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Senegal: Renewable
Energy in Agricultural
Value Chains
Model Business Case: Solar
Photovoltaic Water Pumping for
Small-Scale Irrigation Scheme
with Low Water Demand
INTRODUCTION
This Model Business Case studies the viability of solar
photovoltaic (PV) powered water pumping investments for
irrigation compared to diesel and grid-connected options
in Senegal. The modelling covers water pumping systems
powered by diesel, grid electricity and PV for small-scale1
plot sizes of 0.1, 1 and 5 hectares (ha). This plot size range
represents about 90% of Senegalese farmers cultivating
plots below 5 ha2
and considering horticulture of relatively
low water demand crops such as peanuts, onions and
carrots. It is assumed that these schemes could be imple-
mented at the individual farmer or group level (5 ha), with
the latter applying a shared solar array and pump.
1) A second Model Business Case investigates the feasibility
of solar pumps for large-scale irrigation systems: 50 ha and
250 ha; accessible at www.get-invest.eu
2) Centre for Environmental Economics and Policy in Africa (CEEPA)
research
Globally, the solar irrigation market
has a significant potential for growth.
One recent study predicted a global increase
of installed units from around 120,000 in 2014 to
1.5 million by 2022.3
For Senegal, the accompanying
GET.invest Developer Guide estimated a market opportunity
of over EUR 554
million considering a significant expansion
of the area under irrigation.
The area of land in Senegal with relatively good potential
for irrigation is estimated at 497,500 ha and is concentrated
around the Senegal River in the north, the Niayes area in the
west and the Groundnut Basin in the centre. Until recently,
3) HYSTRA (2017) Reaching scale in energy access: Lessons from
Practitioners, at: www.hystra.com/a2e/ — accessed January
2019
4) Please refer to the accompanying Developer Guide for details;
accessible at www.get-invest.eu
GET.INVEST MARKET INSIGHTS
DEVELOPER GUIDE / MODEL BUSINESS CASE / CASE STUDY
2
GET.INVEST MARKET INSIGHTS — SENEGAL: RENEWABLE ENERGY APPLICATIONS IN AGRICULTURAL VALUE CHAINS
MODEL BUSINESS CASE: SOLAR PHOTOVOLTAIC (PV) WATER PUMPING FOR SMALL-SCALE IRRIGATION SCHEME WITH LOW WATER DEMAND
the total area under irrigation is estimated at 95,400 ha, includ-
ing 26,000 ha for horticulture and about 69,400 ha for cereals
being predominantly rice. The role of irrigation is fundamental
to agricultural production in the country with the FAO/IFC
(2016)5
stating that irrigated small scale (0.2 ha) plots utilising
surface water provide for 90% of the vegetables sold
at local markets.
Currently, for small-holder farmers in Senegal irrigating up to
a 2–3 ha surface area, diesel-powered lower capacity pumps
(<5 kilowatts (kW)) are widely used. Electric-powered pumps, on
the other hand, are generally of a higher capacity (50–90 kW)
and are mostly operating on existing and emerging medium
and large-scale agri-businesses. The daily operating expenditure
(OPEX) including fuel for a diesel pump on the small-scale plots
ranges between EUR 1.55/ha to EUR 2.63/ha. This is over 3 times
higher than the price of grid electricity, though grid access
remains limited with around 40% of rural households connect-
ed.6
Diesel also accounts for approximately one third of pumping
energy requirements of grid-connected farms due to frequent
power blackouts. Diesel systems are often paired with a hose7
,
pumping a large amount of water over a short period of time,
therefore resulting in significant runoff including of fertiliser and
diminishing crop yield and quality.
Within this context, Senegal’s abundant solar energy resource
combined with the falling price of PV panels and emerging
financing schemes may provide attractive conditions for
solar-powered irrigation for some farmers.
