Dumelang*. In my recent series of posts, I have been taking a deep dive
into solar power in Botswana. I have looked at the large
solar resource available in this sun-drenched country, I have considered
the potential for concentrating
solar power, and, in
my previous post, I looked at the technology of photovoltaics and the world-wide
rollout of this technology. As I read about solar and travel around the world,
I am amazed at the proliferation of this technology. It already generates 1% of
the world’s electricity supply and the International
Energy Agency has forecast that by 2050 this value will rise to 16%.
Country after country is climbing onto the solar PV
bandwagon and, even in Africa, there is some progress, particularly in South
Africa. As part of its Renewable Energy Independent Power Producers Programme
(REIPPP), South
Africa has implemented 1059 MW of PV solar projects, with an additional 1255 MW
under construction or in development. This excludes numerous small-scale
solar projects that businesses, homeowners, and farmers in South Africa have
implemented.
Despite the large solar resource available in Botswana,
Botswana has not yet joined the PV movement. In this post, I take a look at
some of the reasons for this.
Large-scale application of solar in Botswana has been
limited to a single project: a 1.3 MW solar farm near Phakalane, just north of
Gaborone. This project was built and
funded by the Japanese government in 2012 who contributed P84 million of the overall
cost of ~P106 million (~USD $10 million). This project has delivered close to
its planned output, but, unfortunately, recent theft of copper cables and solar
panels at the facility has shut down production since December 2015.
Another grid-connected system includes the recently
constructed, but not yet operational, 20 kW EU-funded University
of Botswana research system installed in Mokolodi village, just south of
Gaborone. Both of these systems will be
discussed in detail in my next blog.
The only other large grid-connected system is a 34 kW
system, owned by Scales Associates and located in Broadhurst, Gaborone near the
Western Bypass. This system generates electricity for an office and workshop
complex. It has a battery storage component and only uses the grid to
supplement supply during shortfalls in produced solar power: it does not feed
excess electricity back into the grid. There are, however, many small and large
off-grid systems in Botswana that power homes, offices, businesses, and tourist
lodges. Part of my research during my stay here in Botswana has been to visit
and assess these smaller systems and to learn about issues associated with
their operation.
Generally speaking, there are a limited number of PV
systems in Botswana and the existence of only a single 1.3 MW utility-scale PV operation
in a country with such a high degree of solar potential seemed, initially, to
be astounding. Clearly, lack of solar
irradiation is no excuse. In
an earlier post, I pointed to the high
levels of solar irradiation in this region and the potential to harvest it.
Besides, there have been many articles in the press and literature extolling
Botswana’s solar potential.
The limited number of solar facilities in Botswana was at
first a puzzle for me, but, since my arrival, I have spoken to a good number of
people with knowledge of solar energy regarding the lack of solar power
production in Botswana. Most have had opinions on this matter and a variety of explanations has been provided. The explanations and my thoughts on each are
shared below:
- The costs of installation are high. This excuse was compelling many years ago, but prices have come down—exponentially. Solar systems now cost a fraction of their prices ten years ago and costs continue to decrease; however, they are still not cheap. As noted in a previous post, costs for large-scale solar PV operations are of the order of $ 4400/kW. Coal-fired power plants have lower installed costs (especially if pollution control equipment is not included)—of the order of $ 1300 to $ 2300/kW. But this is only part of the story. A correct comparison should consider not only capital costs, but also long-term operating costs. Operating costs for solar plants are a small fraction of those of coal plants: compare the cost of sunshine with that of mined coal. If we quantify the higher long-term operating costs of burning coal, as well as its deleterious impacts, such as greenhouse emissions, general pollution, and health impacts, solar becomes an attractive proposition.
- Lack of regulation supporting independent renewable energy production. This is a valid excuse. Botswana has taken steps forward in implementing legislation for independent power production. In 2007, the Electricity Supply Act was amended to permit Independent Power Producers (IPPs); however, legislation is just the first step. The next—and more important—step is setting up a regulatory body and framework for IPPs and considering renewable energy feed-in tariffs (REFIT). Many of the regulations are still in the discussion or proposal stage and are, as yet, not codified. This creates uncertainty for investors and discourages investment in the power sector. One of the concepts I drill into my students who enroll in Franklin Pierce University’s MBA in Energy and Sustainability Studies is that successful energy project implementation requires three components: it requires the correct technology; it needs financing; and, very importantly, it requires well-established, supportive, and consistent regulation. These days, there are many technological solutions to produce renewable energy and many firms willing to make investments, but they will only do so when the correct laws and regulations are in place. One just has to view the success of renewable energy legislation in other countries to see the benefits. The South African Renewable Energy-Independent Power Producer Programme (REIPPP) is again a case in point: since the legislation enabling this program was passed and firm regulations were established, regulatory uncertainty was no longer an issue and private investors have lined up to make large investments in grid-scale renewable energy projects. The results have been impressive: awards for over 3000 MW of renewable energy generation, involving $ 10 billion of investment, have been made. Now it is unlikely that Botswana, with its lower population (2 million compared with 55 million in South Africa) and commensurately lower energy consumption, will ever see this level of investment, but some investment in the renewable sector is desirable. To promote IPPs and/or renewable energy production, the government will need to move forward on setting up a regulatory body and framework. This will then create the regulatory confidence that will draw in investment.
