THEnergy not only sees an increasing number of onsite renewable projects, but also observes anincreasing downstream consulting demand, mainly from mining companies
In recent months, oil prices have been rather unstable. To someextent this has been related to Donald Trump’s foreign policy – mainly in respect to Iran. Oil and as aconsequence also global diesel market prices have become very volatile with a tendency to increaselong-term.
In Africa, many remote sites are powered by diesel or heavy-fuel oil (HFO). This not only applies formines and factories but even for large metropolitan regions. For industrial off-takers and utilities,recent diesel price developments are critical. Fuel represents one of their main operational costs. Priceincreases have direct adverse effects on their business. Even higher volatility represents a majorconcern by affecting plannability.
Solar power does not display a high level of volatility. Today’s investments determine the electricitycosts over the next 20-25 years. Industrial consumers often do not have to invest their own capital. Itis sufficient to sign power purchase agreements (PPAs) with third party investors that finance the solarpower plants and sell electricity.
THEnergy sees in its daily consulting practice that renewables are becoming more and moreestablished in African power markets. Even traditional fossil fuel companies like diesel suppliers, dieselgenset providers and rental companies have been changing their business models by integratingrenewable energy solutions. Today, in Africa many offtakers specifically ask for combinations of dieseland solar before signing or prolonging their diesel supply contracts. In solar-diesel hybrid solutions,solar energy is used to reduce diesel consumption. Most of the large-scale projects still do withoutenergy storage systems and rely on solar only during daytime. Falling battery prices will gradually addmore and more energy storage in solar-diesel hybrid solutions and increase the renewable energyshare in the system until finally all the energy will come from renewable energy sources: “solar-dieselhybrid” would turn into pure “solar-plus-storage”.
“On paper, replacing diesel by solar in remote locations has made sense for years,” adds Dr. ThomasHillig, managing director at THEnergy. “However, temporarily low oil and related diesel prices were amajor issue. These unintentional effects of US foreign policy are tipping the scales at the moment. Noone expects stable framework conditions in the near future. We see a high consulting demand fromdownstream stakeholders, mainly from remote offtakers such as mines and also from fossil fuelcompanies.”