TARGET AUDIENCE
—
— Farmers and their associations, who are considering solar
pumping to lower operational costs among other potential
benefits
—
— Project developers and financiers, who may be interested
in an estimated solar-powered irrigation market of over
EUR 55 million and need to understand a potential future
client base
5) FAO/IFC (2016) Senegal Irrigation Market Brief , at: http://www.fao.
org/3/a-i5365e.pdf — accessed January 2019
6) The World Bank (No Date) Access to Electricity, % of Rural Population,
at: https://bit.ly/2QEo0Hk — accessed January 2019
7) More information on the irrigation methods can be found in Annex A
TECHNOLOGY OVERVIEW
Annex A provides more details.
ASSUMPTIONS AND MAIN PARAMETERS
Three pumping alternatives are modelled supplying the three
plot sizes (0.1 ha, 1 ha and 5 ha) with an irrigation need of
between 63–70 m³/ha/day8
. This water need corresponds to
lower demand crops such as peanuts, watermelon, carrots,
crucifers (broccoli, cauliflower, cabbage), onions and lettuce. Two
growing seasons per year, totalling 274 irrigation days between
March and November were assumed9
, with the specific irrigation
needs adjusted per season based on temperature and rainfall.10
Publicly available information about the most common pumps
in the Senegalese market was taken into account including
the specifications and costs. Suitable pumps are selected from
supplier catalogues to satisfy the needs of the estimated flow
rate and head for each of the profiles. A head of 30m is consid-
ered in order to allow for system losses and ensure the necessary
water pressure to run all available irrigation technologies (hose,
sprinkler & drip11
) and support systems containing water storage
tanks.
In order to ensure security of supply, the capacity of the accom-
panying solar PV array is dimensioned with relevance to the
pump. A pump requires a certain power to produce a desired
amount of pressure and flow. Therefore the PV array size has
to be optimised for the required amount of power. A higher
capacity PV system — while it increases the cost — will allow the
pump to start earlier and operate for longer periods during low
insolation conditions.
In general, water demand as well as the required dynamic head
is highly dependent on the local conditions and crops planted.
Even though all assumptions made reflect a typical situation
8) FAO (1986) Irrigation Water Management: Irrigation Water Needs, at:
https://bit.ly/2TFqvea — accessed January 2019
9) While many farmers in Senegal use only one growing season, it is
expected that those with access to (improved) water pumping will
use two growing seasons. The impact of the number of irrigation days
is analysed in the “Sensitivity Analysis” section of this document
10) The climate data for Dakar is applied in this case as an average
representation for the country
11) More information on the listed irrigation methods can be found in
Annex A
3
GET.INVEST MARKET INSIGHTS — SENEGAL: RENEWABLE ENERGY APPLICATIONS IN AGRICULTURAL VALUE CHAINS
MODEL BUSINESS CASE: SOLAR PHOTOVOLTAIC (PV) WATER PUMPING FOR SMALL-SCALE IRRIGATION SCHEME WITH LOW WATER DEMAND
in Senegal, specific local conditions can vary significantly and
therefore influence the calculated results and financial viability.
Table 1 summarises the main system parameters used.
TABLE 1. Main layout parameters
INPUT PARAMETERS VALUES
Plot size (ha) 0.1 1 5
No. irrigation days 274 274 274
Irrigation demand (mÂł/ha/day) 70 70 70
Irrigation demand (mÂł/day) 7 70 350
Pump sizes (kW) 0.07 0.74 3.7
Dynamic head (m) 30 30 30
PV capacity (kWp) 0.9 0.87 4.3
INVESTMENT AND OPERATING COSTS
The capital expenditure (CAPEX) in all cases covers the direct
cost of the pump. For the solar pump, the cost of the solar
array is included. The 0.1 ha plot case is specifically based on a
combined pump and PV panel unit. For electric pumps, the costs
associated with grid connection are not considered, though the
charge for connection to a low voltage line at the 0.1 ha plot is
considered. Import duty is not considered as the equipment is
readily available in Senegal. It is assumed that all three options
have similar costs for installation, logistics, transportation and
civil engineering works, hence these are excluded for comparison
purposes.12
For the operating expenditure (OPEX), solar pumps are subject
to a naturally low operating and maintenance (O&M) costs of
around 2% of CAPEX. Diesel pumps incur higher operating costs
at around 10% of CAPEX, in addition to fuel consumption costs
which specific to this model case range from EUR 1.20/litre (l)
to EUR 1.29/l depending on the system size.13
For electric pumps,
12) Although there are differences in cost, this approach was taken
for simplification. This Model Business Case serves to directly
compare the costs of alternative pumping options (solar, diesel and
grid-connected) for irrigation in Senegal
13) Diesel fuel prices have been adjusted from the national average
(EUR 0.92/l) to account for higher pricing and costs in rural and
remote areas
electricity from the grid is considered an operational cost. The
tariff for “Professional Use”(usage professional) applied by
Senelec14
and determined by the national regulator (CRSE —
Commission de régulation du sect EUR électrique) is utilised for
these calculations with no fixed charge being applicable for all
three plot sizes. The 5 ha plot falls under the medium consumer
category (UD-MP — usage professionel moyenne puissance),
with the small consumer rate (UD-PP — usage professionel
petite puissance) being applicable to the other two plot sizes.