- The low and subsidized cost of electricity
in Botswana. The cost of energy in Botswana is a big issue.
Generally speaking, the cost of electricity in Botswana is low compared with
that of other countries in the world. At this time, the average resident in
Botswana, using more than 200 kWh/month, is paying 88.28 thebe (1/100 of a pula
(P), the currency of Botswana) per kWh,
which is equivalent to US$ 0.0762/kWh (@ P11.59/US$). Compare this with the
average costs of electricity in the
US at $ 0.1273/kWh and Germany
at $ 0.3140 $/kWh. Electricity in
Botswana is heavily subsidized. The chart below compares Botswana Power
Corporation’s (BPC) average selling prices and costs for electricity over time:
it can be seen that the purchase price of electricity in Botswana is consistently
lower than the costs. It is also notable that the difference over the past few
years has escalated, which is one of the main reasons that BPC has been running with an
operating deficit. This low subsidized cost of electricity makes it
difficult for ordinary folks in Botswana to consider renewable energy. The low
price of grid-provided electricity and the high installation costs for solar, especially
when combined with battery storage, makes payback periods very long—it is
simply easier and cheaper to use electricity from the grid. Under these
circumstances, it takes dedicated, far-thinking, altruistic individuals
concerned about the fate of the planet to make the investments in solar against
the headwind of low electricity prices.
Source: BPC - Renewable energy is expensive. The cheap price of retail electricity in Botswana further complicates matters because REIPPs may initially require higher feed-in tariffs than the present retail rate of 88.28 thebe/kWh to run a profitable renewable-energy enterprise. Again, lessons can be drawn from the South African REIPPP. At the start of this program, bid prices in the auction were high, but then, over the succeeding annual bid windows, prices fell as investors gained confidence and experience in the South African renewable energy market. When the program started in 2011, the average bid for renewable energy was R 3.29/kWh (US$ 0.198/kW @ R16.61/$). This has decreased every year and fell to R 0.79/kWh ($ 0.047/kW) in the most recent bid window – a remarkable 76% reduction over four years. This is below the R 1.14/kWh that the average homeowner (using <600 kWh/month) is paying the national electricity supplier, Eskom (see the figure below). The program is a fine example of the results that a well-crafted, consistent, and predictable program can deliver. If large-scale renewable energy/solar is introduced to Botswana, it is very likely that the average tariff required by the developers for the first projects will be higher than the retail price for electricity. In a way, this will become a subsidy for renewable power and is similar to the subsidies presently supporting coal-fired electricity generation in Botswana. Yet, drawing from the South African experience, there is the possibility that, over time, as more projects become implemented, the bid prices for renewable tariffs will decrease, although because Botswana does not have the same degree of needed capacity, such decreases will most likely be smaller.
Source: SA DOE - Solar energy is highly variable: it only produces electricity during the day and what Botswana needs is more consistent base-load production of electricity. I cannot argue with the point that Botswana needs a larger amount of reliable base-load electricity generation, especially considering that the writing of this post was interrupted several times by the lack of electricity due to load shedding. However, even though solar energy is variable, the production of electricity from PV systems will lessen the amount of coal that needs to be burned during the day time. Reduced coal burning has a positive impact on the planet and environment, it extends the lifetime of the coal resources, and it provides some diversification for electricity generation, which, in turn, reduces the vulnerability of energy supply.
- There is a lack of knowledge about solar systems and lack of trained personnel in Botswana. I have found this to be only partly true. There are a limited number of Botswana-based solar firms and trained personnel at the moment, but this is due to the limited amount of business available in the country. I have met several competent and well-trained engineers and technicians in the PV field in Botswana and I am confident the knowledge and expertise base will grow as the business grows – as it has in all other countries where solar energy has been promoted.
- Concern about the impact of grid-connected PV systems on the main electrical grid. The connection of multiple small generators onto an electrical grid does add complexity to its operation, but the experience of other countries can easily and quickly be drawn upon. Major utilities in Europe, Asia, and the US now accommodate large-scale and highly variable renewable energy production from thousands of individual systems that each feed small amounts of electricity into their electrical grid, as well as from grid-scale PV operations. This is a technical problem that has been solved and Botswana can draw from a well-established knowledge base.
