Challenges at project level for microgrid solutions lisbon 2016
- 1. November 2016 CSIQ NASDAQ Listed CHALLENGES AT PROJECT LEVEL SOLAR/DIESEL MINI-GRIDS TREVOR DE VRIES
- 4. 4www.canadiansolar.com 4 Reduction in variable cost; Oil Price at 6 yr low but ……? Of Total price <50% is retail; Significant diesel savings over LOM; 8-12 PPA financially viable due to high cost of Diesel; Demand for power is growing as mines ‘dig deeper’; Reduction in CO2 emissions; Reduction of O&M costs • Unstable grid; • Logistical challenges for Fuel supply; • Theft & Contamination of fuel; • Political instability; • Grid extension prohibitively high; • >7km access makes Mini-grids feasible; • Mini-grids will jump the grid like mobile did.! • Monopolistic conditions causing price uncertainty; • Government subsidies aimed at Gridco; Why PV/Diesel Mini-grids….?
- 5. 5www.canadiansolar.com Why Mini-grid PV-Diesel-Hybrid* is already a real business case in high irradiation regions with effective Diesel cost > 1 USD/liter * Ref: SMA, 2013 * RE penetration <15%
- 6. 6www.canadiansolar.com Mini-Grid Challenges PV Penetration & Control Technical Legacy Retrofit Project Finance Financial Solutions Other Challenges Perceptions Logistical Environmental Community Involvement
- 7. 7www.canadiansolar.com Technical Challenges Design PV Penetration & Control Why is this important? • Solar PV is an intermittent resource; • Failure could result in electrical system collapse and outages; • Large thermal power plants are generally made of multiple medium speed generators; • Medium speed generators may not respond quick enough to the match intermittency; • High speed generators sized to mirror solar PV capacity due to their fast response. Degree of Penetration • <20% - PV regarded as negative load no controller neccessary • Prolonged PV may cause several DG to switch off affecting system inertia & frequency fluctuations; • Requires PV Inverter intelligence; • >20% - DG Production must match consumption; • Maintain minimum DG load under large influx of PV energy; • Load loss – must throttle back PV inverters • Mechanical Injection - operating at 30% of its rated power consumes 20% more fuel per kilowatt hour produced compared with a diesel generator under full load. • This leads to greater engine wear and an increased maintenance requirement due to deposits in the waste gas system and in the pistons; • N+1 rule for 110% of estimated load;
- 8. 8www.canadiansolar.com Technical Challenges Legacy Retrofit Diesel Generators • Low Load or Variable Speed engines; • Minimum Loading will determine RE penetration; • Option 1: solar design is modified to suit the generators) or • Option 2: the generators are modified to suit the solar design. Example impact of diesel engine size on solar penetration (100kW load) Ref: Solar/Diesel/Grid Handbook Minimum Load Factor Spinning Reserve • Several HS DG running at load level to ramp up faster; • Spinning reserve can be reduced if PV oversized compared to Inverter; • Storage will reduce Diesel sizing, load shifting;
- 9. 9www.canadiansolar.com Technical Challenges • Dropping a large load on a generator in a short timeframe can result in engine stall; • Management of over-production (curtailment); • Storage is key; Illustrative Overview of Hybrid PV/Diesel Load and Generation Profile Legacy Retrofit Energy Management Plan • Inadequate Load curve (15min) and future growth needs + margin; • Powerhouse…?; • Existing Diesel assets usually EOL; • Outdated Diesel control systems; • Contaminated fuel (Diesel & HFO); • Adequate reference sites for controller technology; • Accurate evaluation of DER and controller integration; Other
- 10. 10www.canadiansolar.com Financial Challenges Project Finance PV / Diesel Hybrids • Projects too small for Investors; • How to secure PPA Risk (LOM, Curtailment, Sovereign, Liquidity, Foreign Exchange); • Venture Risk with Infrastructure returns…?; • Parental company guarantee not always available; • Propriety engineering drives up cost….(MG test centre) Rural Mini-grids • No clear standards for technical bankability; • No confirmed revenue stream; (PAYG, Political Risks and grid expansion; • No Scalable business model; • Current projects only exist through large Government subsidies; • Early development funding: • Grants; • Crowdfunding (Sun Exchange. TRINE, Ecoligo);
- 11. 11www.canadiansolar.com Financial Challenges Solutions • Establishing common features for PPAs; • Develop industrywide standards.; • Reduced due diligence costs; • > $300m threshold; • Default de-risk; • MG backed assets to access secondary markets • Streamline due-diligence process; • Green Bonds; • Streamline Operations; • Need policy change to re-divert subsidies; • Leverage existing data to match consumption for POC; • Leverage anchor (commercial) client to subsidise residential tariffs; Standerdised Contracts Aggregation Securitisation Other
- 12. 12www.canadiansolar.com Other Challenges Logistical • Remoteness; • Local logistics partners; • Country specific Sub-contractor HSE requirements do not match contacting party; • Special transport requirements (air suspension trucks); • Very specific packing requirements; • Permitting for abnormal loads vary considerably (no superlinks !) resulting in additional trips; • Clearly defined laydown area (goods arrive site not ready!) • Goods held at port incurring demurrage costs; • Lack of heavy lifting equipment; • Identified spares storage for O&M; • Environmental issues like water onsite for dust & road control; • Bribery & Theft; • Inadequate lead time; • Country specific investment incentives direct subsidise import duties; (up to project developer to provide) • Custom risks must be well defined; Environmental • Risk of diesel spills in-situ and in transit, causing contamination of soil and ground water • Greenhouse gas emissions from diesel combustion and fuel transportation Community Involvement
- 13. 13www.canadiansolar.com Mini-grid Project Experience Keewaywin North Spirit Lake McDowell Lake Deer Lake
- 14. 14www.canadiansolar.com Case Study – Fort Severn 400x people, 100 houses, 1x healthcare facility, some offices, church, community hall.
- 15. 15www.canadiansolar.com Case Study – Fort Severn ----What did we do? Proposed a phased-in solar capacity development plan Phase I - Installed a grid connected 24kWdc/20kWac solar rooftop system. Gained confidence of community and utility that renewables would not have a negative impact. Phase II – To implement a pilot Mini-grid including 300kW solar, 10kW wind and 200kW battery to study the impact on the grid with diesel as primary. Phase III – To implement a full Mini-grid including 600kW solar, 500kW wind and 750kW battery allowing for diesel-off operation. ----What did we learned? Logistics in remote locations is unpredictable. Shipping BOS materials was another challenge Important to triple check and cross check bills of material. Necessity of working with the situations as they arrive and adapting to a change on the fly. ----How did it start? Most remote community in Ontario. Highest cost of electricity generation due to transport cost of diesel fuel. Planned community growth. Prior – failed – experience with wind energy.
- 16. 16www.canadiansolar.com Mini-Grid Test Centre Mini-grid Control System PV system Wind Turbine Flywheel Battery Storage System Load Banks Diesel Gensets Grid Simulator PV Solar Simulator Wind Simulator Forecasting
- 17. 17Canadian Solar Inc. THANK YOU! November 2016