Aggreko used to be seen as a provider of stopgap or temporary power solutions – now the company is often in it for the long haul, as distributed energy takes off in Africa.
Aggreko has long been a presence in the African market, mainly as a provider of temporary power solutions that help to fill the gap between supply and demand on an increasingly energy-hungry continent. But that role is evolving, as customers seek longer term distributed energy solutions.
The company operates in some 25 countries across Africa, as part of its extensive worldwide presence, and has typically provided thermal power generation, using diesel, gas and other fuels to complement grid power or compensate for its unreliability or complete absence. It is also developing biomass solutions.
Many of these activities on the continent have been carried out in collaboration with national grid providers, filling in gaps in their supply, but that’s changing, according to John Lewis.
“We have done a lot of work with the national power utilities in Africa, because they don’t traditionally have very well developed infrastructure. In the past 10 years or so it’s been a very strong market for us. But that part of our business is flattening out, because, as these economies are
developing, they’re investing in permanent power solutions,” he said.
Aggreko still has a role in this area to meet seasonal demand spikes, emergency requirements, or as a back-up solution.
Crucially, national utilities themselves now see distributed energy, rather than extending the grid, as an intrinsic part of strategies to get power to more remote communities faster.
“A lot of the African utilities are grappling with how they cost-effectively extend electrification out to rural areas and this is a good solution for that problem,” Lewis contends.
Other African markets are providing stronger growth. In particular, industrial sector opportunities are expanding, ranging from small-scale temporary solutions for, say, a shopping centre, to power for a mine, a cement factory, or oil and gas applications at the other end of the scale.
“In some cases, it is because our solution is cheaper than the national utility. That part of our business is growing rapidly, probably 20%-plus this year,” said Lewis.
Mines and oilfields are key markets for the company, given they are often located in remote locations with no prospect of a grid connection. The modular and scalable nature of temporary power plants are also attractive, as mines typically require different amounts of power depending on their stage of development.
Renewables in the mix
Solutions for industrial customers are becoming more sophisticated, and, in some cases, tie thermal generation to renewable energy to provide much cleaner – and cheaper – power than would be possible using thermal alone.
Just how much cheaper the solar-thermal combination is than pure thermal depends on local feedstock costs. “Around 80% of the cost is
the fuel, so it really does depend on the fuel price and tax in the country,” said Lewis.
In Eritrea, the company is building a photovoltaic (PV) and diesel hybrid system to provide micro-grid power at a gold mine.
Under a 10-year rental agreement, the mine will be powered by a 22MW diesel plant and a 7.5MW solar power resource. Aggreko says this combination will reduce fuel costs by more than 10%. There is no upfront cost to the customer, with a power purchase agreement in place for the solar energy.
Using solar power alone for such industrial-scale projects, which often operate on a 24/7 basis, would be impractical at the moment, as the scope of battery storage to provide night-time power remains limited
and its cost high. So thermal power needs to be part of the project.
However, Aggreko is looking at incorporating more battery storage in African projects.
“The batteries only last for half-an-hour to an hour, but they can cover slight degradations in solar activity. If you get some cloud cover, the efficiency of that solar plant will dip and the battery will kick in to cover that requirement. We provide the combined solution and the control systems to manage the transition between the different sources,” said Lewis.
The company is already working on hybrid solutions with battery components elsewhere in the world that are likely to become more regular features in Africa before long.
Aggreko was contracted by mining firm Gold Fields Australia to provide a 22MW gas-fired power station for its operations in Western Australia. Aggreko has added 8MW of solar power and 2MW of battery storage to the mix to reduce the environmental impact and fuel costs without affecting the stability of the local micro-grid.
The solar-plus-battery element of the project, which is currently under construction, is forecast to reduce fuel consumption by 10-13%. Lewis says he’s hopeful that similar solutions will be deployed by the firm in Africa soon.
