Coca-Cola Beverages South Africa (CCBSA), Coca-Cola’s bottling partner in South Africa, is aiming to have 25% of its electricity powered by renewable sources by 2025.
The company says the first 10% of this renewable energy, about 18-million kilowatt hours a year, will be rolled out nationwide through rooftop solar photovoltaic (PV) units at 11 of its sites. This will be a combined installed capacity of 10.6 MW. Nine sites will be completed by the end of the year, with the last two expected to be completed by March 2019.
CCBSA is the seventh-largest Coca-Cola bottling partner worldwide by revenue and the biggest on the African continent, accounting for about 40% of the Coca-Cola volume sold in Africa.
Under a 25-year power purchase agreement (PPA) with its partner, renewable- energy developer and strategic equity investor Mulilo Group, CCBSA’s plants will also realise substantial savings in electricity drawn from the grid.
The plants are leased to Coca-Cola Beverages Africa (CCBA), Mulilo Energy Partners CEO Richard Doyle tells Engineering News, and are owned by a company established by Mulilo, which meets CCBSA’s broad-based black-economic- empowerment requirements.
CCBSA has an option to buy the plant back from Mulilo at any time.
“The financial benefit right now isn’t significant enough to pass [CCBSA’s] hurdle rates for a normal capital expenditure spend, but it does reduce our cost of electricity,” says CCBSA supply chain director Andrew Ferrett.
However, given the structure of the project agreement with Mulilo, together with the likelihood of further tariff increases from State-owned utility Eskom in the coming years, Ferret is convinced that, over the life span of the rooftop solar project, the financial benefits will be material, making the investment “extremely viable”.
Sustainable engineering solutions provider Romano Solar will build and operate the project, and was awarded the CCBSA project with Mulilo after an 18-month bid period.
Investec, through its Power & Infrastructure Finance division, is the lead arranger and underwriter for the transaction, which is funded using a PPA. Investec is one of the leaders in the provision of funding for the rooftop solar sector in North America and leveraged its international expertise and deep understanding of the solar industry to provide an innovative funding solution for Mulilo.
The solar PV generation systems at CCBSA’s plants will assist in decreasing the use of coal by South African thermal electricity generation power plants by about five-million tonnes a year and carbon emissions by 14 000 t/y.
“All our plants are supplied electricity by Eskom, using coal as a fuel source,” says Ferrett.
First System Installed
The first system in Devland has successfully been installed, with Midrand and Pretoria to follow this month.
Eight more systems will be installed and rolled out over the rest of the year at Gutsche and Tannery, in Bloemfontein; Wadeville, in Gauteng; Elgin, in the Western Cape; Polokwane, in Limpopo; and Phoenix, in KwaZulu-Natal. The installations are expected to be completed during November and December.
The last of the systems – Premier Place, in KwaZulu-Natal, and Lakeside, in the Eastern Cape – will be installed in February 2019.
Coca-Cola, like many multinationals, Doyle says, is increasingly focused on sustainable business operations across its value chain and also has PPAs in place with renewable-energy suppliers worldwide.
The rooftop solar PV units are not the first step in its commitment to sustainability and protecting the environment, Ferrett says, as the company has invested more than R120-million in the past seven years to achieve this objective.
Last month, to mark World Environment Day, CCBSA and Coca-Cola Peninsula Beverages reaffirmed their commitment to create a world without waste.
In January, the Coca-Cola company launched its global goal to fundamentally reshape its approach to packaging through its World Without Waste initiative. This initiative aims to collect and recycle the equivalent of 100% of its packaging by 2030.
“We have been working on energy efficiency for a number of years under our sustainability objectives. Introducing renewable energy is a logical extension of that,” he tells Engineering News.
As part of the bottler’s sustainability objectives, CCBSA has, over the past seven years, upgraded all lighting in its facilities to light-emitting diode, and installed high- efficiency motors, as well as various other energy efficiency technologies that Ferrett says have seen the company invest in excess of R120-million in the past seven years alone.