Other tariffs could apply in cases where electricity is provided
by third party actors other than Senelec.
In general, replacement of pumping installations depends on
the reliability of the system and the operating environment
(e.g. water quality, diesel quality, direct exposure to sunlight,
excessive temperature) as well as the level of maintenance
performed. Based on sector knowledge and discussions with
pump suppliers, an estimated project lifetime of 10 years has
been assumed. No equipment replacement costs are foreseen
during the 10 years across the three scenarios.
Table 2 summarises the pumping system CAPEX and OPEX. As
expected, solar pumps require higher upfront investment while
incurring the lowest operating costs. Figure 1 compares the total
solar PV pump CAPEX with the cost per kW, showing the impact
of economies of scale.
TABLE 2. CAPEX and OPEX overview
INPUT PARAMETERS VALUES
Plot size (ha) 0.1 1 5
CAPEX (EUR) Diesel 300 800 1,500
PV 600 3,814 9,504
Grid 442 1,000 1,500
OPEX incl. fuel
(EUR/year)
Diesel 78 544 2,386
PV 12 82 216
Grid 23 169 794
14) Senelec is the national electricity company of Senegal (Société
nationale d'électricité du Sénégal). Please see the accompanying
Developer Guide; accessible at www.get-invest.eu for the Senelec
tariffs
4
GET.INVEST MARKET INSIGHTS — SENEGAL: RENEWABLE ENERGY APPLICATIONS IN AGRICULTURAL VALUE CHAINS
MODEL BUSINESS CASE: SOLAR PHOTOVOLTAIC (PV) WATER PUMPING FOR SMALL-SCALE IRRIGATION SCHEME WITH LOW WATER DEMAND
FIGURE 1. Solar PV pump cost (pump and PV array)
Financing15
scenarios
In this Model Business Case, no grant or concessional funding is
assumed. Please refer to the accompanying Case Studies where a
concessional financing scenario was studied. Table 3 summarises
the financial assumptions used in this Case:
TABLE 3. Financial assumptions
INPUT PARAMETERS VALUES
Plot Size (ha) 0.1 1 5
Debt/equity ratio % 80/20 50/50 50/50
Weighted average
cost of capital (WACC),
pre-tax, real
% 16 15 15
Interest rate, real16
% 15.7 12.5 12.5
15) Please refer to the accompanying Developer Guide; accessible at
www.get-invest.eu for more details on potential financing options
16) Based on average commercial bank nominal rates
INPUT PARAMETERS VALUES
Plot Size (ha) 0.1 1 5
Loan grace period months 6 12 12
Loan repayment
period
years 1.5 3 3
FINANCIAL ANALYSIS
Levelised cost of electricity (LCOE)17
and net present value
(NPV)18
of cost savings
Figure 3 summarises the results of LCOE calculations using the
pre-tax real weighted average cost of capital as the discount
rate. Table 3 summarises the NPV of saved costs of using solar PV
pumps against those powered by diesel and grid electricity, using
the pre-tax real weighted average cost of capital as the discount
rate. It is evident that investing in a solar PV pump is a better
option for the 0.1 ha and 5 ha irrigation scenarios compared
to diesel pump. For the 1 ha plot size, the diesel pump is more
attractive than the solar option despite the close LCOE values.
