Aerial picture of Ivanpah solar tower plant, in California. Picture credits: BrightSource Energy.

The good news is there is growing policy support for renewables in these markets because clean tech is viewed as essential to meeting both economic and environmental goals.

By Joseph Desmond, Senior Vice President of Marketing and Government Affairs of BrightSource Energy

As renewable penetration increases globally, policymakers and utilities have shown growing interest in technologies that can ensure long-term reliability without increasing emissions. Regulators, utilities and grid operators are increasingly applying a “net system cost” methodology when considering future energy portfolios and procurement decisions; this approach considers factors such as system integration costs and reliability impacts under different scenarios.

Concentrating Solar Power (CSP) with thermal energy storage is one example of a flexible resource to help address the supply variability introduced by rapidly expanding wind and PV production. Recent studies show the technology can play an important role in achieving global clean energy and climate goals by providing dispatchable power when it is needed most, improving reliability and reducing costs.

The investment community is taking note of the various factors that are moving in favor of renewables. According to the United Nations Environment Programme’s (UNEP) 9th Global Trends in Renewable Energy Investment 2015, “renewables are being seen increasingly as a stable – even relatively low-risk – investment by institutional funds. This is evident partly in the rising commitment by institutions to renewable power projects, and partly in their backing for green bonds, which hit a record $39 billion of issuance in 2014.”

South Africa is a particularly exciting area for CSP and other renewables. The country is implementing the largest renewable energy program on the African continent, and the South African government is committed to diversifying its energy mix, which until now has been predominantly based on coal. Just this week, Bloomberg reported South Africa was a bright spot for clean energy investment in Q1 2015 attracting approximately $3 billion in renewable investment.

To its credit, South Africa has relied on best practices learned in other renewable markets to guide its procurement program design and implementation. This past December, South Africa announced plans to almost double the amount of power it intends to draw from renewable sources based on the success of the current program, which reflects these key attributes:

• Adopts a business-friendly approach
• Takes a long-term approach
• Takes advantage of external sources of funding
• Makes a case for renewable energy (…and keeps making it!)

Additionally, South Africa gives considerable weight to non-price factors, such as job creation, local content, ownership, management control, preferential procurement, enterprise development, and socio-economic development. Fortunately, the components needed to construct CSP projects easily lend themselves to high levels of localization.

CSP with thermal energy storage has potential applications in many countries and regions of the world that have different market structures and regulatory regimes. These institutional differences must be considered when valuing CSP with storage in particular regions.

In countries with transparent wholesale markets, such as the United States, it is easier to value a plant’s attributes, but historical prices do not necessarily help in forecasting future system considerations. In regions without such markets, such as South Africa, resource planning methods used by utilities can similarly use simulations to estimate the value (net system cost) of alternative renewable resources.

While there are many factors that contribute to the overall cost of operation, generally speaking, those areas with the highest amount of direct sunlight (Direct Normal Insolation, or DNI) will produce the lowest levelized cost of energy. To provide the solar industry with a single document addressing the key aspects of solar resource characterization, National Renewable Energy Laboratory (NREL) recently released an updated handbook on the best practices for collection and use of solar resource data, featuring new contributions from an international group of experts.

Southern Africa is also investing in better information to help developers, evidenced by the Southern African Universities Radiometric Network’s (SAURAN) map of solar MET stations and associated data. SAURAN aims to make high-resolution, ground-based solar radiometric data available from stations located across the Southern African region, including South Africa, Namibia, Botswana and Reunion Island.

BrightSource’s confidence in the South African market for our technology and future growth opportunities for CSP is based on partnering with strong South African companies; continued innovation and cost reduction of solar thermal technologies; and the growing global recognition of the value of CSP with thermal energy storage. Equally important, we are confident in South Africa’s long-term commitment to promote a low carbon economy that expands the opportunities for clean energy technology, environmental protection and job creation.