Africa Off-Grid Photovoltaic Market Analysis

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We help your innovations reach their markets Africa Off-Grid Photovoltaic Market Analysis The experts of clean energy markets December 2014 http://www.infinergia.

1 We help your innovations reach their markets Africa Off-Grid Photovoltaic Market Analysis The experts of clean energy markets December Tel : reports@infinergia.com Report page: market- research INFINERGIA Consulting

2 TABLE OF CONTENTS EXECUTIVE SUMMARY 1- OFF-GRID QUANTITATIVE DYNAMICS p Off-grid PV quantitative model Structuring parameters Moderation 1-2 Macro-economical view of Africa Electrical Issue GDP Corruption Solar potential 1-3 Scoring : off-grid PV quantitative dynamic model results 1-4 Off-grid PV cumulative installed capacity in Africa in MW Evolution of the global off-grid PV installed capacity ( ) Split by region of the off-grid PV installed capacity in MW 1-5 Scoring Analysis Scoring versus installed capacity Group References and timing of off-grid PV Potential 1-6 Off-grid PV installed capacity forecasted Forecast 1 : Global off-grid PV installed capacity Forecast 2: Regional off-grid PV installed capacity Top 5: high potential countries 2 - OFF-GRID RURAL ELECTRIFICATION IN AFRICA p Rural electrification maturity scale The 4 stages model of rural electrification African country by stages of rural electrification 2-2 Key rural electrification scheme focusing on off-grid Panoramas of key international institutions in Africa African wide program 2-3 Policies and regulation impact on off-grid PV deployment Off-grid Feed in Tariff development Custom duties & taxes 3 - OFF-GRID PV DEPLOYMENT BY APPLICATION p SHS Definition, usage, power range, low & high end, price Regional installed capacity in MW and units in 2012 Top 5 : high potential countries 3-2 Community Definition, usage, power range, low & high end, price Regional installed capacity in MW and units in 2012 Top 5 : high potential countries 3-3 Water Pumping Definition, usage, power range, low & high end, price Regional installed capacity in MW and units in 2012 Top 5 : high potential countries 3-4 Telecom Definition, usage, power range, low & high end, price Regional installed capacity in MW and units in 2012 Top 5 : high potential countries 4 CONCLUSION p 87 5 EXHIBITS p 89 2

3 INTRODUCTION Africa is one of the world s largest off-grid population, with 590 million of people living off-the grid*. As the results, large segments of the continent rely on fossil energy. This off-grid population presents a sizeable market opportunity for producers of stand alone systems and components, such as solar panels, batteries, solar pumps, etc. A key barrier to off-grid PV market development in Africa has been a lack of information on which, manufacturers, OEMs and distributors can base their products and market development decisions. Our report aims to address the electricity needs of off-grid population by providing a global view of African countries in terms of potential, through the development of an Off-grid PV dynamic model. Infinergia has addressed this information deficit by conducting studies on 33 African countries including: a documentary phase and interviews of actors involved in off-grid PV projects (among a selection of manufacturers, distributors, NGOs, governmental organizations, etc.). From off-grid PV potential to off-grid PV installed capacity forecasted, this report will provide the first step to define the best market for off-grid products. *The term off-grid refers to not being connected to the main or national grid. Off-grid can be standalone system (SAS) or mini-grid (to provide electricity to a smaller community). In our report, mini-grid installed capacity has not been taken into account, and will not be analyzed in details. 3

COUNTRY COVERAGE 33 countries (out of 54 African countries) Northern Africa Sub-Sahara: Western Africa Central Africa Eastern Africa Southern Africa Algeria, Egypt, Libya, Morocco, Tunisia Benin,