In reality, whether diesel or solar PV pumping is more attractive
would depend on the individual conditions of each farm and
­
further consideration should be given to the sensitivities
presented in this document.
On the other hand, compared to a grid-connected electric pump,
the cost advantage of solar pumps is less definitive. However, if
power service quality is considered and outages are factored in,
means of backup generation should be considered which might
tilt the cost advantage to the solar PV pump (see the sensitivity
analysis section for more information).
17) LCOE is used here as an indicator to compare the cost of electricity
of different options. LCEO is the ratio of lifetime costs to lifetime
electricity generation, both discounted back to a common year using
an appropriate discount rate
18) NPV is the difference between the present value of the project future
cash flows and initial investment. The present value is the current
worth of a future sum of money or stream of cash flows given an
assumed discount rate representing the investment risk
0.1 ha
CAPEX (EUR) EUR/kW
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
1 ha 5 ha
5
GET.INVEST MARKET INSIGHTS — SENEGAL: RENEWABLE ENERGY APPLICATIONS IN AGRICULTURAL VALUE CHAINS
MODEL BUSINESS CASE: SOLAR PHOTOVOLTAIC (PV) WATER PUMPING FOR SMALL-SCALE IRRIGATION SCHEME WITH LOW WATER DEMAND
FIGURE 2. LCOE (EUR/kWh) per pump alternative at
three plot sizes
TABLE 3. NPV of saved costs of using solar PV vs.
diesel and grid electricity pumps
0.1 ha
PLOT
1 ha
PLOT
5 ha
PLOT
NPV of saved costs
of using Solar PV
pump against:
(EUR)
Diesel pump 70 –346 4529
Grid-
powered
pump
–94 –2313 –4665
Break-even analysis
The break-even analysis of the cumulative total discounted
expenses (CAPEX and OPEX) is presented to illustrate the relative
economic feasibility of each scenario. Figure 3 summarises the
results. It is evident that PV pumps become more attractive
than diesel pumps within seven and five years respectively for
installations on 0.1 and 5 ha plot scenarios. For the 1 ha plot size
scenario, break-even of the solar pump is not reached across the
ten-year timeframe as modelled.
In general it can be observed, that solar irrigation pumps are
attractive due to the high fuel cost associated with the diesel
option. This is not the case for the 1 ha scenario which can be
explained by a relatively significant increase in initial investment
costs for the pump at this plot size. This is due the size of the
pump required to ensure supply of the water volume according
to the pumps available on the market. The net savings of the
solar PV system against the diesel option are further presented
as charts in Annex B.
FIGURE 3. Break-even of different pump alternatives
across the three plot sizes
0,0
0,5
1,0
1,5
2,0
1.77
1.60
1.38
0.92
1.00
0.46
0.71
0.50
0.28
Diesel Solar PV Grid
0.1 ha 1 ha 5 ha
800
750
700
650
600
550
500
450
400
350
300
1 2 3 4 5 6 7 8 9 10
Year
0.1 ha plot
1 ha plot
EUR
Diesel pump Solar PV pump Grid pump
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
1 2 3 4 5 6 7 8 9
Year
EUR
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
EUR
Diesel pump Solar PV pump Grid pump
10
800
750
700
650
600
550
500
450
400
350
300
1 2 3 4 5 6 7 8 9 10
Year
0.1 ha plot
1 ha plot
EUR
Diesel pump Solar PV pump Grid pump
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
1 2 3 4 5 6 7 8 9
Year
EUR
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
EUR
Diesel pump Solar PV pump Grid pump
10
6
GET.INVEST MARKET INSIGHTS — SENEGAL: RENEWABLE ENERGY APPLICATIONS IN AGRICULTURAL VALUE CHAINS
MODEL BUSINESS CASE: SOLAR PHOTOVOLTAIC (PV) WATER PUMPING FOR SMALL-SCALE IRRIGATION SCHEME WITH LOW WATER DEMAND
SENSITIVITY ANALYSIS
A sensitivity analysis was performed on two variables to test
the impact on the economic performance of the water pump
investment. The variables are:
—
— The number of growing seasons
—
— The price of solar PV module
Variable 1 — Effect of number of growing seasons on the
LCOE of the PV pump
The number of growing seasons (1 to 3)19
can significantly
impact the economic performance of solar irrigation pumps.
