Energy for Commercial & Industrial Customers in Africa Case study 26/06/2020
CONTENT EDF C&I in Africa- elements of context The case 2
1. EDF 3
EDF GROUP - KEY FIGURES 90% carbon-free 510 Millions Euro R&D Be the energy for budget generation change 584 Twh of electricity 165 790 Employees in 69 Billion Euro Sales generated worldwide the world
OUR AMBITION BE THE ENERGY FOR CHANGE MEANS PROVIDING OUR CUSTOMERS WITH SOLUTIONS THAT ENABLE THEM TO CONSUME BETTER ELIMINATING CO2 PROMOTING OUR LOW-CARBON MODEL AROUND THE WORLD 1 ER ELECTRICITY COMPANY IN THE WORLD 1 st nuclear operator worldwide 1 st renewable company in Europe LEADER IN CARBON FREE 3 rd European operator in Energy Services GENERATION EDF COVERS THE WHOLE Generation VALUE CHAIN OF Transmission, Distribution ELECTRICITY Market, Sales Energy Services, Energy Efficiency
EDF GROUP IN THE WOLRD Present in 23 countries with an installed capacity of 132 • GW and 90% carbon-free generation worldwide. 33% of EDF sales are made outside France . • CAP 2030 ambition: triple EDF Group activities outiside • Europe. EDF Group targets to double Renewables installed • capacities to reach 50GW by 2030. International development now focuses on about 15 target • countries : USA, Brasil, China, India, Cameroon, Ivory Coast, South Africa, UAE,…
EDF GROUP IN AFRICA ALGERIA MOROCCO EGYPT Present in Africa for 50 years . • Wind farms in Tétouan (50 MW) and Taza (150 MW – ongoing) EDF is supporting its customers • Pumped-storage power station in Afourer towards their energy projects (466 MW) DEMOCRATIC through various solutions in all Smart city: consultancy for development REPUBLIC OF CONGO types of energy (hydropower, of smart services (smart lighting) thermal, wind and sun, nuclear, biomass) and all along the value KENYA SENEGAL chain of electricity, from Ongoing development of production to households through solar irrigation system for small-scale farmers networks: engineering consulting, BURKINA FASO TOGO & BENIN GHANA construction management, MOZAMBIQUE Ongoing technical assistance, delegated development of off- management of O&M, training, grid solar kits for rural SOUTH AFRICA COTE D’IVOIRE areas energy services, etc. CAMEROON GABON Ongoing development of off-grid solar 3 wind farms at Grassridge (62 500 000 people have access to • kits for rural areas MW) ; Chaba (21 MW) and Waainek (25 MW), plus one Electricity in Africa thanks to EDF under construction in Wesley (33 CONGO REPUBLIC MW) Networks Wind Smart cities Nuclear EDF Group presence Thermal International Energy Biomass Hydroelectric Solar Gas Division local office services
2. C&I in Africa- elements of context 8
A sample of 7 countries illustrates the challenge of electricity access in Africa and a large spread in per capita consumption Country / Zone (population in M) • % of population with electricity access Senegal (15,9M) (2018) • 62% electricity access • Per capita electricity consumption • 0,3MWh per capita (MWh, 2018) • 633MW • Installed power capacity (MW, 2018) Côte d’Ivoire (25,1M) OECD • 65% electricity access • 100% electricity access • 0,3MWh per capita • 8MWh per capita • 2200MW Subsaharian Africa • 45% electricity access Ghana (29,8M) • 0,5MWh per capita • 79% electricity access • 0,4MWh per capita Rwanda (12,3M) • 4400MW • 34% electricity access • 0,04MWh per capita Togo (7,9M) • 220MW • 48% electricity access • 0,2MWh per capita Kenya (51,4M) • 230MW • 64% electricity access South Africa (57,8M) • 0,2MWh per capita • 84% electricity access • 2400MW 9 • 4MWh per capita • 51 300MW Source: IEA, Worldbank, USAid
Commercial and Industrial (‘C&I’) uses accounts for 45-75% of electricity consumption depending on countries Split of final electricity consumption by sector 2018 est. 100% 90% Other (transport, 80% agriculture, fishing, non- specified) 70% Residential 60% 50% Commercial and public 40% services 30% Industry 20% C&I 10% 0% South Africa Côte d'Ivoire Kenya Sénégal Rwanda Ghana Togo 10 Source: IEA, Government of Rwanda
Businesses in Africa face the challenges of high electricity costs, incomplete access to energy and unreliable supply Difference vs world av. Difference vs OECD Difference in electricity supply electricity prices 100% access to energy quality index vs OECD (%, 2018, industrial usage) (%, 2018) (%, 2019) Rwanda Togo Senegal Togo Ghana Togo Senegal South Africa Ghana Kenya Senegal Kenya Côte d'Ivoire Côte d'Ivoire Kenya Rwanda Ghana Côte d'Ivoire South Africa South Africa Rwanda -50% 0% 50% 100% -100% -50% 0% -100% -50% 0% 11 Note1: Electricity supply index includes « reliablity of supply » and « transparency of tarfiff ») Note2: Electricity price by country based on a simulation for manufacturing plant Source: Share analysis, IEA World Energy prices, Doing Business 2020