4 COUNTRY COVERAGE 33 countries (out of 54 African countries) Northern Africa Sub-Sahara: Western Africa Central Africa Eastern Africa Southern Africa Algeria, Egypt, Libya, Morocco, Tunisia Benin, Burkina Faso, Ivory Coast, Ghana, Guinea, Guinea Bissau, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal Cameroun, Chad, DR Congo, Ethiopia, Kenya, Madagascar, Mozambique, Rwanda, Tanzania, Uganda Angola, Botswana, Namibia, South Africa, Zambia, Zimbabwe Countries excluded (21) Burundi, Cape Verde, Central Africa Republic, Union of the Comoros, Djibouti, Equatorial Guinea, Eritrea, Gabon, Gambia, Lesotho, Malawi, Mauritius, Republic of Congo, Sao Tome and Principe, Seychelles, Sierra Leone, Sudan, South Sudan, Swaziland, Togo, Somalia Figure 1: Regional map of Africa 4

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6 1.1 Off-grid PV quantitative dynamics model 6

The population is an important multiplier of the electrification rate, e.g. each fire place could be electrified with a SHS or the associated communities with water pumping or public facilities.

7 1 - OFF-GRID PV QUANTITATIVE DYNAMICS 1.1 OFF-GRID PV QUANTITATIVE DYNAMIC MODEL o Structuring Parameters EI: Electrical Issue Calculation of the number of people not connected to the grid based on each country s electrification rate. The population is an important multiplier of the electrification rate, e.g. each fire place could be electrified with a SHS or the associated communities with water pumping or public facilities. The EI score ranges from 0 (for people without grid access) to 10 (for 50 million people). PG: POPulation needs based on the country Geography Population density (number of inhabitants/km²) and Country area (km²) are taken into account. Rural population (% of the total population) as well. Large and low population density countries are the most favorable case to off-grid PV infrastructure development versus grid development costs. The PG score is based on the average of those 3 parameters, each of them being noted from 0 to 10. POT: Solar POTential This parameter is based on the average solar irradiation in kwh/m²/year in order to integrate seasonal variations along the year. The POT score ranges from 0 (<1 350 kwh/m²/y) to 10 (>2 250 kwh/m²/year). EI + PG + POT = Score /30 7

8 1 - OFF-GRID PV QUANTITATIVE DYNAMICS 1.1 OFF-GRID PV QUANTITATIVE DYNAMIC MODEL o Moderation of previous score via the 5 percentage (1/2) GDP: Economical Gross Domestic Product, 0 to +20% moderation GDP in billion dollars (PPP). GDP CAGR in %, from 2009 to Countries having a high GDP and a high CAGR are positively moderated as economical growth helps boosting investment in electricity access and benefits to off-grid PV market development. CORR: CORRuption Index, - 15 to 0% moderation Based on the Transparency International corruption index CPI. Corruption affects business environment and business development. The more corrupted a country is, the more a moderation is applied. FOSS: FOSSIL ENERGIES: -20 to +20% 2012 Inventory of the Diesel price per country. With high diesel prices (> 100 US cents/liter) a hybrid PV/Diesel or a pure PV system becomes more attractive. Countries having adopted diesel price subsidies are negatively moderated due to small incentive to use renewable energy such as photovoltaic system. 8

9 1 - OFF-GRID PV QUANTITATIVE DYNAMICS 1.1 OFF-GRID PV QUANTITATIVE DYNAMIC MODEL o Moderation of previous score via the 5 percentage (2/2) IND: INDustry ecosystem, 0 to +20 % moderation PV industrial actors: number of PV manufacturers, qualified distributors and installers per country. PV development is favored by technical knowledge. The countries with a developed PV industry, distributors and installers are advantaged. NAT: NATURAL ASPECTS: 0 to +20% Countries with difficult to reach areas are positively moderated due to difficulties and higher cost to deploy a grid infrastructure there. This typically includes areas such as islands, mountains, deserts, jungles (EI + PG + POT) * (GDP, IND, CORR, FOSS, NAT)% = Final Moderated Score 9

