Exclusive interview with Mikhail Nikomarov, director and founder of Bushveld Energy and speaker at the upcoming African Utility Week on “Why Africa stands to benefit the most from energy storage”.
Let’s start with some background on Bushveld Energy and what your company does? And some background on yourself?
Bushveld Energy is a young yet ambitious company intent on being part of the short- and long-term solution to Africa’s electricity challenges, namely its insufficiency and mass access to it. We believe that adoption of large or utility-scale energy storage across Africa offers not just an economic value (to reduce long-term electricity costs), but also immense social benefits. For example, if you add storage to solar or wind generation you can provide stable, round-the-clock, renewable generated electricity at significantly lower prices than diesel or heavy fuel oil generators do today. Plus, such installations can be sized anywhere from 5 kilowatts to hundreds of megawatts in size and take just months to manufacture and commission. That means that unconnected households and communities no longer have to wait years or decades for transmission networks to reach them.
We specifically support vanadium redox flow batteries (VRFBs), both because the technology is ideal for daily storage of large amounts of energy and because together with Bushveld Minerals’ large vanadium resources in South Africa, we can provide an integrated model to reduce cost even further. Right now Bushveld Energy is developing projects that use VRFB storage, but in the near future, we will start producing the systems in South Africa as well.
The electricity challenge in Africa is one that is dear to me, though that may not be obvious from my background. I am originally from Russia, but have also lived in the USA, western Europe and, for the last 5-plus years, here in South Africa. My background is quite diverse, as I have studied history, economics and business – and also worked in banking. Most recently, I spent over 6 years with McKinsey & Company focusing exclusively on energy and energy infrastructure, first in Russia and since 2010 across Africa.
That allowed me to form my perspective that nothing is as transformative for this continent as electricity – because it is the common enabler for nearly all human activity today, and we do not have enough of it. That quest was my motivation previously as a consultant, it led me to co-author “Brighter Africa”, the 2015 McKinsey report on electricity in sub-Saharan Africa, and to co-found Bushveld Energy, through which I can directly build up Africa’s electricity infrastructure.
Tell us about the power projects that you are currently involved in and that you are very excited about.
One of the most exciting aspects of energy storage is that it can be used for many applications, of varying sizes and in any geography. Right now from Johannesburg, South Africa, we are installing vanadium redox flow batteries in western Uganda. At the same time, we are developing megawatt-plus sized projects that will lead to Bushveld Energy installing the largest battery in Africa.
You will address African Utility Week (AUW) on energy storage – how does energy storage work? Can it work in the African continent?
Energy storage, or specifically large-scale energy storage for the purpose of supplying electricity, is how we can get around the challenge that electricity itself is very hard to store. As a result, it must be converted into different types of energy first. Energy, whether chemical, mechanical, etc., though, can be stored and then converted back to electricity when needed. A good example is solar energy, which can only be captured and converted to electricity during periods of sunlight; however, storing it through heat or chemically (e.g. with batteries), for example, allows us to have solar produced electricity even when there is no sunlight.
Energy storage, is already in wide use in Africa. Hydroelectric power plants with water reservoirs (or dams) ‘store’ energy that can be released and converted to electricity at will. Africa already has gigawatts of such hydro dams. In South Africa, in fact, there are pumped storage schemes that use electricity to exclusively store water in a reservoir (by pumping it uphill when there is excess electricity) and release it at a convenient time to run electricity generating turbines when electricity is needed. Once Eskom finishes its Ingula project, it will have roughly 2.5GW of energy storage (that is roughly 5 times the generation capacity of all of Namibia, for context). Plus, the concentrated solar power (CSP) plants that have been tendered under the South African Renewable Energy Independent Power Producer (REIPP) Programme, also have over a gigawatt hour (200MW for 5 hours) of storage capacity. Finally, many industries (such as telecom) and some households have battery systems, which also store energy to provide electricity (e.g. as a back-up system for grid failures). So, yes, storage has a long and diverse track record of working and benefitting African utilities and customers already.
