Energy Central community, and Thomas reached out to me in response to the Casting Call I put out to interview some of the knowledgeable and interesting people who are amongst this community (feel free to continue to reach out to me for an interview if you have something noteworthy to share, as well!). 


If you can help build the picture of Africa's C&I solar opportunity, click the map for more details on THEnergy's survey.

I recently had the privilege to speak with Thomas Hillig and ask him all about this project and the proliferation of solar power in Africa more generally as a part of our Energy Central Power Perspectives™ series. 

Matt Chester: The solar PV sector in Africa appears to be growing quickly but not necessarily reaching an inflection point of adoption. What's your assessment of the current situation of African solar energy and what factors have played into its growth-- both factors that have promoted growth and ones that have restricted the sector from reaching its full potential?

Thomas Hillig: Unreliable power supply was and is a main issue across many parts of Africa. Additional investments into the power infrastructure are needed. Renewables-- especially when combined with energy storage-- may improve the reliability. In Africa, microgrids often come with an excellent value proposition, even in grid connected areas. Often, fossil-fuel based power generation is rather inefficient in Africa. In this context, inefficient also means expensive. High solar irradiation is another plus for renewables. However, in many cases renewables do play on a level playing field. Fossil fuel based power generation is highly subsidized all over Africa. This makes it hard to compete. In addition, many electricity markets in Africa are highly regulated with monopolies of government-owned utilities. The role of independent power providers (IPPs) often remains unclear. The threat of corruption and deficits regarding bankability are other issues the renewable energy sector is facing in Africa.

MC: You're currently conducting surveys into existing and prospective commercial and industrial solar PV projects in Africa. Can you give a brief overview of what the goals of the survey are and how you're conducting it?

TH: The segment of commercial and industrial solar PV projects is particularly interesting for many African markets. When the systems do not work perfectly, corporations are more willing to tackle the issue directly. We see corporations all over Africa that have taken the task of switching to renewables in the own hands. This is a trend in many sectors: mining, cement, telecommunications, banking, hospitality, fast-moving consumer goods, shopping centers. etc. The drivers might be manifold. Also, the framework conditions vary from country to country in Africa. The objective of the survey is to identify global trends across the continent regarding commercial and regulatory drivers. We are speaking with commercial and industrial off-takers. There are already quite a few surveys that focus on developers.

MC: What sort of initial results have you received from these efforts? Are the results taking shape? What sort of information are you still seeking to round out the efforts?

TH: Some issues are taking shape: regulatory framework conditions might be a show-stopper. We also see that local financing is crucial for many renewable energy projects in the commercial and industrial sectors. We have also discovered that references are extremely important. Addressing the end-customers typically gives much better insights. We are still looking for corporations with operations in Africa to participate in our survey. We are covering many countries and industries, so that we are still in a phase in which each additional interview brings new insights. 

MC: You note that, thus far, commercial and industrial solar projects seem to arise in tight geographic clusters. Can you explain why this occurs and maybe how it can be used to further drive the adoption of solar power in Africa?

TH: This is actually very much linked to a previous point. This factor reference has two dimensions: geography and industry. For large installations such as mining, references in the same industry are crucial. For smaller systems, we rather see that the local factor is dominant. The renewable energy power plant of the neighbor is a clear driver for many businesses to act. 

MC: Another key aspect of your survey appears to be separating out solar installations by on-grid vs. off-grid applications. What is the importance of this distinction? Are these two segments equally important to the growth of African solar power?

TH: Actually, off-grid vs. on-grid is about the technical solution and also about the business case behind it. Adding renewables is always about competing with the status-quo. In off-grid scenarios, we often see that power generation is particularly expensive. Power is typically generated by diesel, heavy fuel oil, or gas gensets. Transport to remote locations and losses also increase the costs. Here renewables almost always can come up with an excellent business case that provides substantial cost savings. In on-grid scenarios, renewables often have to compete with subsidies. The business case then normally depends on how big these subsidies are and also how reliable the grid actually is. If power outages lead regularly to production losses, onsite renewables can also compete with extremely subsidized electricity prices for grid power. 

MC: Generally speaking, do you see the developing nature of much of Africa to be more of a benefit to the proliferation of solar power (such as the ability to leapfrog technologies that came first in industrialized nations) or a disadvantage due to a lack of technological infrastructure?

TH: On paper, I would say that it is an advantage that the power infrastructure is not there yet in many African countries. However, there are often reasons behind this. For example, that governments or the national utilities do not work very efficiently. These inefficiencies are also slowing down the adoption of renewable energy solutions.

MC: Is there anything else you'd like to share about this project that we didn't cover?

TH: In Germany, there is an interesting program providing subsidies for renewable energy flagship projects in developing countries. Subsidies of almost 50% are achievable. Our survey shows that references are important. This is why we try to assist in connecting off-takers and renewable energy providers in setting up new lighthouse projects that have the potential to spread renewables in the same geography or in the same industry. 


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