10 1.2 MACRO-ECONOMICAL VIEW ON AFRICA 10

11 1 - OFF-GRID PV QUANTITATIVE DYNAMICS 1.2 MACRO-ECONOMICAL VIEW ON AFRICA o Electricity Issue (EI) & Population geography (PG): 17 countries with a rural electrification rate < 10% The percentage of rural population in those emerging markets and a rural electricity rate below 10% explains the high proportion of off-grid people. Only x countries, in Western Africa, report an access rate above x%: xx. Nevertheless, with a rural electrification rate higher than xx%, xx remains the first country of Africa in terms of number of off-grid people. Rural electrification rate raises a number of issues for African governments, since the rural communities are situated in remote locations with a low population density. Off-grid solar solution seems to be the best alternative to electrify those locations. Figure 4: Rural electrification rate in Africa, cross checked by Infinergia (EXHIBIT 1 & 2) 11

12 1 - OFF-GRID PV QUANTITATIVE DYNAMICS 1.2 MACRO-ECONOMICAL VIEW ON AFRICA o Diesel price (FOSS): Decentralized electrification can be powered by fossil fuels like diesel or by renewable energy sources. Diesel and gas are mainly used because of the low price (CAPEX) of Generator Sets or Gensets. The dramatic increase in diesel prices became an enormous burden for many African countries and the lower cost of PV systems (CAPEX) became an opportunity for off-grid PV installations. In 2012, xx African countries had subsidies in place for fuel products (Source), this number decreased in the 2 past years, and governments lowered the subsidies or removed them. Today only x countries have a diesel price below 50 US cents/liters. Example of fuel prices subsidies: q xx Figure 9: Diesel price per country, xx Data Base 2012 (EXHIBIT 1 & 2). 12

13 1 - OFF-GRID PV QUANTITATIVE DYNAMICS 1.2 MACRO-ECONOMICAL VIEW ON AFRICA o Industry (IND): x manufacturing plants and >900 off-grid PV installers/distributors To implement electrification program, governments need to import or attract PV manufacturers in the country. In 2012, almost all equipment was imported. African PV manufacturing capacity was less than 1GW. Only mature and few emerging markets had manufacturing facilities. 4 q 1 st South Africa: x manufacturers (xx) with a manufacturing capacity >xx MW/year. q 2 nd xx: y manufacturers (xx) with a manufacturing capacity > xxmw/year. q 3 rd xx: xx manufacturers (xx) with a manufacturing capacity < x MW/year. q 4 th xx : x manufacturers (xx) with a manufacturing capacity < x MW/year. Figure 10: PV industry actors in Africa, Infinergia (EXHIBIT 1 & 2) 13

14 1.3 SCORING: OFF-GRID PV QUANTITATIVE DYNAMIC MODEL RESULTS 14

15 1 - OFF-GRID PV QUANTITATIVE DYNAMICS 1.3 SCORING: OFF-GRID PV QUANTITATIVE DYNAMIC MODEL RESULTS o Ranking of 33 African Countries on this model The 3 previous parameters: Electrical Issue (EI), Population needs based on the country Geography (PG) and solar potential (POT), majored by other criteria, allow the ranking of the 33 African countries according to their potential of off-grid PV development. As a result, Infinergia identifies the 5 most promising off-grid PV market in Africa: Tanzania, xx, xx, xx, xx. Infinergia will explore market forces affecting Solar PV adoption and cumulative off-grid PV installed capacity in those countries. Country Global mark Global mark Country moderated moderated Tanzania 44 Ivory Coast 25 Ethiopia 43 Guinea 24 Kenya 37 Chad 24 South Africa 36 Rwanda 24 Nigeria 35 Namibia 23 Zambia 33 Mauritania 21 DR Congo 31 Benin 20 Mali 30 Liberia 19 Uganda 30 Angola 18 Niger 29 Botswana 17 Senegal 28 Egypt 17 Mozambique 28 Morocco 16 Madagascar 28 Algeria 15 Ghana 26 Libya 9 Burkina Faso 25 Guinea Bissau 9 Zimbabwe 25 Tunisia 6 Cameroon 25 Table 2: Off-grid PV quantitative dynamics model ranking applied to 33 African countries 15

