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Africa holds enormous potential for PV

Mr. Wedepohl, BSW-Solar  cooperates with associations across the entire African continent, from Egypt, Morocco, Tunisia and Algeria in the north to Mali and Nigeria in the west, Tanzania in the East and Angola, Botswana, Namibia and South Africa in the south. How do the countries or regions differ when it comes to using photovoltaics?

The spectrum is exceedingly broad – from the sub-Saharan regions of Africa which are not electrified to the industrialized regions of South Africa. There is a market for photovoltaics and solar storage units everywhere. The self-consumption of solar power is a relevant topic in practically every country, even in those with a comprehensive nationwide power supply such as the Maghreb states. Power purchase agreements, or PPAs – mostly with state-owned or large private utility companies – are very widespread. In some countries, the framework conditions for renewable energy are regulated by law, settling the issue of grid feed-in of excess power and what remuneration is possible.

 

Africa holds enormous potential for solar energy. What is lacking most in the countries overall, in spite of all their differences?

The expansion of solar energy – not just in Africa – requires suitable and stable framework conditions in the long term, access to financing, and skilled labor. The individual countries are in different positions here. Financing and default risks, in particular, are a major issue in almost all African markets. Lending rates are often very high and complicate the economic viability of a project. Small-ticket financing from state providers can help here, as BSW-Solar has proposed while working on the German government’s various African initiatives – AfricaConnect, the Marshall Plan with Africa, or Pro! Africa. These efforts support the interests of our members working abroad. Among other things, we are working with the new financing assistance platform GET.invest, which is run by the German international solutions provider GIZ and funded by various EU countries.

Alongside financing issues, there are challenges relating to the grid infrastructure. Power grids are either non-existent or too weak and unreliable. Additionally, in some countries there are prejudices against the reliability of PV systems which need to be dispelled. Yet the insufficient infrastructure can also mean a competitive advantage for German off-grid specialists. Partner companies and electricians can be found in most countries, and even electrical engineers in some places. But additional qualifications are often necessary to be able to build high-quality and, above all, safe systems.

 

Where do you see particularly promising markets emerging?
The entire continent has a large appetite for energy, a growing population and excellent irradiation levels, meaning that solar energy is a relevant topic everywhere in Africa. There is generally a business case if the political situation is stable and financing is available. It’s particularly worth looking at Egypt, which holds the greatest potential due to its strong economy, and Nigeria, which is the largest economy on the continent and has approximately 200 million inhabitants. Alongside these are countries with dynamic economic development such as Angola, which has opened up a lot more, Ethiopia, the Ivory Coast, Ghana, which gives access to other west African markets, Senegal and of course the Republic of South Africa, a mature market across all segments. BSW-Solar maintains partnerships with associations in these markets, which makes it easier for members to find reliable partners on site.

 

Is the focus mainly on private rooftop installations, commercial solar parks or off-grid projects?
Large solar parks and roof-mounted photovoltaic systems for industry and commerce are definitely two very attractive segments of the market.

 

How is off-grid faring?

Off-grid projects offer many opportunities for specialist suppliers. They are competing with diesel generation, and are therefore particularly lucrative. However, suitable financing models always need to be found.

 

What do financing and project development depend on?

In market segments of all sizes, they depend on the right partners and framework conditions. Due diligence  is a  major obstacle in financing photovoltaic systems  up to ten megawatts, because hardly any bank wants to take on the costs  – they are simply too  high in relation to the total investment. Product standardization and inspection processes are key here. Repayment facilities are another main focus in terms of financing. How can a permanent cash flow be secured while the system is in operation? The solar industry can learn lots from the mobile communications industry here, at least in the end customer segment.

 

You’re going to present a study on PV in Africa for the first time at Intersolar Europe. What’s it about and who is it aimed at?

Only around two gigawatts photovoltaics are installed on the entire continent with its 1.3 billion inhabitants. By way of comparison, In China with a similar number of inhabitants the capacity of over 40 gigawatts was installed in the year 2018 alone. Africa holds enormous potential. In this study, which BSW-Solar worked on together with the Becquerel Institute, we investigate how we can tap into the potential of renewable energies in Africa, especially that of photovoltaics, batteries and off-grid solutions. The analysis places emphasis on Egypt, Angola, Ethiopia, Ghana, Madagascar, Morocco, Nigeria and South Africa, countries which offer especially good prospects, and on particularly promising business models. We also illustrate the medium-term prospects for companies who are active in Africa or who plan to enter the market there. We’re already really looking forward to interacting with the companies at the conferences of The smarter E Europe.