A solar PV system of about 1 MWp uses between 10 000 m2 and 15 000 m2 of space and requires about 3 400 solar PV panels of 1 MWHp, which, in total, will amount to between 25% and 35% of the bottler’s factory and warehouse roof space in South Africa after the 11 sites have been completed.
CCBSA reduced its electricity use by 9.64-million kilowatt hours last year and has reduced its electricity use per litre of beverages produced by 9.24% over the past three years.
Doyle explains that a new trend developing in the South African solar PV industry is to use a service-based business model where there is no capital requirement from the client. This is the dominant business model in Europe and is increasingly being used in the US and other territories, owing to energy plant operation not being the core business of many companies, he adds.
Doyle says South Africa, which already has between 500 MW and 1 000 MW of self-funded commercial and industrial solar PV plants, is progressing towards using this model.
“However, it should be noted that, since the sun is only up for about eight hours a day, the maximum power that solar can provide for a 24/7 operation is 30%. These projects typically reduce CCBA’s demand by between 10% and 20%, so they still depend on the grid.”
Doyle suggests cooperation and joint planning between municipalities and independent power producers to find the optimal way in which to share space.
“This is working well in some of the metros, but renewable energy is still regarded as a threat in many municipalities, which see the loss of revenue,” he laments.
South African Photovoltaic Industry Association (Sapvia) spokesperson Kinesh Chetty says that, in terms of implementing renewable-energy alternatives, “the revolution is already happening” and “it cannot be stopped”.
This change is driven by a convergence of improving solar PV economics, rising environmental awareness and a desire by businesses to improve and prove the sustainability of their energy supply.
Therefore, Sapvia remains hopeful that rooftop PV could be as large as utility-scale power generation, in view of tariff increases from Eskom.
This type of decentralised energy production is “astounding”, the industry body highlights, especially in terms of capacity addition to the grid, job creation and diversification of energy supply to a more sustainable source.
He says that this type of production natu- rally poses a risk, which can be managed through focusing on grid management and energy distribution, while charging producers for the right to distribute energy. This business model also leverages existing Eskom assets, Chetty adds.
“Let private companies produce power cheaply and let them pay Eskom to wheel this on the network,” he suggests, adding that municipalities should embrace PVs, as this enables them to produce energy cheaper in the long term.
“Therefore, if a municipality adds solar energy, it has additional capacity for other users.”
China’s leadership in solar PV deployment speaks volumes and Chetty believes South Africa should be taking note of the approach being taken in that country. If this model is adopted locally, small and/or medium-sized businesses could produce a portion of their energy virtually indefinitely from the sun at a fixed cost, as opposed to a variable cost from the grid.
The PV industry needs Eskom, he states, as solar PV is a variable source of energy. However, with the cost of power increasing, South Africa is becoming less attractive to manufacturers and companies that add value through energy in production processes, Chetty warns.
“South Africa is also globally recognised as one of the best countries for solar energy. Owing to our sunlight, rising energy prices and the stabilisation of international market prices on solar panels, this can culminate in a perfect storm for solar PV technology in our country.”
While solar PV installations have largely been at the level of individual households, University of Cape Town Energy Research Centre senior researcher Hilton Trollip says projects similar to the CCBSA project are evidence that a tipping point is being reached.
He explains that most medium-sized or large businesses have a steady electricity demand during the day, which means PV is well matched to supplying that demand.
The PV solution provides net savings for increasing numbers of these customer installations and these are likely to increase rapidly.
However, this industry potentially repre- sents a direct threat to Eskom and local municipalities, as the potential to generate decentralised energy by small-scale users is “massive”, Trollip tells Engineering News.
This potential threat to Eskom, Chetty says, can be mitigated by getting rid of the “us (PV) versus them (Eskom)” mentality.
For example, if 600 000 homes in South Africa each installed a minimum of four panels, the energy capacity of the local grid could be increased by about 600 MW, which, Chetty says, will be good for the country.
Therefore, Eskom must regard itself as a partner to the PV industry, and needs to embrace the change and find ways of working alongside industry, Trollip points out.
“If Eskom could change its mindset, it could avoid getting into what is inevitably going to be a game where it loses control, making it difficult for people to install PV systems,” Trollip concludes.