CSP Today recently conducted a survey of 60 leading professionals to get their views on the development of the CSP industry in South Africa. The survey addressed some of the critical issues facing the industry at the moment, such as local content, legislation, storage and more. The guide has been produced in partnership with the launch of CSP Today South Africa 2015 (21-22 April, Cape Town). The event will bring together leading developers, EPCs, legislators and utilities to further the deployment of CSP in South Africa. If you want to be part of the conference visit www.csptoday.com/southafrica CSP in South Africa: Industry Development Guide CSP Today South Africa 2015 For more details on CSP Today South Africa 2015 visit: www.csptoday.com/southafrica www.csptoday.com/southafrica BUSINESS INTELLIGENCE
Transcript
CSP Today recently conducted a survey of 60 leading professionals to get their views on the development of the CSP industry in South Africa. The survey addressed some of the critical issues facing the industry at the moment, such as local content, legislation, storage and more.
The guide has been produced in partnership with the launch of CSP Today South Africa 2015 (21-22 April, Cape Town). The event will bring together leading developers, EPCs, legislators and utilities to further the deployment of CSP in South Africa. If you want to be part of the conference visit www.csptoday.com/southafrica
CSP in South Africa: Industry Development Guide
CSP Today South Africa 2015
For more details on CSP Today South Africa 2015 visit: www.csptoday.com/southafrica
www.csptoday.com/southafrica
B U S I N E S S I N T E L L I G E N C E
www.csptoday.com/southafrica l 2
B U S I N E S S I N T E L L I G E N C ECSP in South Africa: Industry Development Report
contentsoverview
Which CSP technology will prevail in South Africa? .........................................................................3
What are the greatest challenges to constructing CSP in South Africa? ..............4
Where else is hot in Africa? ................................5
Key players in South Africa .................................6
Who would help develop your business? ....................................................................................7
Cutting costs in CSP development ...........8
Future markets for CSP ...........................................9
How can storage become cheaper? ..... 10
The future of CSP in South Africa: O&M ......................................................................... 11
How can we get more CSP in future? ............................................................................... 12
South Africa is the world’s most exciting market for CSP.
400MW of CSP has been awarded under the Renewable Energy Independent Power Producer Programme (REIPPPP) so far, and this is just the start in hitting a government target of 1200MW.
The market is growing at an exponential rate, with the first of these installed projects set to come online shortly, and others nearing completion. With a large generation deficit which needs to be filled with on demand power CSP is set to be a vital part of the South African energy mix.
Despite the optimistic outlook for CSP in South Africa uncertainty remains. A heavy reliance on the government to support the industry means that CSP is still vulnerable.
In order to understand the opportunities, and the concerns in the market we carried out with over 60 key stakeholders and having provided the result with full analysis.
Which CSP technology will see the largest deployment in South Africa?
Which CSP technology will prevail in South Africa?
The aim of this question was to decipher which technology will dominate the South African CSP market.
The results are unsurprising with the two technologies whose projects have been awarded already under the REIPPPP, Parabolic Trough and Tower, dominating with over 90% of the vote. The lesser deployed Fresnel and Dish technologies are far behind with less than 10% of the vote between them.
Key CSP Projects in South Africa
�� Khi Solar One - Tower, 50MW�� KaXu Solar One - Parabolic Trough, 100MW�� Bokpoort, Parabolic Trough, 50MW�� Xina Solar One, Parabolic Trough, 100MW
Which is the greatest challenge when constructing a CSP plant in South Africa?
What are the greatest challenges to constructing CSP in South Africa?
This question asked respondents to identify which factor was the biggest in constructing a CSP plant, specific to South Africa.
South Africa is a new and emerging market for CSP, but this hasn’t meant that a lack of local expertise has hindered development with only 5.45% citing the sourcing the right components as the key challenge in constructing CSP plants. This is accounted for by access to international markets mixed with substantial domestic expertise.
