South African Small-Scale Embedded Generation Market, 2016

New Business Models Must Consider Commercial Grid Connection Implications as the Distribution Network Transforms

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The South African small-scale embedded generation market is entering an exponential implementation phase. Soon after 2010, the uptake of private solar photovoltaic (PV) systems began to increase. This resulted in the creation of more than 215 companies that provide either a product, a service, or both in South Africa. This new sector begged the option of returning generated power back into the grid, which itself was hindered by a lack of policy. The City of Cape Town has led the creation of a policy, which is spreading to other municipalities. Over time, the volume of private power generation will begin to affect revenue of the state-owned power utility, Eskom.

A disruptive technology is one that significantly alters a market by suddenly capturing share and forcing competitors to alter their business models or risk becoming irrelevant. This report highlights the market in 2016 and unpacks how the utility’s revenue business models are being disrupted. It further highlights the current and future states of the power sector in South Africa.

The study’s objectives are:

·     To highlight current power generation capacity and future independent power producer (IPP) programmes
·     To highlight what it means for solar PV to be a disruptive technology for a utility, and to consider current legislation and policy structures in South Africa that allow small-scale embedded generation
·     To size the market in South Africa by considering the competitive landscape, the total capacity rolled out thus far, and the solar PV value chain
·     To unpack the opportunities that exist in various links of the solar PV value chain: technology suppliers, energy developers, engineering, procurements and construction management companies (EPCs) and operations and maintenance (O&M) companies

Primary research was conducted in the form of phone interviews with companies that are closely involved in the South African PV market, including small-scale PV embedded generation, and by compiling research from energy conferences. A base year of 2015 was chosen; this is the most recent year in which a full set of data was available.

Companies consulted included Power Quality & Renewable Services, which generates an up-to-date database of the South African PV market. Information on legislation for off-grid solutions was obtained directly from government sources.

The research focuses on the opportunities being created in South Africa as power sourcing evolves from a centralised to a decentralised model. The study considers off-grid solutions, including solar rooftop PV, that are privately producing power and that are selling back into the network.

Table of Contents

Executive SummaryExecutive SummaryExecutive Summary (continued)IntroductionAnalysis Motivation and ObjectivesResearch ScopeResearch MethodologySouth Africa OverviewSouth Africa—Economic AnalysisSouth Africa—Economic GrowthSouth Africa—Power Sector AnalysisHistorical and Future Developments of the IPP ProgrammesHistory of the IPP Procurement ProgrammeHistory of the IPP Procurement Programme (continued)Future IPP Programmes—CoalFuture IPP Programmes—Gas to PowerFuture IPP Programmes—Nuclear BuildFuture IPP Programmes—CogenerationFuture IPP Programmes—Renewable EnergyDisruptive Technologies and Changing Business Models of UtilitiesDisruptive Technologies—Introduction Disruptive Technologies Energy Storage—Benefits in the Power Value ChainEnergy Storage—Benefits in the Power Value Chain (continued)Energy Storage—Benefits in the Power Value Chain (continued)Utilities—Changing Power GridUtilities—Changing Power Grid (continued)Changing Role of Utilities Changing Utility Business ModelsChanging Utility Business Models (continued) Case Study—CoCTCurrent South African Solar PV MarketPV Market SizePV Market ParticipantsPV Market Participants—Top 20 by CapacitySunworx Solar—Top Company by CapacitySolar PV Value ChainCoCT Policy and LegislationSSEG GuidelinesSSEG RestrictionsResidential SSEG GuidelinesCommercial and Industrial SSEG GuidelinesFinal WordsConclusions and Strategic Recommendations—Customer FocusedConclusions and Strategic Recommendations—Utility FocusedLegal DisclaimerThe Frost & Sullivan StoryThe Frost & Sullivan StoryValue Proposition: Future of Your Company & CareerGlobal PerspectiveIndustry Convergence360º Research PerspectiveImplementation ExcellenceOur Blue Ocean Strategy




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