Quick Summary
- The Sola Group History
- Why Storage is Important for Africa
- Energy Storage Technologies
- Energy Storage Costs
- Advice for countries on Regulation
Listen to the Interview HERE
Article
RiA: Hallo! I’ve always heard that energy storage is the holy grail of the industry. We know that renewable energy is growing across the globe, it’s into the continent and definitely we know that a breakthrough in energy storage could change everything. That’s fantastic because today I have with me a gentleman who is going to tell us more about that. I don’t want to tell you who they are, you may know who they are but I would rather leave him the pleasure and honor to do it because he can do it better than I and then we are going to go through those fantastic questions that we have. Mr. Daniel Goldstuck, it’s a pleasure to be talking to you this morning. How are you?
DG: Hi Tony. Likewise, it’s great to be talking to you and your listeners. Thank you. Thank you for the time. My name is Daniel, I run the energy storage division of a company called the Sola Group. It is a vertically integrated solar and renewables company with both the construction of commercial and utility projects and we do the development and asset management of utility solar projects. So, we would be able to provide the client with any kilowatt hour depending on the system you purchase, followed by the power purchase agreement.
RiA (Q1): That’s great. Before jumping into the second question, how did you come to lead this company? maybe not you but how did the company get created? Because, when I hear sola group, it is like you taken “Solar” removed the “r” and added “Group”. That’s a great name. I am sure that’s helping to distinguish yourselves among customers but please tell me a little bit more about the history of the company.
DG (A1): The company started 12 years ago as a consultancy looking at various energy efficiency projects for various industries, how they can optimize their use of electricity and what they can do to access alternative source of energy. That was in 2008. At that time South Africa was contemplating a feed-in tariff program to essentially supports or subsidize the purchase of renewable energy from large scale projects. That program transformed into a reverse auction process and in parallel to the changes in program, the founders started acquiring the rights to certain sites that are high resource and close to grid connections nodes or substations. It started with a team of very few people, two brothers and a few friends. They started developing as junior developers; sites that they then sold on to larger players who would then be able to bid various projects into the South African Renewable Energy Procurement program and over time they developed more sites, sold them on and eventually took ownership of those sites. The smaller ones we would stay the majority owner and be able to structure the projects ourselves. This was highly linked to government programs, policies, government action and some cases inaction as well. There were delays in the program but also it becomes very binary business model. You either win or lose. There is no a percentage of revenue that will be made ten percent less than last year. So, the business model was quite fragile and we decided to spend out to commercial scale company that was focused on building solar assets for the private sector and that grew over time and I joined in 2013 as a developer but I have since moved to the commercial sector side trying to develop assets for individual clients, both storage and solar.
RiA (Q2): Excellent. I definitely hear you there. That’s why I am encouraging more and more people to look at the C&I sector because I think there is a lot to do there. Government projects they are great but we also know that they can be also painful to do. So, Daniel, I know that you are the head of the Energy Storage. I have a question about storage for you. Why do you believe that storage is so important for Africa?
DG (A2): There’s many Reasons. Probably the closest comparison is that Africa can leapfrog fixed transmission infrastructure the very same way that cellphones enabled to function to leapfrog fixed line infrastructure. I think Africa has the highest use of cellular telephones because it simply easier to use cellular cellphones compared to fixed lines. Likewise, storage can provide that same niche. Instead of building long transmission lines along transmission lines to electrify various parts of the different countries, rather you can build smaller distributed networks for a district or a community, a village of a number of nearby villages that sought of occupy local source of both solar batteries and some form of perhaps biogas when or where it’s appropriate. Storage helps address many of the problems of the continent both the lack of electricity and infrastructure and weak or constrained infrastructure.
RiA (Q3): That’s great. Thanks for sharing that with me. What you said there is very important. The importance of storage. I was wondering whether we could go a little bit deeper because you and I were discussing it before. I was also wondering whether you may have a couple of case studies that you can highlight so that our listeners can properly understand what we are talking about here in terms of importance of storage for the continent.
DG (A3): Certainly! One of the things I do like to say and your listeners have heard me say before is that;
“Solar alone will save money but storage actually solves the problem”
Where that problem is are remote villages, networks, mines or game lounge. Storage enables that client to reduce their consumption of diesel and their related logistics of risk of possibly; there is theft of diesel. If you have solar and batteries, then you can have your electricity cheaper with much less risks. Then if you are looking at some grid-tied applications, the problem that a company might encounter is perhaps they cannot get enough electricity through their connection. One of our clients, off the west coast in South Africa, was in this specific case, receiving about 200 KW from their municipality but their peak load was 500 KW. The alternative is diesel which is expensive if they need to run it every day. So, we were able to come up with a solution of both solar and batteries to mitigate or almost make the need for running diesel negligible. So that’s a constrained grid model. That’s why we’ve spoken about constrained and remote grids. For the case where we have significant number of weak grids and outages, storage allows a customer to either back up for several hours per day for example in the heights. Many countries have experienced chronic outages, where its several hours of outage several days in a raw. That’s where storage comes in as a backup solution because of the frequency of those outages. Those clients can either have their back up solutions or separate from the grid for months at a time and rely on solar and batteries to support their consumption. Then of course there is tariff optimization. There is jurisdiction, there will be expensive network charges or expensive peak charges or demand hour charges. Batteries allow customers to take control of the cost of electricity and essentially optimize their tariffs. We are starting to see excellent business models and returns for all of these models and applications for our clients.
RiA (Q4): Excellent! Great to hear! Now talking about storage, I am aware there are many technologies because everybody is aware that it would be the game changer as you mentioned it. I was then wondering, because you have extensive knowledge on that, according to you what are the main technologies that people have to watch?