How can African nations benefit from this?
Africans are already benefiting from storage. Reservoir hydropower produced electricity is very cheap, renewable and can be produced whenever it is needed, giving power system operators excellent flexibility. Since electricity supply and demand vary during the day, and either peaking power plants (usually using gas or liquid fuels) or storage is needed to balance out these variations. Of course, storage is better than peaking plants because it takes energy during periods of excess supply, does not emit CO2 and, increasingly, is cheaper. This is true everywhere and why we are seeing such rapid growth in large-scale energy storage globally.
What I want to demonstrate at African Utility Week is that Africa may have the most to gain from energy storage, especially distributed types of storage, such as utility scale batteries. There are a number of reasons for this, including the absence of existing grids and the relatively high solar irradiation levels in many African countries, but I do not want to give away too much now [before the conference, which takes place in May].
The price of electricity is a big issue, how does storage compare to other forms of generation?
This is an important issue and the significant clarification is that energy storage is not generation. In fact, storage requires generated electricity as an input, which means that storage will also always be more expensive than generation on its own (plus, some energy is lost in the energy-electricity conversion process).
Perhaps the better question is: what additional value does energy storage add and is that value greater than the cost of storage? There is no easy answer, in part because it depends on the uses of energy storage. We can pick one example where the answer is yes. It is the supply of electricity to a location that has no connection to a central power grid (either a potential mine or a rural village). In Africa, 99% of the time such locations either do not have any electricity or it is generated by very expensive diesel or heavy fuel oil generators, costing between $0.30 to 0.60 / kWh. Today, as long as those locations have decent sunlight, solar panels can be installed and supply electricity at anywhere between $0.08 to $0.15 / kWh.
That is a significant savings but only during day light. By adding storage, that solar energy could be stored and electricity could be provided 24 hours per day from a renewable, non-polluting source. Furthermore, as long as the cost of storage is below $0.20/kWh, PV+storage is cheaper than diesel. Today, with commercialisation of better storage technologies and increasing scale in production, the cost of storage is already in the $0.15 to $0.20 / kWh range, so in this type of case, storage can already save consumers money. In some situations, storage may not yet be cost effective, but with prices falling rapidly (in 20-30 months, storage costs will fall below $0.10 / kWh); its cost-effective application will only grow.
Are there any challenges preventing us from implementing and utilising storage instead of large-scale rural electrification using the traditional model of large power plants and expansive transmission and distribution power lines?
On a technology level and even cost level, no (which was not the case 5-10 years ago). Most of the implementation challenges are due to the “newness” of the renewable generation plus storage electrification models. These types of challenges include awareness of the solutions and the willingness of decision makers that grew up with the traditional model to try something new – and not just at utilities, but also with government, regulators, banks, development agencies, etc. Finally, implementation resources need to be scaled up for mass delivery, including electrical technicians, business managers, manufacturing and distribution capacity.
Some communities should still be electrified through traditional means, especially if they are located within proximity of existing power lines. That can be done quickly and cheaply. However, most of the 600 million Africans without power do not fit that category, and the benefits of speed and simplicity of distributed electrification means that it must be more than half of the solution, too – especially if universal access by 2040 (let along 2030) is still an objective.
What will be your message at AUW?
My message will be simple: no region in the world offers a better fit and stands to gain more value from energy storage than Africa.
This is important because to date most utility scale energy storage activity has been in developed countries, in part because that is where the technology and manufacturing is located. In fact, we witnessed something similar with photovoltaic generation, where the US, Europe and China deployed the technology early on, but it took about seven years for Africa to reach meaningful levels of PV activity (and it is still limited to certain regions). That was despite Africa’s far superior irradiation levels, extremely high off-grid electricity prices and burgeoning power demand. Africa does not have to suffer through a similar time lag with energy storage. I would highlight that we cannot afford it, and we should not allow it.