16 1.4 OFF-GRID PV CUMULATIVE INSTALLED CAPACITY INAFRICA IN MW 16

17 1 - OFF-GRID PV QUANTITATIVE DYNAMICS 1.4 OFF-GRID PV INSTALLED CAPACITY IN MW o 2012 Off-grid PV cumulative installed capacity: 168 MW Despite having one of the best solar sources in the world, Africa is still a small player on the global photovoltaic installations market. In 2012, Africa represented: q less than x% (y GW) of the total installed PV capacity of the world (102 GW, «Global Market Outlook for Photovoltaics, », EPIA) q and less than x% (y MW, 33 African countries) of the off-grid cumulative installed capacity of the world (<2 GW, Infinergia ). Furthermore, xx % of these installations were concentrated in 6 countries: xx Figure 11: 2012 off-grid PV cumulated installed capacity in Africa (EXHIBIT 7, 8 and 9) 17

18 1 - OFF-GRID PV QUANTITATIVE DYNAMICS 1.4 OFF-GRID PV INSTALLED CAPACITY IN MW o Split by African Region of the off-grid PV installed capacity in MW CAGR: 22% For each African region, lead countries and lead market forces will be described later on. The split by application will be analysis in the next chapter. The off-grid PV installed capacity was rather uniformly split between Northern Africa (xx%), Southern Africa (xx%) and Eastern Africa (xx%) in MW Northern Africa Southern Africa Eastern Africa Western Africa Central Africa Table 4: Off-grid PV cumulative installed capacity in Africa per Region CAGR 13% 28% 20% 14% 78% 18

19 1 - OFF-GRID PV QUANTITATIVE DYNAMICS 1.4 OFF-GRID PV INSTALLED CAPACITY IN 2012 o Western Africa: split by country Western Africa represented xx% of the total installed capacity in 2012, with the second higher CAGR: 30% among the 6 regions described. xx% of the total installed off-grid capacity was concentrated in 3 countries: xx, xx, xx. Off-grid PV installed capacity per person was low: xx Wp. Experience by country: X : government plans to install xx MW of off-grid PV systems (source) x (2011/2012): first development phase for a x MW off-grid xx site by xx y: rural electrification program xx z: rural electrification program xx MW 40,0 35,0 30,0 25,0 20,0 15,0 10,0 5,0 0,0 CAGR: 28% Nigeria 0,6 2,9 8,0 10,1 10,6 Ghana 1,0 1,2 2,3 3,4 5,1 Senegal 2,3 2,6 3,3 3,9 4,6 Mali 2,0 2,4 2,7 3,1 3,5 Mauritania 1,0 1,0 1,0 1,2 2,6 Burkina Faso 0,9 1,3 1,5 2,0 2,2 Niger 1,1 1,2 1,3 1,7 2,0 Ivory Coast 0,4 0,5 0,9 1,0 1,2 Guinea 0,2 0,5 1,0 1,2 1,4 Liberia 0,1 0,3 0,4 0,5 0,6 Benin 0,6 0,4 0,4 0,5 0,5 Guinea Bissau 0,1 0,2 0,3 0,4 0,5 Table 8: Off-grid PV cumulated installed capacity in Western Africa CAGR 75% 39% 15% 12% 22% 20% 13% 25% 48% 46% -4% 38% 19

20 1 - OFF-GRID PV QUANTITATIVE DYNAMICS 1.6 OFF-GRID PV INSTALLED CAPACITY FORECASTS ( ) o Global Forecast for Africa: up to 2020, +x MW 600 Off-grid PV installed capacity in MW Table 11: African Off-grid PV installed capacity forecast to 2020 The cumulative off-grid PV installed capacity in Africa will be multiplied by x. This forecast does not take into account rural electrification, nor delays in off-grid PV project deployment or unexpected events such as wars or crisis. 20