DG (A4): I think for me the dominant technology is lithium ion batteries, the batteries that we all know but with different technology that enable it to last much longer. There is also flow battery which suits a long duration storage application and then there are various technologies that are up and coming with other battery chemistry and battery technology, one such as sodium sulphur for example. The thing really to watch with all of these technologies is improved manufacturing techniques, improved form factor of the batteries themselves and improved actual chemistry in what’s actually used. Although lithium ion has been around as batteries about 25 years, there are new developments all the time. From the chemistry to how the various components have been connected to each other, what components have been included or not included. These simple changes can impact the whole manufacturing process or remove the need for certain manufacturing equipment, then making the battery either cheaper or more efficient or increased capacity. So, all of these developments will have effects on the markets and the various business models.
RiA (Q5): I heard you talking about business models. So, let me then follow up with an important question. Am sure people will be very attentive to that. How affordable is energy storage? Because the challenge is when you bring in a new technology, we know that normally we look at the curve. At the beginning its still quite expensive. I just want to know how affordable is energy storage and the second question at the back of that is that can you make any price projections for energy storage so that we now what duration we are going into? Please!
DG (A5): Certainly! One thing is that storage is at the moment where solar was 6-7 years ago. If I came to you proposing a solar project you would want to look at the returns, the capital costs and then I would have to analyze your load profile, the tariff that you are paying and work out whether this makes sense because solar was quite expensive I think in the last 5 years it has come down about 50%. As efficiencies have gone up the balance of system has come down. You are seeing the same thing with energy storage and it’s that it does make sense and it is affordable but still the business case has to be examined with details, with customers load profile, with an understanding of the available solar resources and the alternative cost of energy. So, the affordability is there, the business case is there and then it’s a question of how attractive that is; what are your rates of return, what are your reasons for including storage in your product or project, do you want to maximize your renewable energy consumption because it’s good for your credentials or internal reporting, your carbon avoidance. So that gives us a direction on what configuration we would need and then we would try and maximize the value within those parameters. That is only going to improve to the second part of your question. The cost of batteries comes out at around $400 per Kilowatt-hour for a medium scale commercial project. And we are seeing various estimates in terms of costs that are seeing it coming down to $150 per Kilowatt-hour in the next five to ten years depending on what estimate or what research you follow. Then there is balance of system components that are necessary. As the battery configuration and form factor change, similarly you need less balance of system to add on top of that cost. That’s genuinely quite stable. So, as we go on the affordability of energy storage to provide that solution that a customer might be looking for is just increasing in the business case making it much more attractive.
RiA (Q6): Excellent! I have to say that price range that you’ve mentioned, this is also something that I have seen. So, I can confirm that which is essentially the 400 all down to 150 potentially per kilowatt-hour. My hope is that we could go far below. Let’s see. It all depends on how the industry is progressing. I have heard you speaking before and I have read some interviews of you and one thing you have been vocal about is the impact of the regulation on the sector especially energy storage. So, I wanted to know, now that I have you face to face, what kind of policies do you think should be put in place in the continent and not just within South Africa. South Africa I know have launched a tender which is great since it also has got a lot of attention. From the continent point of view, what kind of policy would you advise officials to really make sure that we can help this technology take off in the continent?
DG (A6): The most important thing is clarity. I want to install a battery storage project storage project. What mission do I need to speak to and what do I need to be aware of in terms of size and the protection needed for the system. A lot of the technical standards can be derived from the standards already in place for the solar project to connect to the grid safely where you have grid-tied systems. In most jurisdictions, the sale of energy is a regulated exercise, for example in South Africa, above a Megawatt, the project requires a license which then one would require to go to the regulator to apply for a license. The framework to evaluate and award those licenses needs to be quite clear in any jurisdiction so that I can apply with the necessary documents and know that if I follow the rules, I can get my license and install the system. That licensing framework would then site on top of clear codes that speak to the technical safety of connecting a project to the grid. So, any country looking to promote storage needs to make sure that all questions can be answered when a customer comes to a regulator: I want to install this system. If it’s a certain size do I rely on this legislation or that legislation, this technical standard or that technical standard?
RiA (Q7): Well, I am hoping that many of those government officials will listen to you and take advantage of your knowledge in the industry. I absolutely agree with you because we are still in a sector where legislation hasn’t greatly impacted. We still need to make sure that they all play their part because if governments play their part, industries paly their part and society play their part as well, I think we can get things moving forward. So, Daniel, I think it was a great conversation I had with you. Thank you for taking your time stop by and share some of that piece of knowledge. If people want to reach out to you, what’s the best way thing to do?
DG (A7): I can be contacted at my email address: Daniel@sola.africa and check out our website: sola.africa. There’s a lot of news on what’s happening in the industry, in South Africa and in the continent. Also, what is happening in South Africa and be applied to the rest of the continent. There are projects that we are working on that have the same applicability elsewhere. So please check out our website, check out what we are doing.
RiA (Q8): Could we please finish up with that quote that you’ve mentioned, that I love? You were saying energy storage is…you said solar… what was it exactly? Because I just love it.
DG (A8): Certainly! It is my favorite as well. Solar alone will save you money, but energy storage will solve the problem.
RiA: Bingo! Excellent! I love it! We are just going to finish up with that. Thank you very much for your time and I had great pleasure talking to you this morning.
DG: Likewise, Tony. Thank you very much for your time. It’s been great chatting with you and your listeners.
RiA: Thank you! Bye!
DG: Bye!
Listen to the Interview HERE