CSP plants are clustered around Upington and Kimberley, in Northern South Africa. This means that parts imported into ports in Cape Town or Namibia need to be transported over at least 800 kilometres. This logistical challenge has been cited by 18.18% of respondents as the key challenge in constructing CSP plants in South Africa.
A significant part of the REIPPPP has been the inclusion of Local Content Requirements and Broad Based Black Economic Empowerment Legislation, designed to benefit local companies and share expertise and new income streams across the economy. With Local Content requirements now at 45% of the project, 36.36% of respondents stated that meeting these was the biggest challenge in the construction of the project.
The most cited challenge was working with local authorities, with 40% saying this was the biggest challenge of working in South Africa. Local opposition and corruption has been a problem for CSP developers and this has culminated in project delays, labour force problems and supply chain challenges. While the Department of Energy has worked hard to encourage renewable development there has not been a harmonious support to assist deployment across all levels of legislature.
Sourcing the right
components
Meeting local content requirements
Working effectively with
authorities
Assembling the supply chain over
long distances
0% 10% 30% 50% 70% 90%20% 40% 60% 80% 100%
Answer choices
Meeting local content requirements 36.4%
Sourcing the right components 5.5%
Working effectively with authorities 40%
Assembling the supply chain over long distances 18.2%
Which sub-Saharan African market (outside of South Africa) has the most credible prospects for growth in the next 5 years?
Where else is hot in Africa?
Which market in the region offers hopes for CSP development other than South Africa?
Zimbabwe is still perceived as too unstable – and too corrupt for there to be credible prospects for CSP.
Nigeria (15.87%), Kenya (17.46%) and Botswana (22.22%) all polled very similarly and this reflects the hope which developers have in the region, but also the uncertainty about the strength and credibility of government programs in these countries. Nigeria is the market in the region with the greatest potential, with 20% of all Africans there, but domestic instability mean that a credible renewable program is still some way off.
The stand out market from this question was Namibia which secured 44.44% of the vote. One reason for this is that Namibia is one of the most stable countries in the region which makes it attractive for investment and in assembling the vast supply chains CSP plants require.
The key reason however is that Namibia possesses amongst the finest DNI measurements in the world. The northern most part of South Africa, where the current CSP plants under construction are, is part of a corridor of exceptional DNI which runs into Southern Namibia.
This is key as it means more output from the plant, which means the project is more economical and bankable.
This survey has been conducted amongst a range of stakeholders, offering a broad based overview and fair analysis of the market.
Such is the strength of the South African market that all of the major international developers and EPC’s with a track record in CSP have set up permanent offices in South Africa.
Strong legislation compelling integration of local companies as project stakeholders has meant that CSP plants in South Africa have many stakeholders, with the benefits of the technology being shared around and local expertise developed.
Develop your business and find clients
If you are looking for new business opportunities in the world’s most exciting CSP market then CSP Today South Africa 2015 has solutions for you. You will have the opportunity to meet key developers, EPC’s and financiers in one place.
CSP Today has a proven track record of helping businesses expand their client base via solutions that work best for you. If you would like to find out more about opportunities for you available at the event email Business Development Manager Joel Lopez at: [email protected]
Which type of company is it most important to meet for you to expand your business in Africa?
Who would help develop your business?
This aim of this question was to understand which companies our respondents wanted to meet in order to develop new business opportunities. EPC’s (10%), Engineers (10%) and Technology Suppliers (11.67%) all polled very similar results.
The majority of votes identified Financiers (21.67%), Regulators (21.67%) and Developers (25%) as the key people they wanted to meet. With financiers support vital to getting a project moving it is no surprise that they are one of the key people to meet. And the same is true for developers who have large amounts of contracts to award and are largely sought by key suppliers.
The reason that regulators are key is that the Round by Round nature of project awards has meant that a long term investment in manufacturing and new offices has been limited. With more clarity from regulators companies will be able to make increased levels of investments in long term manufacturing and local skills to imbed a long term CSP industry in the region.
