Solar panels are nothing new in this world. The timeline starts in the 19th century. Could we have anticipated the current commercial opportunity of solar?
When in 1839 Alexandre Edmond Becquerel observes the photovoltaic effect via an electrode in a conductive solution exposed to light. Meaning that the presence of sunlight is capable of generating usable electrical energy. Back then it was too early to see the commercial opportunity that solar is presenting to us today.
Cape Town, view from the colorful Bo Kaap.
One other interesting fact: solar cells historically have been used in situations where electrical power from the grid was unavailable. So let’s take a closer look at the commercial opportunity for small scale off-grid solar in sub-Saharan Africa.
Many companies are seeing the solar energy opportunity in sub-Saharan countries. And also in the literature the African solar potential is something authors can all agree upon. “Africa boasts incredible clean energy opportunities, and the potential for growth in the African solar energy sector is tremendous. According to the new Climatescope report, sub-Saharan countries have attracted over $25 billion for renewable energy projects, doubling their renewable energy capacity in 2014 to over 4 gigawatts.” [Herscowitz, 6 December 2015]. And this can be easily explained, regardless of all social and economic opportunity: abundance of sun and space.
In an overview of solar power by country Wikipedia clearly shows the potential for African countries. “They receive on average a very high amount of days per year with bright sunlight, especially the dry areas, which include the deserts [such as the Sahara] and the steppes [such as the Sahel]. This gives solar power the potential to bring energy to virtually any location in Africa without the need for expensive large scale grid level infrastructural developments. The distribution of solar resources across Africa is fairly uniform, with more than 85% of the continent’s landscape receiving at least 2,000 kWh/[m²/year]” Wikipedia.
Many articles have published updates on the price developments of solar panels, all stating that over the years [last 5 or last 10 years] the prices keep dropping. This of course directly relates to the growing distribution of solar panels worldwide. “‘Swanson’s law’ states that solar modules drop in price by 20% with every doubling of cumulative shipped volume” [Adegoke, February 17, 2016].
Of course this is a positive and easy to understand economic development. But if you go in a little deeper, this means solar energy can perhaps become a competitive alternative to fossil fuels. And if this is the case, chances are the demand of solar panels will rise even more, leading to even more attractive prices and a better competitive market position.
This positive spiral is already changing the world of energy as we know it. ““Prices for renewable technologies, especially solar and wind-power, are falling at an extraordinary rate to the point at which they are competitive with fossil fuels,” wrote the African Progress Report panel […] which is headed by Kofi Annan” [Lynch, December 9, 2015]. As UN leader Ban Ki Moon mentioned in his speech at the World Future Energy Summit in Abu Dhabi 2016: “We have made a good start. There has been remarkable progress on many fronts. The fall in prices for renewable energy especially solar energy and the emergence of new business models are bringing sustainable energy within reach”. He is a little cautious in choosing his words here, but you can see the optimism if you watch the speech. More interesting about this quote is the combination he mentions of both dropping prices and new business models that are making this industry attractive and competitive.
Small scale solar
Solar energy can be found in many forms and scales. Let’s keep focussing on the small scale, off-grid technologies. To avoid confusion, this is the definition of small scale solar: small electricity generation and distribution systems that operate independently from the electricity grid. Powered by local sources of renewable energy, such as river flows, wind, biomass, or, as we focus on here, the power of the sun. There are many forms of small scale solar technology. And many authors mix up all these terminologies. The three most important ones are:
● residential solar systems: self supply of electricity per unit (house, office, building) often, but not necessarily connected to the national grid
● microgrids: similar to the national grid except on a smaller scale. Producing electricity needed for a small area. Microgrids can be independent or connected to the national grid. Electricity flows through wired connections from generating source [solar plant] to user
● micro utilities are not connected to the national grid and instead have a battery based distribution system making it possible to operate in rural areas, far from the national grid, [with uses] scattered far apart, sometimes over difficult terrain [Van der Walt, 2013]
● Then there are all sorts of mixes, simplifications and expansions of the above systems.
Their total generating capacity is unknown. “There are no official statistics on how many there are, or what their total power output is. But a recent study by U.S.-based Navigant Research, which studies new energy technologies, suggested that their combined generating capacity might now exceed 750 megawatts worldwide” [Pearce, October 27, 2015]. This is 0,3% of the world total pv [photovoltaic] capacity according to the numbers of the International Energy Agency . Pearce continues: “but they are a true hot-bed of innovation popping up all over the world”.
Last year , nearly $64 million was invested in off-grid solar solutions. The Global Off-Grid Lighting Association estimates today’s off-grid solar market at $300 million annually, and 2015 investment figures are likely to be higher than 2014” [Tweed, October 23, 2015].
Biggest commercial opportunity in energy in decades
Whether small scale solar energy can be successful in African countries largely depends on commercial viability too. Do people need the product and what are they willing to pay for it? Few will say they are not interested in access to [affordable] electricity. And […] based on this logic many [millions of] people are interested. The market potential in this continent is massive.
If you now add to this the massive dropping product prices [expected to only go down in the next decades, based on a growing demand and fierce competition], we have the biggest commercial opportunity in energy in decades. Given the falling cost of solar and batteries and the groundwork laid by many nonprofits, the market is strengthening for off-grid distributed renewables in developing countries.
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