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Distributed energy generation; potential impacts of and impediments to rapid small-scale photovoltaic embedded generation deployment in South Africa.

By K. O. Akpeji, Department of Electrical Engineering, University of Cape Town

South Africa’s (SA’s) white paper on renewable energy (RE) [1] and recent Integrated Resource Plan (IRP) [2] were developed to strategically respond to global calls for low-carbon electricity generation and SA’s electricity supply inadequacy. According to the IRP, the share of distributed energy resources (mainly RE) in the energy mix is expected to appreciate progressively up till 2030, with fixed annual increase for large scale solar photovoltaic (PV) and wind, as well as other forms of embedded generation (EG).

The expected share of wind and solar PV in the mix by 2030 is 10.52% each [2]. The gazetted IRP notwithstanding, there is still a need for complementary policies and regulations, as well as viable business models to not only attain, but surpass the projections for RE integration into SA’s electricity generation mix. In particular, small-scale solar photovoltaic embedded (grid-tied) generation (SSPV EG) < 1MWp could play a vital role.

Solar electricity generation in SA

SA receives an average of 4.5 – 6.5 kWh/m2 of solar irradiation daily and more than 2,500 sunshine hours per annum across most locations [3]. Following the inception of the renewable energy independent power producers procurement programme (REIPPPP) in 2011, the share of solar PV in SA’s installed electricity generation capacity increased progressively from about 0.025% in 2012 to 5% in 2017 [4].

In the same period, solar electricity generation increased from about 30GWh to 5000GWh per annum [4]. While the plans and progress on grid-integration of medium- to large-scale independent power producer (IPP) solar plants are laudable, rapid deployment of SSPV EG systems is also desirable.

Pros of rapid deployment of SSPV EG

Rapid deployment of SSPV EG offers several benefits. Electricity consumers who own these systems (prosumers) could enjoy reduced impacts of tariff hikes and declines in grid reliability; reduced energy storage requirements and the capital cost of the system, and abatement of the need for diesel gensets.

Prosumers whose SSPV EG capacity is above their nominal consumption and are situated in municipalities that allow grid exports of excess generation would enjoy even more energy cost savings.

Also, SA and its municipalities could benefit from the rapid deployment of SSPV EG through deferment of investments in large generation plants; reduction of carbon emissions and improvement in the green profile of cities; creation of jobs within an SSPV ecosystem that has a multiplier effect on the economy; and an improvement in societal resilience to wide-area electricity supply interruptions.

Several residential, commercial and industrial electricity consumers have realised the potential of SSPV EG to alleviate their electricity supply security concerns and are exploiting it, especially as the cost of PV technology declines.

As of 2017, the estimated number of installed SSPV EG ≤ 1MWp in SA was about 138,350 – with about 93% of these being < 1 kWp [5]. Excluding REIPPPP, installations between 100 kWp – 1MWp account for over 50% of installed SSPV EG capacity. Installation rate more than doubled between 2015 and 2016; the current estimated growth rate is 28% year-on-year [5].

Most of the existing installations are by commercial and industrial customers due to interests in mitigating business impact due to electricity interruptions. The growth in installations in the residential sector is mainly from the upper-middle and high-income households [6].

Cons of rapid deployment of SSPV EG

If not effectively managed, rapid deployment of SSPV EG could introduce technical issues namely power quality deviations, network equipment overloading, increased losses during periods of over-generation, reactive power compensation issues, and power system instability during large and abrupt changes in net generation.

Generation with fast ramp rates – e.g. open/closed cycle gas turbines – and flexible resources like demand response (DR) are required to cater to the significant changes in net consumption when the generation from SSPV EG changes abruptly.

Also, as prosumers purchase less electricity from distribution utilities – Eskom and municipalities – the gross revenues of utilities will decrease. Reactive utilities might attempt to address revenue shortfalls by increasing electricity tariffs. Non-prosumers who cannot afford SSPV EG would bear the brunt of tariff hikes and might be forced to reduce their consumption; this might precipitate another round of tariff hike, leading to a vicious cycle that impairs the profitability of utilities that refuse to change their business models and strains consumers who are locked in with these utilities.

Impediments to rapid SSPV embedded generation deployment in SA

Three main issues currently threaten rapid deployment of SSPV EG in SA. These are briefly discussed below.

Longstanding energy security perspectives

SA has abundant coal resources that can last for up to 300 years, and was ranked the world’s seventh-largest producer of coal in 2013 [7], [8]. Currently, coal power plants make up 82.7% of Eskom’s generating capacity [9]. The considerable certainty in coal availability, well-established coal supply chain, and vested interests of the beneficiaries of the coal economy still incentivises pro-coal policies that might limit rapid grid-integration of renewable power. Coal is still expected to account for 58.8% of the electricity generation resource mix by 2030 [2].

