CrossBoundary Energy report says solar data irregularities hurt African businesses

The declining cost of solar equipment continues to attract more and more African commercial-industrial (C&I) users toward solar energy solutions. However, this surge in solar energy uptake can be hindered by a key design factor- inaccuracy in solar irradiation.

Solar irradiation is the measurement of how much sunlight shines in each location which has a bearing on how much electricity a solar array can produce. The question is: Is the African solar industry’s current method of calculating long-term solar production reliable?

CrossBoundary Energy (CBE), one of Africa’s largest providers of solar plants for businesses, has suggested that this is not the case.

A new report from CrossBoundary Energy, entitled ‘Measuring Solar Irradiation in Africa, A Case for Change’, reveals that biases within the datasets commonly leveraged to estimate solar production in Africa cause projections to often overstate solar irradiation.

The report further states that “If these biases are not addressed during project development, inaccurate irradiance estimates can result in up to 20% reduction in realized solar savings for C&I solar buyers and a 1-2% reduction in the internal rate of return (IRR) on investment for solar developers and investors.”

The overstatement of solar irradiation is by no means peculiar to Africa. According to the report, even the U.S. and European markets are immune to inaccuracies.

For example, kWh Analytics, a U.S.-based research firm recently collaborated with 10 of America’s 15 largest solar asset owners to conduct the industry’s largest energy validation, analyzing the historic performance of distributed generation and utility-scale solar projects.

It was discovered that projects on average underperformed their third-party P50 estimates by 6.3% on a weather-adjusted basis, while a quarter of the projects missed their production targets by over 10%, even after weather adjustment.

What the research underscores is that higher irradiation data biases could see solar developers and their clients facing even greater impacts.

Solar developers bear the consequences of solar production overestimates

Per the report, solar developers in Africa rely on solar irradiance measurements to predict how much power the plant will produce daily and annually.

Their prediction affects the solar installation’s design, the price for solar-charged to C&I clients, and the expected return to investors from solar investments.

As such, inaccurate solar production estimates pose a risk to developers in that they fail to meet portfolio investor returns and under-deliver the expected savings to solar buyers.

Highlighting the risk on C&I users of solar solutions, the report explains that a solar buyer in a major capital city could lose 4-5% of their projected savings from underproduction, while clients with operations outside of the major cities risk a significant reduction in savings of up to 20% due to system underperformance.

Even higher is the risk to off-grid mines using solar energy in tandem with diesel gen-sets, as they will bear additional fuel costs to offset the unmet solar production needs.

For investors, such systemic underperformance can reduce the projected IRR by up to one percent for urban sites, while diverse portfolios of urban and rural assets could see deviations from the projected IRR of greater than one percent.

The way forward

The CrossBoundary Energy report recommends that collaborative actions be taken to improve African irradiation estimates over the long term.

It states: “Improving solar irradiation measurement on the continent is not a single organization’s responsibility; collaboration between solar buyers, developers, data providers, installers, and investors is needed to address and ultimately rectify the problems.”

In addition, C&I solar buyers and investors are urged to implement practical steps on their own to protect themselves against over-optimistic production estimates.

For their part, solar developers and solar customers can help to reduce the impacts of these biases through deeper interrogation of estimated long-term solar production figures.

Rather than rely on a single source of data for estimating the solar irradiation for a given new project as is the common practice, solar developers should seek to interrogate multiple solar irradiation data sources to evaluate a realistic range of solar irradiation.

This will help to ensure that projections are not overly optimistic and avoid misrepresentation of project profitability.

You may read the full CrossBoundary Energy report here.