Recent allocations from the Department of Energy have made South Africa become one of the most dynamic markets worldwide, and local modules are expected to play a key role in its development. According to Enertis, international firm specialized in providing consultancy, technical assessment and engineering services for solar projects, the South African solar market has grown into a mature industry able to create much needed energy generation capacity, local employment and a competitive renewable energy environment, attracting investment from major international players.
Recently the DoE has taken a stand to face the energy supply crisis and boosted the allocation of RE projects. When talking about Solar PV alone, Enertis highlights that if rounds 1 to 3 resulted in the allocation of 1,484MW, only in round 4 some additional 813MW have been selected. On top of that an accelerated, or expedited, round has been announced which will secure further 1,800 MW from various technologies ahead of the next-to-come round 5.
The evolution of the REIPPP has followed a path where projects selected have grown in size (75 MW projects are now the norm whereas almost 50% of the projects in Round 1 were comprised between 5 and 20 MW) and become very competitive in terms of price and local content. Round 4 prices have reached some of the lowest levels hitherto seen worldwide, and local content values are in average higher than 64%.
Just as Enertis did three years ago, international PV modules manufacturers also moved to South Africa recognizing the potential of the market. ARTsolar, Jinko Solar, ILB Helios and JA Solar have opened (or are about to) their doors recently. French Tenesol were already established in Cape Town to be later acquired by American Sunpower, with plans of increasing their production capacity in 2015. Claimed annual production capacities of these manufacturers vary from 80 to 160MW in most of the cases, so total combined capacity may still be far from the 813MW – not to forget this figure is only nominal power – necessary for Round 4 unless further expansions are made.
Preferred bidders have committed to local content values which would hardly be met if not using local manufactured modules. Most of the cost of manufacturing a PV module in South Africa is still of foreign origin but considering the local content targets, every little counts. On the other hand, project prices have become so low that to reach financial closure equipment cost will have to decrease dramatically, putting local manufacturers in a difficult position. It might be hard to meet market needs considering the current production costs, especially when some of the local manufacturers are still in the ramp-up process.
In Enertis’ opinion, the future performance of the PV plants operating across South Africa depends on several factors – adequate planning and engineering, correct construction and operation of the assets, good selection of equipment – but one of the most critical components, if not the most, is still the PV modules. It is absolutely essential for the success of a project that the PV panels are correctly selected, inspected, installed and monitored during the whole life of the plants. The interests of every part involved in a project, whether it is the bank, the developer, the EPC contractor or the operator, are in the same boat when it comes to module performance. Should a major problem occur with the modules performance, none of those parties will meet their targets and economic losses will be difficult to minimize.
The PV modules technology is well proven and experience in other markets makes things easier now. Well known and recognized manufacturers have moved to South Africa bringing a significant amount of know-how and transfer of skills. However, entire factories are being built, dozens of complex pieces of equipment installed, hundreds of people trained, and quality control systems and practices put in place. To cap it all, the timelines, production and price levels demanded by the local industry these days do not make it any easier for local manufacturers to achieve maximum quality standards.
As it happens in other more mature manufacturing markets such as China, it is essential to perform a thorough due diligence when purchasing PV panels. An adequate quality control of the modules supply during manufacturing is showing great results in major markets, as it reduces greatly the risks during the entire life of the plant.
Vendor qualification, contract negotiation – introducing adequate criteria for acceptance and rejection of lots-, factory auditing prior to and during construction, as well as contrast verification testing of samples in an independent laboratory are the main steps to be taken for carrying out a quality control that can help to maximize the project return and profitability.
As local manufacturers go through this process the result is an improvement of the quality of the product, as they are pushed to improve their systems and correct any production deficiencies. Not only the major developers are benefited from this improvement but also small scale and embedded generation users.
Enertis is a pioneering company in defining quality assurance programs for photovoltaic projects. Since 2007, the company has advised clients on acquisitions of modules totalizing over 600 MW and has tested more than 16,000 modules from over 40 different manufacturers in its conventional and mobile laboratories.
The company, which has a permanent technical team in South Africa, conducts module testing in its laboratory in Port Elizabeth – Flash-test, Electroluminescence or Electrical Insulation, among others -, manufacturing audits at the PV module factories, testing services directly at the plants and advice in PV panels supply contract negotiation.
Enertis is currently performing Factory inspections and independent Quality Control testing in South Africa within the Round 3 Sonnedix-Mulilo Prieska project, and providing laboratory and on-site testing services to a number of major developers and EPC contractors involved in Rounds 1 and 2, as well as to other installers involved in the rooftop market.