Reaching for the sky: Major solar projects finally kick off
Mbongeni Mguni | Monday February 21, 2022 06:00
Local clean energy firm, Sustainable Energy Botswana, calls it “letting the sun do the work,” a reference to the potential solar power has in transforming the country’s electricity mix from its current finite fossil fuel base, to a more renewable future.
For more than ten years, government has been making plans and venturing at limited scale into cleaner energy, particularly solar, but to date, the 600MW or so of peak national demand is still met largely by local and imported coal-fired power.
All available studies agree that Botswana, being a largely flat country, is ideally suited for solar power generation with estimates that it receives direct normal irradiance of over 2,200 kWh per year. That figure is comparable to African solar power pioneers like Morocco, which has 602MW of solar installed and plans for more than 3,00MW more.
Locally, official estimates made available last September indicate that just six megawatts of capacity in the country were renewable, indicating the slow progress over the years in converting carefully detailed plans into actual generation.
As an example, available data suggests that the pre-qualification tender for international and local bidders floated earlier this month for 200MW of Concentrated Solar Power (CSP), dates back to a feasibility completed in 2012. The study was done as part of the conditions for funding of the Morupule B power station and represented a firm commitment by government to move away from fossil fuel dependence and towards “green growth.”
Venturing into solar was a novel area for the country’s policy, legislative and technical structures, a fact that combined with the costs of the technology at the time, partly explains the delays in government procuring solar power at a large scale over the years.
Several factors have come together to add impetus to the plans. One major change has been that advancements in technology and uptake globally have made the cost of setting up new renewable power generation projects, including solar, cheaper than coal-fired projects for the first time in history. According to the International Renewable Energy Agency, since 2010, utility-scale solar Photovoltaic (PV) power costs fallen by 82%, followed by CSP at 47%, onshore wind at 39% and offshore wind at 29%.
Another factor is that the world is turning away from funding new coal projects or allowing market space for their usage, with last year’s Glasgow climate conference providing the strongest global commitments to phasing out the fossil fuel. At the conference, Botswana signed onto a worldwide commitment to ease the use of coal, but declined to sign a pledge to stop issuances of new licences.
In line with these developments, another major factor is the increasing amount of global funding available for renewable energy, coming through at both state as well as private banking and investment level to help fossil-fuel countries such as Botswana accelerate their transition to cleaner energy.
The 200MW CSP under procurement will be the single largest renewable energy project government will undertake in the next few years, with the winning bidder expected to begin supply the electricity into the national grid by 2027.
However, before then, several other projects are due to enter the national grid as part of the Integrated Resource Plan (IRP) under which government is targeting 36% of the country’s electricity being generated through clean energy sources by 2036. The IRP, launched in December 2020, details the projects government plans to procure over the next 20 years and 61% of these consist of renewable energy sources. The only non-renewable projects under the IRP are a 300MW coal fired plant and 10MW of Coal Bed Methane (CBM) for which a Power Purchase Agreement (PPA) between the Botswana Power Corporation (BPC) and Tlou Energy was signed last year.
By basing the entire IRP on procurement from Independent Power Producers (IPP), government is shifting the funding of the projects to the private sector, which will tap into a global pool of funds eager for renewable projects. The BPC’s role will be to act as an offtaker of the power, leaving the funding, construction, maintenance and operation of the plants to the IPPs.
In her budget speech earlier this month, Finance Minister, Peggy Serame detailed the progress being made in procurement of solar under the IRP.
“BPC has signed three PPAs with independent power producers.
“Two of these are for grid-tied solar PV plants in Shakawe and Bobonong and one is for a 10MW CBM facility at Kodibeleng.
“Construction at the two solar PV sites is scheduled to commence in February 2022, while commercial operation is anticipated to start in July 2022.
“Procurement of five more solar PV projects has been successfully completed, and BPC is about to sign PPAs for the first utility scale grid connected 50MW solar PV plant at Selebi-Phikwe, and four more small
scale grid-tied solar PV plants for Molepolole, Lobatse, Maun and Ghanzi,” she said.
The BPC is also retendering for a 50MW solar PV project for Jwaneng and six small scale grid-tied solar PV plants for Tutume, Kasane, Serowe, Tsabong, Kang and Charleshill as no suitable investors were identified for these sites from the original tender process. The eight IPP projects for which three agreements have
already been signed and five are being concluded, reflect the progress with Public Private Partnerships (PPPs) in the energy sector.
Analysts have said the approach government has taken is strategic, being a mix of the small, village level plants, as well as the larger, utility-scale projects in Selebi Phikwe and Jwaneng. Procurement has proceeded with the smaller projects, allowing the BPC to scale its uptake of solar power and test the new technology’s economics and operability.
The same “start small” approach is seen in the solar rooftop initiative under which households, commercial and industrial users are able to develop their own generation and sell the excess to the BPC. Between December 2020 and August last year, the Botswana Energy Regulatory Authority had received 102 applications for solar rooftop licences, with a number already operational.
Institutions such as universities and retail shopping malls have reduced their dependence on the national grid by participating in the rooftop initiative, while major consumers such as Debswana and the Diamond Trading Company Botswana have also established major solar self-generation.
The winds of change in the country’s energy mix have also swept over private sector energy developers, several of whom have diversified from non-renewable projects to cleaner energy. One of these is Shumba Coal, a private company sitting on 4.6 billion tonnes of measured and indicated coal resources across licences in Botswana.
Shumba Energy’s focus is now on solar energy development, with advanced plans for a 100MW plant on 300-hectares near Tati. Projected costs for the development are about P800 million and Shumba recently secured about P11 million in equity from international financiers for the advancement of its technical studies.
“We are quite down the path on the funding side and we already have large institutions that we are working with,” Shumba Energy managing director, Mashale Phumaphi told Mmegi.
“There is a good possibility that rather than do the project in two phases, we will be able to do the full 100MW at once.
“That is because there is a huge push to get more renewables into the regional grid, especially after COP26 where we have seen the need to fast track renewable efforts for us to meet the targets for greenhouse gases by 2050.”
He added: “This is a really good time to fast track projects of this nature and for Botswana, it is particularly important because 99% of our generation is from fossil fuels'.
When asked whether Shumba Energy would be looking at divesting from coal, the MD said it was still premature to detail how the partnerships around fossil fuel would look like.
“What’s important is that the key focus is on renewables and we believe that as much as coal will play its role, in the long term renewables is where we want to be.
“We have always wanted to provide a backbone for supplying sustainable power in the region and what has happened is that a lot of funding for sustainable projects is in renewable energy.
“This does not mean coal cannot be mined for other purposes but for electricity, the funding is in renewables.
“Even Eskom has announced that new generation going forward will be for renewables and they have raised funds from a number of European financiers to help with that.”
Power from the Tati will be sold directly into the Southern African Power Pool and with Shumba expecting to finalise funding in the second quarter of this year, the plant could be the country’s first major solar project to test the regional pricing around renewable energy, at a time when nearly all the power available in the market is coal-fired.
Meanwhile, Tlou Energy, which is primarily advancing its CBM leases in the Central District, has plans to develop scalable solar and hydrogen production from its project sites later this year.
After at least a decade of planning, renewable energy is expected to begin flowing into the national grid at large scale, revolutionising an energy sector that has been dependent on fossil fuels since electricity was first switched on in the country.