Many of the PV industry players have already wished for opportunities that were faster, easier, and better defined than actually develop a PV project from zero, though some of us have developed pretty neat skills doing exactly this. I have already commented on solar parks and their impact, which so far has been remarkable in PV and CSP.
Another interesting way has been devised by the International Finance Corporation (IFC), part of the World Bank Group (WBG). The programme is called Scaling Solar. IFC has developed a product that uses several separate products from the WBG as World Bank supports country governments with financing and advice, IFC leveraging the private sector and the Multilateral Investment Guarantee Agency (MIGA) providing a range of political risk insurance products to attract private capital into emerging markets.
In a nutshell we have advisory, financing capacity for the private sector, financing for the public sector, and partial risk guarantees to serve as sovereign guarantees. This builds up the most loved word in the industry: bankable projects!
The cost of solar photovoltaic technology has fallen more than 80% in the past six years. Still, many countries have struggled to develop utility-scale solar plants due to limited capacity to manage, structure, and negotiate private power concessions; small and distinct power markets can deter investors and small grids can only absorb small projects; power projects are not competitively tendered; individually negotiated contracts have high transaction costs and poor credit utility offtakers as well as political risks increase the cost of capital, driving up the tariff.
This results in less attractive projects and in the end mostly shady deals are done that benefit only some and the value of PV is not obtained.
Scaling Solar aims at developing a PV project in less than two years (from zero to commissioning) at low tariffs by providing advice to assess the right size and location for solar PV power plants in a country’s grid, simple and fast tender process but ensuring strong competition from committed industry players, developed and tested bankable templates of power purchase agreements (PPA) and concession agreement, government support agreement (GSA) that can positively eliminate negotiation, competitive financing so that the cost of finance is affordable, and risk management tools to lower tariffs.
This benefits all stakeholders. Governments and utilities are able to deploy PV projects fast and with the enhanced probability of success attached to a low tariff that may contribute to reduce the common deficit of the utilities in developing countries. Project Developers and Investors are certain of looking at projects that have been developed with quality and are able to bid fast and efficiently reducing their development costs and risk perception, bidding low to get the projects.
International Donors and Development Partners may provide financial support to projects that work and really make a difference leveraging their funds and maximising the results in developing countries by providing affordable clean energy.
Asian investors should pay attention to Scaling Solar as to allow them to bid for PV projects in Africa with a reduced risk, assured quality, and financing availability. Asian manufacturers should team up with investors and EPC companies to deliver cost-effective PV projects under well defined conditions, allowing for win-win situations.
Asian governments should adopt Scaling Solar to allow their countries to have PV projects that are affordable, fast, and developed with quality. There is no reason for only Africa to benefit from the approach when solar power is available for all.
India has showed that the same principles behind Scaling Solar work and the costs of PV have decreased immensely along the phase I of the National Solar Mission, similar to what was witnessed in South Africa. Still Scaling Solar can be faster, but clearly India has chosen the solar parks as the way forward.
Thailand could benefit from a revised approach; Cambodia, Vietnam, and Malaysia could all embark on PV with a certainty of success that it is not present now and PV is still deemed to be expensive. Even the Philippines could benefit.
MENA is another region being targeted and may provide some very interesting results.
The results in Zambia this year speak for themselves:
Scaling Solar projects are currently being developed in Zambia, Senegal, and Madagascar.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Asian Power. The author was not remunerated for this article.
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Agostinho Miguel Garcia is the Chief of Development and Engineering at Sun Business Development Lda.