The US Trade and Development Agency’s recent partnership with Kenyan renewable energy developer Xago Africa and US battery storage manufacturer Alevo USA, Inc, to develop Kenya’s first utility-scale (40MW) solar PV plant with integrated lithium-ion battery storage, is an important milestone in the disruption of the African power market by energy storage technologies. At the same time, South Africa’s utility Eskom, has just opened an energy storage test and demonstration facility in Johannesburg. The facility is researching and comparing the different energy storage technologies available on the market as a precursor to integration into the national electricity network. Eskom estimates that it requires 2GW of energy storage capacity within the existing grid to accommodate the 18GW of renewable energy intended to be procured under South Africa’s Integrated Resource Plan.
Viewed as a potential game-changer for widespread adoption of renewable energy generation throughout Africa, energy storage technologies facilitate the management of renewable power intermittency, demand response services and the dispatchability of stable, clean and sustainable power into the local or national grid system.
At the heart of investment into renewable energy and storage technologies in Africa, is the objective to break the continent’s dependence on expensive fossil fuel generation in favour of low cost renewable energy sources, which it has in abundance. However many challenges are faced by the African energy sector before this transformation can really take place. Power generation has traditionally been centralised from costly (often antiquated), poorly managed and maintained, inefficient fossil fuel based plants on unreliable grid infrastructure. Policy-makers and state utilities in many countries face a difficult journey of market reform and infrastructure improvement before they will be able (and willing) to support cheap and efficient generation capacity from distributed renewable energy plus storage plants running alongside larger centralised plants, each selling power at cost-reflective tariffs and across robust and reliable grid infrastructure.
But while adoption of battery storage on a utility scale across Africa may be some (but not many) years away, technological advances and cost reductions in the sector have already combined to allow local communities and businesses, with the support of export credit agencies and development banks, to invest in smaller energy storage installations as part of micro-grid or off-grid distributed projects and thus leap-frog the slow progress made at a national level. Small, renewable, off-grid solutions with battery storage are a sustainable alternative to the traditional centralised generation model that is comparatively easier to finance given lower capital costs, shorter construction periods and fewer risks and complications involved.
For example, the USTDA has also recently awarded a grant through Power Africa for the development of 25 solar microgrids across Nigeria. The grant is going to a local firm initially to complete a feasibility study to evaluate the installation of solar PV modules, battery storage, micro-grid infrastructure and smart control systems and meters across local communities in Nigeria. These microgrids are expected to operate on a pay-as-you-go basis by end-consumers using mobile payments. This is another new tech-driven business model that is expected to accelerate Africa’s rural electrification process as it is deployed with similar off-grid solar or wind plus storage plants further afield.
Energy storage costs across technologies are falling at an exponential rate (Lazard’s Levelized Cost of Storage Analysis 2.0 (December 2016) shows, for example, that lithium-ion battery costs range from US$285 to US$581 per megawatt-hour; reflecting a 12 percent drop in the median cost from 2015) and, at the same time, performance and reliability levels continue to improve. Most batteries are now sold with assignable, long term manufacturer’s warranties which provide additional comfort to developers and funders. The reality is that energy storage is going to unlock a huge opportunities for more renewable energy investment in Africa at both a utility and distributed scale that will totally disrupt the traditional African power sector model. Governments and state utilities will need to adapt quickly to embrace the evolution and to avoid more and more potential customers going off-grid in the interim.
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