Next Renewable Generation (NrG) has successfully implemented the first solar photovoltaic (PV) Power Purchase Agreement (PPA) of its kind in South Africa in the commercial space.
A 140 kilowatt-peak (kWp) PV power plant was built, funded and is now owned by NrG. The energy that is produced is sold to a leading retail solutions company, Smollan, on a per kilowatt-hour basis at an agreed tariff rate and fixed annual escalation for 20 years. Three separate power plants make up the total capacity: two of these power plants are roof-mounted at Smollan’s key call-centre which is based in Orange Grove, and the other is mounted on a specially designed carport at its Maryvale-based head office. The project demonstrates visionary leadership in its PPA structure. Although used in large-scale (>10MW) power plants that sell energy directly to the utility, the PPA model had not yet been applied successfully on a commercial scale in South Africa, until now.
Smollan must be commended for their pioneering view on the world of renewable energy. Many commercial and industrial consumers of electricity are faced with the dilemma of the relatively high capital costs and generally long payback periods associated with installing energy generating systems. David Smollan, CEO of Smollan, said: “From a business perspective, this makes sense on various levels – there is no upfront capital required, as we pay only for the power produced by the renewable energy system, it gives us full control of our energy future by providing Smollan with customised embedded generation sources designed to meet our specific needs. We have no performance or technology risk and as the owners of the system, NRG takes care of all engineering, maintenance, construction repairs and monitoring.”
Ultimately, the small scale Smollan PPA project is a pilot and role model for the industry, as its structure makes renewable energy more accessible to the average commercial entity, by removing the capital intensive requirements. In an industry that has little government incentives for projects of this nature, a vastly different approach is needed to make carbon reduction targets attainable for companies, and, significantly, to make renewable energy project bankable and essentially “no-brainers” for clients.