Inadequate standards and regulations

Present regulations by the national energy regulator of SA (NERSA) waive license requirements for small-scale embedded generation (SSEG) systems (< 1MW) with overall net positive consumption but require them to be registered with the utility whose network they are connected to [10]. Technical standards – NRS 097-2-1 and NRS 097-2-3 – prescribe integration requirements [11], [12].

However, national regulations and standards did not anticipate rapid growth in SSEG – mainly SSPV EGs – that can export power to the grid. Thus, proactive technical assessment of distribution network SSEG hosting capacity was not widely undertaken by SA distribution utilities. SSEG capacity requirements are defined according to the type of network a prosumer is connected to and the prosumer’s notified maximum demand (NMD) – determined by the service circuit breaker rating.

The SSEG capacity limit is 25% or 75% of the NMD for a prosumer connected to a shared or dedicated network, respectively [12]. These are broad specifications and do not account for the peculiarities of the networks of distribution utilities, thus it is plausible that the SSEG hosting capacity of several utilities with robust networks might not be realised.

At present, not all municipalities allow SSEG to export power to the grid; SSEG output should match consumption requirements [5]. Only a few municipalities support reverse feed-in, e.g. the City of Cape Town and Nelson Mandela Bay [13]. Also, net-metering schemes are not firmly determined; some municipalities demand connection charges for SSEG and define import and export rates, with export rates typically less than import rates to ensure the profitability of municipalities [13], most of whom largely depend on electricity retailing for income [14]. While time-of-use tariffs may be considered in net-metering schemes, prosumer exports might be priced low during periods of low demand when prosumers expect to offset some of their electricity costs through excess power exports.

Furthermore, the requirement for SSEGs to switch off during an outage (for safety reasons) [13] detracts from the benefits of continuity of supply which prosumers expect to enjoy during outages; this might dissuade prospective prosumers from opting for grid-tied systems, if flexible approaches that mitigate safety concerns are not implemented.

Also, “while there are compulsory wiring standards for general electrical installations, there is no dedicated national PV standards for PV installations yet. Nor is there a nationally approved training and accreditation system specifically for PV installers” [15].

Some municipalities like the City of Cape Town and Stellenbosch municipality have made appreciable progress in defining installation guidelines for SSEGs [15], [16]. However, knowledge sharing among SA municipalities is limited especially due to partisan inclinations. Other institutions like PV Green Card [17] and PQRS [18] have also published some guidelines. Nonetheless, the skills gap in the SSPV EG industry could slow down rapid deployment or precipitate widescale deployment of low quality and hazardous systems by persons without the requisite certifications.

Inadequate business models and limited access to finance by low- and middle-income households

Focus on individual prosumer installations by SSPV EG developers might also slow down rapid deployment, especially in low – middle income households with low affordability and limited access to required finance [6]. The high investment cost could dissuade them from switching to an SSPV EG based energy model for their homes if the system’s benefits are not readily perceptible [19].

Recommendations to improve rapid deployment of SSPV embedded generation

Regulations and technical standards

National standards on SSPV EG installations need to be developed to facilitate the safe deployment of these systems. These should provide the primary framework for the installation guidelines published by municipalities and PV institutions to ensure consistency. With rapid deployment of SSPV EG, a reassessment of current export limits is necessary. Export limits should not only be based on present or short-term projections of the deployment of these systems but long-term projections.

While broad studies based on general assumptions might suffice to give an average outlook on the level of SSPV EG penetration that utilities should allow on their networks, such outlook might be suboptimal and detract from potential gains of allowing more deployment of these systems. Accordingly, it behoves individual utilities to conduct holistic technical studies to determine the amount of SSPV EG that their networks can handle without causing adverse impacts.

As SSPV EG deployment increase, traditional tariff structures will need to be redesigned to minimize the cross-subsidization of normal consumers (especially ones with low affordability for SSPV EG) by prosumers. Also, it might be necessary to ensure fair allocation of network hosting capacity among current and prospective prosumers to minimize inclusivity concerns.

An alternative to hard-fixed prescription of export limits and switching off SSPV EG during outages (due to safety concerns) will be to adopt more flexible approaches to distribution network design and operation. Multiple SSPV EG within a geographical boundary can be networked as microgrids (MG) with adequate diversity in the consumption profiles of the prosumers and consumers therein. An effectively designed MG management system could manage power flows within an MG island, and between the MG and the central grid. As the cost of storage technologies declines, excess power exchanges between the MG and the central grid that can cause adverse effects can be significantly reduced.

Human resource development

The skills gap in the SSPV industry (and RE industry in general) is an opportunity for creating new jobs. However, this is contingent on having high quality training system and institutes that issue standardised certifications to installers; such training and certification will limit the concerns on the safety of SSPV EG systems in a rapid deployment era.

