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10th largest
SA's position in the world's PV solar market this year

As consumers respond to loadshedding and multiple above-inflation price escalations from Eskom, distributed energy resources (DER) such as rooftop solar photovoltaic (PV) and backup batteries are growing rapidly in South Africa. According to predictions by Bloomberg New Energy Finance (BNEF), SA will become the tenth-largest PV market in the world this year.

This growth is expected to continue, with the research organisation forecasting 4-4.5 GW for SA this year, reaching a cumulative capacity of about 36 GW by 2030.

With significant capacity in the pipeline, the major challenge facing the country now is grid capacity constraints.

While the explosion in self-generation creates challenges around system stability, it also offers new opportunities through demand-side resources, virtual power plants and smart participation in new power markets, including ancillary services.

According to UCT’s Prof Anton Eberhard, Australia has one of the highest grid penetration rates of solar, wind and DER globally. So, what can we learn from down under?

Speaking at a recent EE Business Intelligence webinar, co-sponsored by Investec, Prof Eberhard shared insights from a study tour he led to Australia, which included senior executives from the National Energy Regulator of South Africa (NERSA), Eskom, metropolitan municipalities and the South African Local Government Association (SALGA).

 

Watch webinar

Lessons from Australia: Integrating high levels of renewable energy on the grid

20 GW
Amount of power generated by rooftop solar in Australia

 

Market similarities offer learnings

Drawing similarities between the Australian and South African energy markets, Prof Eberhard explained that both countries benefit from huge resource endowments, and both experience peak demand at around 36 GW, despite disparities in the size of the populations (23 million in Australia versus 60 million in South Africa).

The main differences between the two markets relate to market maturity and the amount of energy generated from renewable sources. Australia benefits from higher levels of wind and utility-scale solar generation methods, which produce roughly 10 GW each. In addition, rooftop solar PV in Australia is approaching 20 GW across millions of homes with rooftop installations.

“Renewables could theoretically supply up to 98% of electricity at peak levels. In reality, this figure has reached 70% at specific times,” explains Prof Eberhard.

The country also has a more sophisticated energy-only power market, with greater resources to invest in building out its generation and transmission networks.

“It is an unbundled system, even at a network level, with a mix of ownership. Every provider must have a default contract offering at a regulated price, but providers can also offer contracts with non-regulated pricing.”

Importantly, Australia has experienced significant and rapid grid penetration from DER, which can provide key learnings for South Africa as its climb up the market maturity curve accelerates.

 

Challenges to Australia's grid

The rapid transition from the traditional model, where system operators and protection engineers controlled large generation assets, to the new DER model, placed system stability at risk, and Australia faced numerous challenges.

Prof Eberhard highlighted issues such as a lack of inertia, which reduces the system's ability to respond to frequency changes caused by sudden shifts in supply and demand.

Another issue is the potential for unmanaged rooftop solar PV to lower demand from the grid as households generate their own power. This situation can create a significant risk of system collapse as transmission grids require a minimum level of electricity, even during low consumption periods, to provide the inertia and predictability needed for system stability.

The latter point is particularly relevant to South Africa's situation, as is the risk that an under-frequency transmission grid – a situation where the electrical frequency on the grid falls below its normal operating range – poses to managing generation loss, as loadshedding is no longer an effective tool in these circumstances.

Additional challenges highlighted include the market risks that negative pricing and volatility can create, and the potential for electrification to significantly increase peak demand on the transmission network.

Anton Eberhard
Prof Anton Eberhard, Power Futures Lab, UCT Graduate School of Business

The grid operator needs ways to maintain voltage control as the nature of load changes, with the ability to reverse power flows when generation exceeds network hosting capacity.

 

Key insights relevant to South Africa 

“What struck us in our visit is that there is a can-do, problem-solving mindset to resolve these challenges in an incremental and experimental way in Australia, which progressively deepens the understanding needed to manage grids under these challenges," said Prof Eberhard.

