Pre-feasibility study into solar energy rollout in Namibia

11. Rejected and delayed alternatives 

Crosssubsidised multi-technology solar strategy

The initial hypothesis was to use inexpensive technology interventions such as solar water heating, better insulation, LED lighting to reduce residential and small business demand by 50%, to negate the inflationary effects of much more expensive utility-scale solar. In later years, solar PV on houses would make financial sense and could if credit risks could be managed, be a profitable private sector initiative, if the cost of debt was kept low.

On a top level, the following table gives an indication of forecast costs:

Technology Timing of supply Cost (levelised)       Volume
Nation-wide solar water heating strategy Takes pressure off grid at key morning and evening slots. US$0.05 per KWh, about 1/3rd of residential costs. If 100,000 houses were installed with solar water heaters, with a 50:50 mix between 100 litre and 200 litres, peak demand could be reduced by as much as 100 MW, with 7%-6% reduction in electricity demand.
Energy savings such as LED lighting, better insulation, voltage control and boiler blankets Residential consumption for heating and lighting tends to be in the morning and evening peaks – especially in the high demand winter season. Less than the cost of solar water heaters, can largely be funded by voluntary carbon credits. Can reduce household consumption by 1/6th, so together with SWH will halve electricity consumption in households, in theory enabling household electricity unit prices to double before absolute cost of electricity goes up.
Micro-generation in the form of on-grid solar PV with storage Can store electricity to relieve the grid in peak times. Works well in the winter due to the low diffuse irradiation and summer rainfall climate. Currently 40 USc per kilowatt hour for stored PV at low interest rates – assuming a lead acid battery with 1,000 cycles is depleted to 80%. The economics of higher quality batteries has similar effect on levelised cost of electricity. Could eventually eliminate the 20% peak demand, so be a potent demand side management tool, especially if combined with GSM mobile phone technology, enabling this tool to manage short term fluctuations in demand.
Micro-generation in the form of off-grid solar PV with storage Irrelevant to grid, but storage is vital especially if supporting critical social infrastructure such as health-care and clinics. Same as above, except that it can be reduced by ground mounted wind and biomass. As it is competing with diesel generation, this is currently the cheapest supply option where it is affordable. The problem is that communities lack credit and income, so this solution is currently financially inaccessible to all but wealthy farmers, tourist facilities and grant-funded social infrastructure. 2/3rds of Namibian lack access to electricity, so the demand for this solution will be dependent on supply of capital.
Utility-scale PV plant without storage working in conjunction with a CSP plant with storage PV will supply mainly during the day, but much during the critical morning peak demand period. The CSP will supply almost entirely during peak periods with 6 hours of storage – delivering 3 hours at peak capacity in the evening and 3 hours peak capacity during the day. Very high – as this technology is not competing with retail, but wholesale rates, it is sadly x

Reasons for rejection – In theory this model would not result in any new energy inflation for consumers, the original constraint set by the electricity control board, as the solar water heating and energy savings initiative would halve household volumes, enabling the prices to double before impacting on electricity monthly bills. But in practice, this is politically unworkable for the following reasons:

  • Current electricity costs are unacceptably high to most households and needs to be reduced in absolute terms. The interventions suggested are needed to reduce electricity bills from current levels to half rather than doubling then reducing to current levels.
  • The proposals require low-cost finance that is not available to the levels required. The solar water heating initiative requires US$100 million and would not be suitable unless interest rates were set at 6% in local currency terms
  • Credit risk on most customers is not acceptable for a private financing initiative – only 10% of customers are likely to pass credit tests, so the proposal would leave the most vulnerable with higher energy costs, while only the richer households benefited from the subsidy – which is inequitable and politically unsustainable.
  1. A capital asset should only be financed if the risk of destruction or theft can be transferred with low-cost insurance. The risk of theft of expensive solar infrastructure – particularly in remote rural areas is very real, and can only be addressed with the technology intervention mentioned in the previous section. This technology is not currently available.
  2. The utility-scale subsidies required would be vast – about 75% of revenue. It is possible that a 30% grant could reduce levelised electricity costs by a quarter, but the micro-generation scheme would need to be water-tight enough to generate the cash to subsidise the remaining 50% of the “internal feed-in-tariff”. In light of the low level of income, banking penetration and credit culture, this is not a reasonable assumption. NamPower and the Namibian government could not be expected to shoulder this burden, which is in excess of 0.5% of GDP for a 25 year period.
  3. Utility-scale solar PV without storage would not be technical feasible without solar PV storage.Integration of utility-scale renewable plants onto the grid, is extremely technically challenging, vexing utilities all over the world. Wind and many solar applications do not currently have cost effective storage and also cause a host of technical problems that are listed below:
    • Communication – control and monitoring the performance of solar and wind farms
    • Protection of the transmission connection – unitised protection throughout
    • Voltage / reactive power control by the solar and wind farms
    • Low Voltage ride through capability
    • Fault level contribution
    • Ramp up / ramp down gradient
    • Tripping frequencies during island mode
    • Harmonics – filter requirements

These technical integration issues effectively make storage compulsory – tripling the cost of wind and doubling the cost of solar. The source of this list is the Shilimba presentation mentioned previously.

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