21 2.1 RURAL ELECTRIFICATION MATURITY SCALE 21

22 2 - OFF-GRID PV & RURAL ELECTRIFICATION - AFRICA 2.1 RURAL ELECTRIFICATION MATURITY SCALE o The 4 stages model of rural electrification Rural electrification is the process of bringing electrical power to rural and remote areas. The electrification stage depends on many criteria (dedicated agency, national strategy, regulatory framework ) and will influence the development of off-grid market. A well established strategies with clear objectives will outcome to successful installations. Infinergia has developed this model to put into perspective the off-grid PV potential previously mentioned by analyzing national contexts: 1 Step 1 (initial stage): development of a regulatory and political framework - Implementation of a rural electrification strategy - Clear objective, including grid connection, mini-grid and off-grid system in rural area - Centralized or decentralized strategy 2 Step 2 (development stage): development of an Institutional Framework - Deployment of a ministerial support (Ministry of Energy, Ministry of rural development ) to design, implement and develop a rural electrification strategy - Creation of a dedicated agency (Rural Electrification Agency, Rural Electrification Fund) - Contract with a national utility company (National Electricity supplier) to implement the rural electrification strategy 3 Step 3 (advanced stage): development of a national rural electrification program - Design, implementation, development and management of a national rural electrification program - Number of MW, SHS, solar pumps or agricultural systems to deploy defined 4 Step 4 (final stage): implementation of Roadmap and Long Term Vision - Electrification rate long term objectives (>15 years) - Target: MW to be deployed (grid and off-grid) 22

23 2 - OFF-GRID PV & RURAL ELECTRIFICATION - AFRICA 2.1 RURAL ELECTRIFICATION MATURITY SCALE o Rural electrification rate versus electrification stage Figure 13: Rural electrification rate vs electrification stage Infinergia rural electrification maturity scale was compared to rural electrification rate (EXHIBIT 1 & 2). All countries in the final stage have a rural electrification rate higher than 90%. Advanced stage countries: x, began rural electrification development 15 years ago, but still need to electrify 80% of the rural population. Initial stage countries: as the exception of xx, have a rural access rate lower than 10%. 23

24 3.1 SOLAR HOME SYSTEMS 24

25 3 - OFF-GRID PV DEPLOYMENT BY APPLICATION 3.1 SHS: SOLAR HOME SYSTEMS o Total installed SHS in Units per region: x ku in 2012 In 2012, over x million unit of SHS have been installed in Africa (cumulative basis). Most of the installed capacity is concentrated in x countries (xx) but some countries are interesting in terms of units (with lower power range). 1 st market: x: xx, xx and xx represented x% of SHS units installed in x, and x % of the total installed SHS unit in Africa. 105 ku 10% 290 ku 28% 99 ku 10% 26 ku 3% 505 ku 49% Eastern Africa Southern Africa Western Africa Northern Africa Central Africa 2 nd market: xx: x and xrepresented x% of SHS units installed in Southern Africa and x % of all Africa. Figure 19: SHS in thousand units per African region 25

26 EXHIBITS LIST EXHIBIT 1 EXHIBIT 2 EXHIBIT 3 EXHIBIT 4 EXHIBIT 5 EXHIBIT 6 EXHIBIT 7 EXHIBIT 8 EXHIBIT 9 Macro Economical Data per country 1/2 Macro Economical Data per country 2/2 Rural Electrification Management by country Rural Electrification Programs by country Feed-In-Tariff by country Import duties and VAT on solar systems per country Total Off-Grid PV installed capacity in MW per country Off-grid PV installed capacity in MW by application per country Off-grid PV installed units by application per country 26

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