Importantly, emulating the success achieved in Australia requires a huge shift in system operation thinking, which has significant implications for National Transmission Company (NTC) SA.

The country needs a new model to integrate high levels of DER onto the grid, with speakers identifying dynamic envelopes as one suitable model, as it supports variable limits and scales well, allowing for a greater return on investment from consumers by limiting curtailment on rooftop solar PV.

“In this regard, the challenges facing the NTC SA relate to the investment and business model needed to build these new capabilities within system operations in the country,” stated Prof  Eberhard. 

Additional boxes to check on the path to successful DER grid integration include:

  • Establishing a blueprint for generation and transmission expansion.
  • Establishing a coordinated plan for non-renewable energy retirements.
  • Setting clear policy goals and bold targets for renewable energy generation.
  • Planning early to identify future power system requirements related to factors including frequency control and reserves, system strength, inertia, and dynamic reactive support.
  • Defining and enforcing strong performance standards for new generation.
  • Establishing streamlined interconnection processes for new generation
  • Initiating regulatory changes (if needed) as early as possible to enable future requirements.
  • Triggering early investment to avoid supply shortages.
  • Creating parallel pathways for system strength.
  • Accelerating proof at scale of grid-forming battery capabilities and inverters.

 

  • 36 GW

    SA's cumulative solar PV capacity by 2030

    70%

    The contribution made by renewables to Australia's grid during peak demand. 

    4.5 GW

    The expected amount of solar energy to be produced in SA this year. 

 

Leverage technology to create flexibility

Ultimately, flexibility is the key to unlocking the full capacity of a DER network to create greater resilience and customer value, affirmed Prof Eberhard.

“If we get it right, we can significantly increase asset utilisation and reduce costs for all, as flexible connections will enable customers to save money upfront and in ongoing energy costs.”

Implementing dynamic voltage management systems (DVMS) lies at the heart of creating this flexibility, allowing the grid operator to control voltage as more capacity from residential rooftop solar PV comes online.

“DVMS uses smart meter data to actively control voltage in real-time across the network, resulting in power supplies to customers remaining in the optimal voltage range for power quality, increased capacity on networks for residential solar exports, and additional capacity to respond to minimum demand scenarios,” elaborated Prof Eberhard.

The Australian approach manages millions of rooftop solar installations as one large resource, which is possible through DVMS.

Battery storage important in the new system

Pilot projects underway in Australia also include neighbourhood batteries – either large ground or small pole-mounted batteries – which can improve network reliability and increase the amount of solar hosting that is possible.

Innovative control systems can also enable batteries to participate in the wholesale market via virtual power plants.

“These batteries can mitigate peak demand and defer network augmentation, which offers an interesting use case in South Africa,” suggested Prof Eberhard.

Opportunities and limits of retail competition and innovation

Opening the grid to DER also creates opportunities for retail competition, giving consumers choices about how they participate in the market.

“South Africa ideally wants to send competitive, cost-reflective price signals to consumers who will rationally respond to these offerings by changing how they participate in the sector as we start establishing the new power market,” continued Prof Eberhard.

In this regard, contracts with power suppliers would include the cost of supply and exported electricity, perhaps with volumetric limits, delegated control over onsite production, price access and ownership with potential options for offsite storage, and payment for ancillary data.

“The assumption here is that consumers have access to data that they can work with to make efficient choices. However, not everyone in South Africa will have this access,” stated Prof Eberhard.

While it remains to be seen how much of the Australian market South Africa will replicate as it transitions to a DER model, the default offerings made to consumers will be important to its ultimate success.

“The government and all new stakeholders in the sector will need to think carefully around the technology we need to enable these capabilities and invest accordingly,” cautioned Prof Eberhard.  

"Critically, success will hinge on mobilising all stakeholders to ensure they broadly go in the same direction. South Africa can learn important lessons from Australia in this regard, as the country also has vested interests in natural resources, but has a better track record on collaboration and stakeholder engagement.”