INTELLIGENT BRANDS // Green Technology
Shared risk has opened up Africa’s
solar energy opportunities
/////////////////////////////
Africa’s solar energy
opportunities have opened
up due to changes in the
sector. Wessel Wessels,
Head of Sales, Alternative
Energy, at NEC XON,
explains these changes
and how they have made it
easier to go green.
There is now a zero-risk, zero-cost
way to establish renewable energy
in Africa. Advanced delivery
models and mature global providers have
encouraged financiers to provide innovative
solutions that don’t even require companies
to pay a deposit.
The change is a result of a matured sector.
These projects were historically characterised
by solution providers delivering for
customers, who procured a customer and
repaid the entire project off profits. That
model is hard to finance.
The new model sees solution providers lead
with their own equity, essentially willing to
put their money where their mouths are. So,
it makes sense to create robust maintenance
and operations agreements with customers
to look after the investment.
Customers then procure customer
agreements of their own. Add the fact that
reinsurers are providing exceptionally good
yield cover and the recipe is one that banks
and other institutions are very keen to bake.
The ability of service and solution providers
Wessel Wessels, Head of Sales, Alternative
Energy, at NEC XON
like NEC XON to be able to deliver this level
of solution has caused several positive knockon
effects with wider market ramifications.
Financial instruments have been created
specifically for the market so people are no
longer limited to liability cover. They can now
also get yield cover and others.
Yield cover is a game changer. Plant designs
that promise a number of kilowatt hours per
month but fail to deliver for whatever reason,
such as inclement weather, see shortfalls
covered. That’s huge. Theft and other
factors also influence power delivery. Yield
cover is typically charged at one percent of
revenues so this really is a no-brainer.
The engineering phase of any energy project
is probably the riskiest. In the past, people
would get bogged down by trying to get the
cheapest deal possible and a few people still
do. But the market is maturing and many
more customers, vendors and providers know
they must weigh the levelised cost of energy
(LCOE) much more heavily because the LCOE
is more important than price per watt.
We consequently invest a lot of time and
resources into this phase of energy projects,
ensuring the technologies we use are the
best for that project, that they meet the
objectives, that they maximise the LCOE for
the specific plant.
Using an inverter with a 12-year warranty
versus one with a five-year warranty, for
example, shifts your replacement date
right out, which has a huge impact on cost.
Similarly, using better quality solar panels
may initially cost more but they repay the
investment. They degrade less over time so
essentially deliver more energy per hour in
their lifetimes.
We’ve made active gains in mitigating
remaining risks around these projects
with others in the industry. Establishing
standards around operational asset
maintenance is a key one. We have decades
of experience applying the global industry
standards around ICT and telco equipment
across projects throughout Africa. Their
robust standards, best practices, proven
methodologies and reliable frameworks are
readily deployable procedures that we have
transitioned to mature the sector. •
www.intelligentcio.com INTELLIGENTCIO 61