- Renewable electricity from PV is highly subsidized in developed countries. This is a valid point. We are seeing residential and grid-scale solar installations rolling out across parts of the US and Europe, but this is not because solar irradiation levels are high in these regions. In fact, they are often far lower than Botswana. For example, in my home state of Massachusetts, where there is a major growth in the solar industry, the average solar insolation value is 3.9 peak sun hours compared with 5.6 in Botswana. Similarly, in Germany, solar irradiation levels are a lot lower: 2.52 in Hamburg and 2.98 in Munich. The reason for the solar bonanza in those countries is that there are tax credits for installation, high FIT levels, and/or generous renewable energy credits to be earned. For example, in Germany FITs in 2015 were € 0.1288/kWh (US$ 0.14/kWh). (This is down from 2004 when they were as high as € 0.54/kWh (US$ 0.67/kWh).) In Massachusetts, excess electricity generated by homeowners can be sold back to the grid for $ 0.1837/kWh through net metering and also earn the homeowner ~$ 0.30/kWh in renewable energy credits.
- At this time, there are better alternatives for Botswana than renewable energy. Botswana is a developing country and, as such, there are perhaps better alternatives to installation of expensive, long-payback renewable-energy projects. A reading of the most recent annual report for Botswana’s electrical utility, BPC, indicates that their focus is on base-load energy supply, transmission grid reliability, service delivery, financial turnaround, and rural electrification. Renewable energy is not even addressed. Moreover, discussions that I have had with various BPC personnel also suggest a very different viewpoint: when they view the P100 million Phakalane solar PV project, they see a good and interesting project producing enough electricity for 200 to 300 homes, or enough for one village; however, they then emphasize the fact that this same sum of money could be used to bring the grid to approximately 30 villages and impact a lot more people. Ultimately, this is a very important choice to make in a country with limited resources: impacting the lives of many in the short term by extending the grid and burning more coal or that of a few for the long term by installing solar. This is a complex matter, but it is very relevant to the situation in developing countries across the world. It is easy for those of us in the developed world to promote renewable energy, but we have the resources, incomes, the developed economies, and the completely electrified countries to make these choices. Sometimes what works in a developed country is a poor fit for a developing country.
It has taken me some time in Botswana to understand the complexities involved in the consideration and installation of solar projects. Sunshine is a magnificent energy resource for the country and it is clear that small off-grid systems with battery storage in remote areas and a long way from the grid are great alternatives to diesel generators. However, when it comes to large-scale grid-connected systems, the situation is a lot more complicated than I first appreciated and requires a nuanced understanding of the factors at play in the country. One has to balance the short-term needs of development and electrification against the long-term benefits of renewable energy production. One has to understand that renewable energy is not free energy – even though prices are falling: the initial costs are still high and the reason we are seeing large-scale solar PV roll outs in other countries is because energy costs are high and renewable energy is heavily subsidized. Furthermore, one has to deal with the variability of a solar resource and balance that against the need for reliable base-load generation, even though that is achieved by burning coal.
Overall, as these matters often are, it is a complex
situation involving a great number of tradeoffs, but this is not to say that
solar and renewable energy do not require regulatory and financial support. They
do – and there are clearly actions that can be taken to promote solar, such as
implementing FIT regulations, establishing subsidies, and training workers
skilled in the solar energy business.
It has taken time to come to grips with the complexities of
renewable energy in this part of the world. My understanding has evolved and my
opinions regarding solar in Botswana are now a lot more educated. Clearly,
there is still much to learn and I would be interested to hear your thoughts
about this issue. Feel free to drop a comment in the box below or, if you
prefer, drop me a note at my email address.
In the meantime, remember to turn off the lights when you leave
the room.
Tsamayang Sentle**
Mike Mooiman
mooimanm@franklinpierce.edu
(*Greetings in Setswana)
(**Go well or Goodbye in
Setswana)
Such a well balanced and insightful article. I'm based in SA with business interests in Botswana and your article speaks to the heart of the challenges the country confronts. I can understand the economics of it all but bemoan the slow speed at which the policy and regulatory framework is being deliberated. Botswana is an AMAZING country and the potential spin offs on the job creation, up-skilling front are incredible. If subsidy for coal powered plants exist why not solar? Sometimes its a situation of creating the right environment for new technologies to be brought in that creates desirability and public uptake. Well considered renewable energy legislation and sheer will is key. I have no doubt that interesting developments in this sector will come out of Botswana, hopefully sooner rather than later.
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