Makana invests in solar power
Makana Brick in the Eastern Cape has invested in a solar microgrid to supplement and secure their power supply. The farm of photovoltaic (PV) panels is designed to produce 600 000 kW hours per annum — 356kWp DC and 300kWp AC.
“The system will supply 17% of our electricity requirements,” reports Colin Meyer of Makana Brick. “It supplements grid power in operations including crushing and extrusion, as well as running all electrical motors for the fans and equipment on the dryer and kiln. As we run a night shift, this result exceeded expectations.
“With a capital cost of R4,5 million (financed through GBS Mutual Bank in Grahamstown) the payback period is less than 5 years. The first year savings are expected to be R675 000 before tax. With a 25 year lifespan, the savings can only increase.”
“More importantly it has reduced our dependence on Eskom, minimising our exposure to arbitrary price increases.”
The system is fully integrated with Makana’s substation, so there is no battery storage. Keeping panels dust free improves performance; although rain helps, Makana has installed a manual spray system to clean when necessary.
“The solution at Makana Brick is scalable,” advises Matt Ball of service provider Sinani Energy.
"It could be expanded to produce all of the electricity required. With the installation of batteries to store excess energy, Makana Brick could go completely “off grid”.
As of 1 January 2016 the South African government gave a tax incentive through the South African Revenue Service for the installation of photovoltaic solar energy generation systems. The accelerated depreciation depends on the size defined in MWp (Megawatt peak) of the photovoltaic solar system.
Photovoltaic solar systems smaller or equal to 1 MWp can be depreciated in one year. This offers a major cash flow benefit of 28% of capital expenditure in year one. Photovoltaic solar systems greater than 1 MWp are depreciated with the schedule 50%, 30%, and 20% in the first 3 years respectively.
The combination of the Section 12B tax benefit and the annual energy savings results in a simple payback of just over four years.
Countering energy supply concerns
Eskom posted a R20-billion loss in 2019, continuing its downward spiral of operational and economic failure. Finding alternative energy sources is an urgent risk-management strategy. Many individuals and businesses counter energy security concerns by resorting to traditional solutions like petrol generators and fossil fuel sources like coal.
Even after discounting health and environmental concerns, these “fossil fuel” based solutions continue to incur ongoing costs in terms of procurement, logistics, storage, quality monitoring and carbon tax.
In comparison, solar energy is one of the cleanest energy solutions available — and is completely renewable. In fact, the sun continuously delivers around 1 366 watts of direct solar radiation per square metre or around 150 000 terawatts globally.
South Africa’s climate is ideally suited to solar leveraging free sunlight to generate electricity. Most areas in the country average more than 2500 hours of sunshine per year — one of the highest rates in the world thanks to its equatorial location.
Solar provides an attractive internal rate of return (IRR) as solar electricity is free after the initial payback period.
Solar technology is continually evolving and innovating, and this power source is disrupting conventional thinking with respect to energy planning. Because solar projects are within the budget and capabilities of the private sector, they can bring much-needed power alternatives especially in underdeveloped, rural or remote areas.
For Makana, solar solution was an obvious choice in order to...
- take control of energy costs. Going forward, Makana Brick will only be exposed to Eskom tariff increases on the portion of the electricity that they buy from Eskom. The electricity produced by their solar system will be fixed, based on the capital that they have invested.
- convert to renewable, green energy. This is not only good for the environment, but can be used to offset carbon tax.