As the 10-year duration of some of the new African projects indicates, providers of temporary power solutions are now well positioned to participate in the paradigm shift in the way African nations are looking at power provision. Mini- and micro-grids, and off-grid household level power provision, are now being seen more as permanent solutions rather than as stopgaps in the hope that the national grid will soon arrive – a hope that frequently fails to be fulfilled in much of Africa.
Lewis said it makes sense not to build out grids into remote areas, given there are now better ways to provide power there.
“Distributed energy is a global trend that we’re trying to harness,” he said. “Even in Western Europe, you wouldn’t do the same thing again by building grid infrastructure everywhere. It’s no longer the most efficient way of doing it. Certainly, some African countries are never going to achieve it.”
While renewable energy is seen playing as big a role as possible in the electrification of Africa, Lewis believes thermal power will still remain an
important part of the energy mix over the next 10 to 15 years.
“Even in Western economies, which have a heavy share of renewable energy, they can’t yet run without thermal power. We can see thermal diminishing, but bearing in mind the significant growth in demand for power in Africa as well, we just don’t see renewables being able to keep up with that demand and become the only solution,” he said.
The intermittency of hydropower, which forms the backbone of power supply in several African nations, is another reason why thermal generation is likely to remain in demand.
Both seasonal fluctuations and longer term supply problems, such as those caused by drought, require reliable, large-scale backup generation, which thermal generation is best placed to provide at present, according to Lewis.
Thermal power generation should become cleaner as old stocks of diesel generators are replaced by more efficient alternatives, though this is
unlikely to happen overnight.
“It’s like any technology, it incrementally improves. But they’re not cheap bits of kit. People have to spend money on them, and they don’t replace them quickly,” he said.
Harnessing waste gas
In some cases, thermal power generation provides a more environmentally friendly option than the alternative. Some of Africa’s oilfields are among the world’s worst offenders when it comes to flaring unwanted associated gas, injecting methane – a potent greenhouse gas – straight into the atmosphere. Policies are being put in place in major flaring nations such as Nigeria aimed at harnessing that gas for power and other uses,
but putting in the infrastructure is taking time.
One relatively straightforward way to use some of the gas is to provide local power for the oilfields involved. To that end, Aggreko installed 5MW of capacity run on flared gas to power Maurel and Prom’s oilfield operations in Gabon, a solution that could have a growing market if African oil producers take their anti-flaring commitments seriously.
Aggreko has also been diversifying the types of fuel it uses for thermal generation. “We use gas if it’s available because it’s cheaper, but it’s not available everywhere. But heavy fuel oil (HFO) is another one that’s a very cost-effective solution in some countries,” said Lewis.
One of those countries is Madagascar, a user of HFO derived from the country’s heavy oil reserves. Aggreko worked with local fuel supplier Jovena to replace ageing, unreliable diesel generation with a mobile, modular HFO plant that could be installed faster than permanent power generation and thus alleviate the risk of power interruptions.
The HFO plant – a 16-pack modular installation with a 28MW capacity – started operating in Ambohimanambola, central Madagascar, in early 2018. Aggreko also provided fuel and water treatment units, and installed a substation to increase the line voltage from 11kV to 63kV.
“This is quite a new technology for us,” said Lewis. “We only deployed this first one early last year and a second one is just going in. There are a few others that we’re discussing.”
The company’s second HFO-fuelled plant in Africa is in Burkina Faso, where it has just installed a 50MW system to help the country cope with seasonal fluctuations.
One reason that HFO is becoming a popular alternative to diesel is that it’s cheaper in some markets. Using HFO in Madagascar is 20% cheaper than running a diesel plant, according to Aggreko.
HFO is also what fuels the floating power plants provided by Karpowership, the Turkish-owned firm whose ‘plug and play’ rapid-deployment vessels provide power to Gambia, Ghana, Mozambique, Sierra Leone, Sudan and Zambia, as well as Lebanon, Indonesia and Iraq.