Meet key companies to develop your business
If you want to hear from key financiers, developers and regulators then find out more about CSP Today South Africa 2015. With over 30 presentations, 10 hours of networking and client meeting rooms it is the region’s leading CSP event. Read more at: www.csptoday.com/southafrica
Which of these has the greatest potential to cut costs in CSP development?
Cutting costs in CSP development
This question is seeking to understand how CSP projects can cut costs and become more competitive against other forms of generation.
Recent advances in research and development have meant that high steam operating temperatures can increase plant output and 16.36% of respondents cited this as a key way of bringing down CSP costs.
Each CSP project is financed on an individual basis needing a ‘bespoke’ financing solution, this requires a lot of time, increased input and is a more expensive process – a standardised approach to financing was cited by 21.82% as the key to cutting CSP costs.
Although we have already seen that actually sourcing components is not a major challenge, 25.45% stated that reducing component cost was the most effective way to reduce CSP development costs. A lack of specialist domestic manufacturing along with a weakening currency has made this a particularly big factor.
The largest factor cited was increasing competition amongst EPC contractors (36.36%). With such a large majority of the project cost being in construction, and a very limited amount of competition amongst major contractors there is a major potential for cost savings here..
Selected ‘Other’ Responses
�� Cheaper Storage �� Standardisation of technology and equipment�� More projects/Greater allocation �� Reduced legal costs
Answer choices
More competition amongst EPC contractors 36.4%
Increase in the operating temperature of CSP plants 16.4%
Which sector is most likely to be a user of power produced from small scale CSP?
Future markets for CSP
South Africa so far has been driven by government growth in the REIPPPP, relying on bidding rounds to support the fledgling industry. There is however a market for small scale CSP to be deployed and this question asked which industry could support this.
10.7% of respondents were sceptical about the opportunities and listed ‘none’ as their answer.
7.1% thought that heavy industries would be likely to support CSP – perhaps a low figure suggesting South Africa’s expertise in traditional heavy industries.
37.5% thought that manufacturing would provide an opportunity for deployment of CSP – and there is certainly opportunities for ‘sister’ technologies to CSP to utilise excess heat.
44.6% saw Mining as the biggest opportunity for small scale CSP deployment. Mines need round the clock power – a key benefit in using CSP over other technologies and Eskom’s poor record in energy security means more mining companies are looking towards self-generation.
Answer choices
Mining 44.6%
Heavy industry 7.1%
Manufacturing 37.5%
None 10.7%
Heavy industry
Mining
Manufacturing
None
0% 10% 30% 50% 70% 90%20% 40% 60% 80% 100%
What to know more about the future of CSP?
If you want to know more about future opportunities for CSP in South Africa check out CSP Today South Africa 2015. The event is the regional hub for key CSP industry leaders to meet and a future roadmap for CSP development will be discussed. Find out more at: www.csptoday.com/southafrica
Which is the most vital factor in reducing the cost of storage?
How can storage become cheaper?
Storage is the key factor in further deployment of CSP in South Africa. It is a vital, if costly addition to projects which separates CSP projects from competitor technologies.
By making storage cheaper CSP projects will have a real competitive advantage against other forms of generation which would inevitably lead to further deployment.
Only 5% thought that better logistical support for specialist materials was the key factor in bringing down prices, with the lengthy transport and storage of materials proving a challenge.
With storage materials currently having to be imported, adding substantially to the cost, 23.33% thought that more local production of specialist components would help reduce costs.
31.67% thought that developments in the efficiency of the systems, tanks in particular would benefit cost savings most.
40% cited cheaper storage materials as the key factor, with high prices currently driven up by limited supply increasing costs.
Answer choices
Better logostical support for specialist materials 5.0%
Cheaper storage materials 40.0%
More local production of specialist system components 23.3%
What will the greatest challenge be in the O&M of completed plants?
The future of CSP in South Africa: O&M
After the installation of 100’s of MW of CSP what follows is an extensive process of operating and maintaining the CSP plant to make sure as much power as possible is extracted from the asset.
A large part of O&M is the replacement of faulty components, although there was little fear about their availability with only 7.02% of respondents citing this as the key challenge to O&M.