Solar PV has emerged as a fast growing source of energy (>~50% CAGR), yet accounts for still <5% of the electricity production mix Main sources in CAGR solar PV % of solar PV Solar PV generation mix generation in mix GWh, 2018 2018 2013-2018 2018 South Africa 3023 131% 1,2% Coal (89%), Nuclear (6%) Sénégal 260 88% 5,3% Oil (86%), Hydro (7%) Kenya 200 45% 1,7% Geothermal (40%), Hydro (30%), Oil (11%) Côte d'Ivoire 38 Natural gas (83%), Hydro ∞ (was 0 in ’13) 0,4% (15%) Ghana 28 75% 0,3% Natural gas (46%), Hydro (40%), Oil (18%) Rwanda 16 ∞ (was 0 in ’13) 0,8% est. 38% Diesel, 37% Small hydro, 23% HFO Togo 0 N/A 0% Hydro (88%), Oil (10%) 0 500 1000 1500 2000 2500 3000 3500 12 Source: IEA, IRENA, Africa Development Bank Group, Ghana”s Energy Commission, PANER Cote d’Ivoire, PANER Senegal
Solar PV serves distinct objectives for Commercial & Industrial offtakers (C&I) across sectors 1. Industrial & 5. Universities 9. Hotels & 6. Banks & 7 Agriculture 2. Retail & 4. Hospitals 3. Telecom 8. Offices & schools logistics mining resorts ATM Objective 1. PV-Diesel Green approach to Hybridization fuel savings Generate revenue 2. Rooftop for and profit + meet Feed-in-Tariff green targets 3. Rooftop for Self- Realize maximum total savings on energy costs Consumption / Net (C&I) Metering 4. Rooftop for Self- Realize maximum total Consumption with savings on energy costs (small commercial) Storage Gain energy independence, access to 5. Commercial Off- electricity or reduce diesel generator Grid Solar with costs (small business) Storage Secure against unpredictable 6. Storage / Backup grid outages with reliable Power backup power Improve bottom line by 20- 7. Telecom towers 40% & deal with unreliable grid 13 Source: SE
In practice, solar PV for C&I takes the form of 3 main configurations Typical payback System Limitations Features Advantages configuration • Basic solar installation • 3-5 years • Most cost-effective • Does not • Solar panels + GRID TIED that uses a standard grid solution provide inverter link backup • No batteries required • Solar power when sunlight is available • Can operate • Grid tied system with GRID TIED • 5-7 years • Cost of quality • Solar panels + independently WITH battery back-up batteries (new + inverter + from the grid STORAGE • Solar energy is stored to replacement) inverter charger be utilised when sunlight or battery grid is unavailable. “Panels last for 20+ years, but batteries are wearing parts • Supplies power • 7-10 years • Integrates solar and • Solar panels + BLENDED limited to maximum even if no grid is batteries with generators inverter + 2000 cycles (i.e. available to ensure 100% power inverter charger about 5 years if daily up cycle)” battery + genset Industry Expert integration • Can be grid tied or off- grid 14 Sources : Share analysis
Solar Companies often propose 2 financing options for C&I users CAPEX* OPEX** (“outright/direct purchase”) (“Leasing / rental / PLA / PPA”) • Customer owns the asset • The Energy company (EC) initially owns the asset Ownership • 100% investment borne by customer Investment • Zero upfront investment by the customer • Typically requires long lead time • Quickly replicable and scalable Length of approvals at senior Management Level commercial cycle • Depending on pricing mecanism set in the agreement • O&M charges after system purchase Off-taker’s expense Example : 15 years PPA between Unilever Tea and once installed Crossboundary in Kenya (619kW) • Capital repaid through generated • Immediate savings (10-40% cheaper than Grid electricity electricity Tariff) Economical model & • 3-10 years depending on system payback configuration • Customer can claim tax benefit through • Case-by-case depending on agreement structure (final Tax benefits and accelerated depreciation ownership, captive or partially shared use,…) impact on accounts 15 Note: *CAPEX: Capital Expenditure ; **OPEX: Operating expenditure ; PLA and PPA tend to be commonly used without clear delineation Sources:cleanmax; Onesolar; SunNetEnergy; Sologix,
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