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Rooftop solar can solve our generation problems but there must be adequate financial compensation

Rooftop solar can solve our generation problems but there must be adequate financial compensation

The state’s power utility is coming under increasing pressure to lay out its plans exactly how it intends to solve our electricity dependence at a cost where Namibian companies and private households can both afford the energy.

For more than 25 years, NamPower has vacillated between several options, none of which has come to bear any results. Kudu’s electricity will be too expensive, the five dams in the Kunene will all grind to a halt during a drought like last year’s, diesel is also too expensive, and the initial capex for large industrial solar installations are prohibitive. And even so, solar requires either diesel or battery backup for peak demand and during the night.

But power generation does not need to be NamPower responsibility only. If we make it a shared responsibility between hundreds of thousands of households and companies, all with rooftop structures that can effectively accommodate anything solar from micro to industrial, it relieves the utility of the generation mandate. Then it becomes a system implemented by municipalities and local authorities, and the surplus is distributed where it is needed by the regional electricity distributors.

From the utility’s point of view, the current paradigm is still built on Independent Power Producers, or so called IPPs, but these are still industrial installations, and their profitability depends on Power Purchase Agreements, or PPA’s at a tariff which is acceptable to NamPower. I believe the legislation is now in place for this model to become reality, but capital investment, operational cost, fuel cost and the integration into the national grid are still issues where I believe there are no general agreements. Only the legal framework exists but on the ground very little seems to be moving.

I do not propose that we go back on that track. It has taken us 20 years to get to a point where it is actually possible, if not always that feasible. That line of thinking must continue. We will need the IPPs at some point, and as they refine their financing models, their technology and their base load issues, IPPs will eventually make up a significant part of the energy mix. Let them continue.

I am suggesting that we tap into the generating potential of all the buildings in Namibia, and by all I mean ALL – each and every structure with a rooftop that can house a solar installation. For this we need a special type of meter and an agreement between the property owner and the local authority, that all electricity that flows back into the grid, offsets the electricity for which normally we have to pay. This is a type of subsidy. The owner of the installation subsidises his or her own electricity costs by earning credits for every kW put back.

I believe the basic regulations for such an arrangement are also in place but implementation has become stuck on the billing side since it also requires a relatively modest investment from the local authority to be able to take the credits into account and reduce the amount due. Such a system has already been tested at a few individual sites but I have not been informed that it has actually come off the ground as a workable system.

The basic principle is this. When the owner of a property is prepared to pay for a solar installation with all the technical paraphernalia it requires to put electricity back into the grid, the compensation must not only be the saving in the amount of electricity taken from the municipality, there must also be an additional credit for every unit returned.

The current line of thinking is entirely based on the saving from buying less electricity from the local authority but there is not additional incentive. I believe the moment solar not only reduces the total amount of energy taken from the local authority, but also reduces the amount payable for normal consumption, a powerful financial incentive is created. This does not cost NamPower a cent, or the municipality, it only reduces the latter’s income from selling power, but it in turn is compensated by selling this back to the regional distributor, and that can work on the same credit principle.

Up to now, all calculations I have seen for the amortisation of private, relatively small, solar installations, only worked on the saving from not taking as much energy from the municipality as in the past. There is no additional compensation in the form of a credit so in essence there is no opportunity for the owner of that rooftop to subsidise his own electricity consumption.

We are literally talking hundreds of thousands of potential micro-generating points distributed across the entire Namibia. The liability for the installation costs, capex, becomes the owner’s, as does the liability for battery storage, which at this stage is still very expensive. According to the current thinking, this cost must be recouped by the saving in electricity consumption. I find no fault with that but if we can incentivise it some more with credits, bringing the electricity bill down even more, then we increase the attractiveness of this type of investment. And if that saving is substantial, many more buildings will be fitted with solar.

The excess which runs back into the grid, then solves our biggest headache, generation, at zero liability for the utility, at a tariff it can control, and in an abundance so that we can actually start exporting power. Adopt the credit principle, and I believe we will see an explosion in private solar. That in turn generates a surplus, which is what we need for future development.

The principle is exactly the same as the one we apply to protect our wildlife. The moment there came a financial incentive to protect nature, local communities started doing it by themselves. The success of that model now serves as global guideline for the conservation of nature.

The same with electricity. If the owners of rooftops can save two-fold, less consumption and a credit system, then we never need to worry about Kudu or Baines, or any other costly technology.


 

 

About The Author

Daniel Steinmann

Brief CV of Daniel Steinmann. Born 24 February 1961, Johannesburg. Educated at the University of Pretoria: BA, BA(hons), BD. Postgraduate degrees are in Philosophy and Divinity. Editor of the Namibia Economist since 1991. Daniel Steinmann has steered the Economist as editor for the past 29 years. The Economist started as a monthly free-sheet, then moved to a weekly paper edition (1996 to 2016), and on 01 December 2016 to a daily digital newspaper at www.economist.com.na. It is the first Namibian newspaper to go fully digital. Daniel Steinmann is an authority on macro-economics having established a sound record of budget analysis, strategic planning and assessing the impact of policy formulation. For eight years, he hosted a weekly talk-show on NBC Radio, explaining complex economic concepts to a lay audience in a relaxed, conversational manner. He was a founding member of the Editors' Forum of Namibia. Over the years, he has mentored hundreds of journalism students as interns and as young professional jourlists. He regularly helps economics students, both graduate and post-graduate, to prepare for examinations and moderator reviews. He is the Namibian respondent for the World Economic Survey conducted every quarter for the Ifo Center for Business Cycle Analysis and Surveys at the University of Munich in Germany. He is frequently consulted by NGOs and international analysts on local economic trends and developments. Send comments to daniel@economist.com.na

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