Stringent water controls mean that water availability is a big issue – and 14.04% saw this as the biggest challenge for O&M in South Africa.
As mentioned with storage such a big factor 24.56% thought that storage output optimisation was the biggest challenge for O&M. With CSP prized for its dispatchability the challenge is in getting the storage system functioning so that it can dispatch the power quick enough to meet demand.
The majority of respondents however felt that a lack of experience in South Africa (54.35%) was the biggest factor in the ongoing O&M of plants in South Africa. With many developers having international experience in O&M so many thinking that a lack of domestic experience would be the key challenge is surprising. Once plants are completed it may be the case that plant owners need to use extensive training of local partners to get the most out of their asset.
Which is the greatest barrier to more CSP deplyment in South Africa?
How can we get more CSP in future?
With CSP an evolving industry still reliant on government support in South Africa the question is how can it become a long term feature in the South African energy mix. This of course involves removing the barriers to development.
14.52% felt that difficulties in project finance was the greatest barrier to further project development, as previously mentioned, the slow and costly process is a serious hindrance for CSP projects.
Eskom’s recent grid troubles in integrating renewable energy projects is no secret and 24.19% cited this as a key barrier to future projects. This issue is not isolated to CSP with PV and Wind projects also suffering.
CSP’s relatively high price compared to competitor technologies was mentioned by 27.42% as the key factor in future development, this is a problem, although for may this is offset by the storage premium which CSP can offer.
The most cited reason was regulatory uncertainty (33.87%). With utility scale CSP projects so reliant on government bidding rounds it is little surprise that this is the biggest barrier to future CSP development. A lack of certainty has also hindered local investment and the uncertainty still stands as a potential axe over this infant developing industry.
A future roadmap for CSP?
If you want to learn more about the future of CSP in South Africa then you will be a great match for CSP Today South Africa 2015. The event in Cape Town in April is a collection of 200+ of the region’s key stakeholders laying out a roadmap for future CSP development. Find out more at: www.csptoday.com/southafrica
With South Africa the world’s leading CSP market for project development this survey has come at a crucial time for the industry. From new challenges emerging like storage management and O&M to the issues of working with Eskom and the DOE.
From the survey results here are some of the overall conclusions which can be made:
�� South Africa has access to expertise – It was reiterated during the survey results that sourcing components was not one of the key challenges in either the development of O&M of plants. Despite many specialist components having to come from Europe developers have had easy access to them and strong domestic expertise means South Africa is a developing centre of excellence
�� Government, municipalities and Eskom need to better support CSP – The headline is the great government program which has led to over 400MW of CSP projects being developed. Under the surface however CSP developers often find uncooperative local authorities and an Eskom grid which needs updating to accommodate more CSP projects. Further to this the DOE’s round by round project award style has hindered long term investment
�� Storage really is the key – This is not a great surprise, but it has been emphasised again that every aspect of storage is key to CSP development in South Africa. It gives CSP an advantage over competitor technologies, it allows CSP to offset its higher price points and managing it is essential to getting the most out of your plant. As South Africa gains experience with storage systems, efficiency gains can be made and this should become an even stronger selling point for CSP.
continuing the growth of csP in south AfricaThe key to continuing the growth of CSP in South Africa is all of the key players in the industry coming together to discuss ways to improve efficiencies, reduce costs and persuade legislators that CSP is the way to go.
Providing this forum, with representatives from ACWA Power, Eskom, BrightSource Energy and more already confirmed is CSP Today South Africa 2015 (21-22 April, Cape Town).
The goal of the event is confront some of the key issues facing the industry in South Africa, by providing a mixture of visionary presentations, international examples and domestic case study successes.
There are opportunities for leading solution providers to showcase products by exhibiting and sponsoring the event. Leading providers may also be invited to deliver a presentation to the conference audience. If these opportunities sound of interest to you, please email the business development manager for the event, Joel Lopez: [email protected]
All event updates, including an industry leading agenda, speaker details and more can be found at: www.csptoday.com/southafrica
