Microgrids are gaining traction globally owing to its ability to alleviate the impact of critical outages, caused by extreme weather, climate events, and various other reasons. 

Microgrids can secure and provide power for 'critical loads' such as hospitals and data centres when the main grid is down, says financial advisory services company Cresco Group’s decarbonisation advisor Dominic Goncalves.

Microgrids refer to energy generation and storage systems that combine multiple technologies such as solar, wind, diesel gensets, and fuel cells.

While microgrids are complex to set up, particularly regarding the technical integration, integrating microgrids offers significant benefits in South Africa, particular as loadshedding is projected to continue for at least the next three to five years.

Microgrids ensure resilience against loadshedding and load curtailment as well as overall lower cost of energy.

Goncalves recounts that several successful projects for industrial, commercial, and residential applications demonstrate that microgrids are a viable option for South Africa. These systems can operate both connected to the grid and in 'islanded' mode, allowing for an intelligently optimised and seamless transition from an outage to using a micro load, such as solar, batteries, or diesel generators

A well-designed microgrid can significantly reduce overall power costs, minimise diesel consumption, and maximise the usage of solar power and batteries. They also reduce emissions by requiring less power from the grid and burning less diesel, while optimising on-site solar and battery use, he says.

Microgrids are highly customisable and designed in a bespoke way to provide the best mix of technologies to optimise value for a particular load. Moreover, they offer an attractive payback period for energy consumers in South Africa, as solar and batteries are generally priced comparable to the grid price, and substantially cheaper than the diesel price.

Goncalves adds that more sophisticated microgrids can use energy efficiency technologies to further reduce energy consumption. This includes incorporating small-scale wind turbines, solar water heaters, heat pumps, and industrial solar thermal rooftop and ground-mounted applications that can provide heat and steam.

Cogeneration and trigeneration can reuse waste heat gas and optimise systems. Lithium batteries, inverters, super-capacitators, fuel cells and other types of batteries can be coupled together to maximise storage when there is no sun or wind.

“In some cases, biomass boilers or biogas anaerobic digesters can burn organic matter – municipal waste or residual plant waste,” he says.

Integrating Solar
South Africa has experienced a significant increase in solar power deployment, owing to easing regulations and ongoing loadshedding challenges. The country saw a 350% growth in rooftop solar and solar not contracted to Eskom from March 2022 to June 2023, says Goncalves.

The shift in the market began in 2021, when regulations were relaxed, allowing private companies to wheel more than 1MW of power to their operations using Eskom’s grid. This enabled independent power producers (IPPs) and consumers to wheel large amounts of power from private sellers to private buyers, says Goncalves.

Additionally, the ongoing impact of the loadshedding has prompted South Africans to explore ways to have more control over their electricity supply. This has contributed to the rise in solar power as it is the cheapest and easiest to install option to limit the impact of loadshedding.

The price of solar photovoltaic (PV) panels have decreased more than 90% from 2008 to 2023. Further, despite solar energy's reliability being contingent on sunlight availability, which accounts for about 30% of the time, it is still a cheaper alternative, Goncalves explains.

However, he notes that there are some drawbacks to solar energy. While current solar PV pricing is optimal for buyer, pricing is volatile and dependent on many factors, including production and supply in China.

“In the last six months, module prices have dropped consistently and dramatically. In the long term, this may stabilise as critical minerals and raw materials may cause supply shortages,” he explains.

Further, commercial and regulatory hurdles around municipal wheeling, net metering, and grid connection constraints are holding back some deployment, Goncalves adds.

“The private sector is pushing hard to unlock these issues and enable a more fluid and liberalised trading market,” he conclude.