Business model adaptations

Distribution utilities (Eskom and Municipalities)

Instead of being apprehensive about the rapid deployment of SSPV EG, distribution utilities could adapt their business models and prepare for interactive and competitive electricity markets that facilitate efficient retail and wholesale market operations, improved power system reliability and minimal network congestion. Utilities’ revision of their business models should incorporate market-driven and consumer-centric transactive energy models.

This includes modernising the grid to sell services beyond electricity units – for instance, ancillary services – and facilitate peer-to-peer energy transactions. Advances in the research and technologies related to MGs and blockchain can be leveraged to facilitate peer-to-peer energy trading within what might be called distributed electricity markets, that can integrate into the wholesale electricity market [20].

SSPV EG developers

Consistently declining solar PV and storage prices and rising electricity tariffs imply that the financial case for SSPV EG is fast evolving. This calls for industry players to be more innovative in developing viable business models for different consumer segments.

Some suggestions for circumventing the seeming financial unviability of SSPV EG in low- and middle-income households include periodic assessment of these households’ affordability and access to credit, collective rather than individual system deployment especially in clustered living settings like apartment blocks, and stakeholder collaboration e.g. collaboration of SSPV EG and real estate developers with municipal authorities to facilitate integration of SSPV EG deployment in building development plans [6], [19].

Conclusion

Following an overview of grid-integration of distributed energy resources in SA and an assessment of the status quo of SSPV EG, several pros and cons, as well as impediments of rapid SSPV EG deployment were identified. Accordingly, key recommendations to facilitate sustainable rapid deployment of SSPV EG were made.

Summarily, a perspective of rapid deployment of SSPV EG systems should envision all consumers becoming prosumers to emulate future electricity markets in which distributed energy generation will be very significant for grid resilience and decarbonisation of the energy mix. Accordingly, it is needful to adapt current energy security perspectives, standards, regulations, and business models, or evolve new ones to maximise the benefits of these systems while minimising potential negative impacts.

References

[1] Department of minerals and energy, “White paper on renewable energy,” South Africa, 2003.

[2] Department of Energy, “Integrated Resource Plan (IRP2019),” 2019.

[3] Department of Energy, “Renewable energy: solar-power,” 2020. http://www.energy.gov.za/files/esources/renewables/r_solar.html#:~:text=Most areas in South Africa,has sunshine all year round. (accessed Sep. 18, 2020).

[4] US Energy Information Administration, “International electricity statistics,” 2020. https://www.eia.gov/electricity/data.php (accessed Sep. 18, 2020).

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[6] C. Gross, E. Broughton, M. Borchers, and D. Conway, “Low- and middle-income grid-connected solar PV approaches in South Africa: discussion paper.” giz, 2019, [Online]. Available: https://www.sseg.org.za/wp-content/uploads/2018/12/discussion-paper.pdf.

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[9] Eskom, “Integrated report,” South Africa, 2019.

[10] Department of Energy, “Draft licensing exemption and registration notice.” 2018.

[11] Eskom Technology Standardization Department, “NRS 097-02-01 – Grid interconnection of embedded generation. Part 2, small-scale embedded generation. section 1, utility interface.” SABS Standards Division, Johannesburg, 2010.

[12] Eskom Technology Standardization Department, “NRS 097-02-03 – Grid interconnection of embedded generation. Part 2, small-scale embedded generation. section 3, simplified utility connection criteria for low-voltage connected generators.” SABS Standards Division, Johannesburg, 2010.

[13] SSEG municipal resource Portal, “FAQ,” 2020. https://www.sseg.org.za/faq/ (accessed Sep. 18, 2020).

[14] Statistics South Africa, “An update to municipal spending and revenue (June 2019),” 2019. http://www.statssa.gov.za/?p=12560 (accessed Sep. 20, 2020).

[15] City of Cape Town, “Safe and legal installations of rooftop photovoltaic systems: commercial and residential in – Cape Town.” 2016, [Online]. Available: www.capetown.gov.za.

[16] Stellenbosch municipality, “Guidelines for small scale embedded generation in stellenbosch municipality.” 2016, [Online]. Available: https://www.stellenbosch.gov.za/.

[17] PV Green Card, “Promoting safe and quality solar PV installations,” 2020. https://www.pvgreencard.co.za/ (accessed Sep. 20, 2020).

[18] PQRS, “The PV quality assurance program.” https://pqrs.co.za/the-pv-quality-assurance-program/ (accessed Sep. 20, 2020).

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[20] Y. Parag and B. K. Sovacool, “Electricity market design for the prosumer era,” Nat. Energy, vol. 1, no. 4, pp. 1–6, 2016, doi: 10.1038/nenergy.2016.32.