Electricity use and diesel fuel consumption increase with more
growing seasons, thus increasing the potential savings associ-
ated with solar PV pumps, and vice versa.
Figure 4 displays the solar irrigation pump LCOE for different
growing seasons scenarios with the previously reported LCOE
figures marked in green. It is clear that the solar option becomes
less economically attractive with shorter growing periods.
19) The scenarios are based on a tripartite growing year, whereby:
Season 1 (Dry and Hot — Contre-saison chaude), runs from March to
June, Season 2 (Wet — Hivernage) runs from July to November and
Season 3 (Dry and Cold — Contre-saison froide) runs from December to
February
FIGURE 4. LCOE of PV pumps with varying number of
growing seasons (Season 2/Season 1/Season 3)
LCOE (EUR/kWh)
0 1 2 3 4 5 6
4.98
3.02
3.42
1.88
2.03
1.60
1.21
0/0/1
0/1/0
1/0/0
0/1/1
1/0/1
1/1/0
1/1/1
Seasonal
use
case
Micro-scale irrigation (0.1 ha)
LCOE (EUR/kWh)
3.20
1.88
2.05
1.21
1.30
1.00
0.78
0/0/1
0/1/0
1/0/0
0/1/1
1/0/1
1/1/0
1/1/1
Seasonal
use
case
Small-scale irrigation (1 ha)
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5
0/0/1
0/1/0
1/0/0
0/1/1
1/0/1
1/1/0
1/1/1
Seasonal
use
case
0
LCOE (EUR/kWh)
0 1 2 3 4 5 6
4.98
3.02
3.42
1.88
2.03
1.60
1.21
0/0/1
0/1/0
1/0/0
0/1/1
1/0/1
1/1/0
1/1/1
Seasonal
use
case Micro-scale irrigation (0.1 ha)
LCOE (EUR/kWh)
3.20
1.88
2.05
1.21
1.30
1.00
0.78
0/0/1
0/1/0
1/0/0
0/1/1
1/0/1
1/1/0
1/1/1
Seasonal
use
case
Small-scale irrigation (1 ha)
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5
0/0/1
0/1/0
1/0/0
0/1/1
1/0/1
1/1/0
1/1/1
Seasonal
use
case
0
9 10
Grid pump
9
5 ha plot
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
1 2 3 4 5 6 7 8 9
Year
EUR
Grid pump Diesel pump Solar PV pump Grid pump
10 10
LCOE (EUR/kWh)
0 1 2 3 4 5 6
4.98
3.02
3.42
1.88
2.03
1.60
1.21
0/0/1
0/1/0
1/0/0
0/1/1
1/0/1
1/1/0
1/1/1
Seasonal
use
case
Micro-scale irrigation (0.1 ha)
EUR/kWh
1.64
0.94
1.00
0.62
0.67
0.50
0.40
0/0/1
0/1/0
1/0/0
0/1/1
1/0/1
1/1/0
1/1/1
Seasonal
use
case
Small-scale group irrigation scheme (5 ha)
0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8
7
GET.INVEST MARKET INSIGHTS — SENEGAL: RENEWABLE ENERGY APPLICATIONS IN AGRICULTURAL VALUE CHAINS
MODEL BUSINESS CASE: SOLAR PHOTOVOLTAIC (PV) WATER PUMPING FOR SMALL-SCALE IRRIGATION SCHEME WITH LOW WATER DEMAND
In order to gain a deeper appreciation for the significance of this
variable it is useful to highlight the impact of irrigation needs
across seasons and locations within the country. Considering the
same plot under cultivation in the southern city of Ziguinchor,
water needs per hectare decrease from an average of 63m3
/ha/
day to 55m3
/ha/day during the wet season (July to November).
Variable 2 — Effect of PV module price on LCOE of solar
pumps compared to diesel and grid-connected pumps
The costs associated with utilising a solar pump are directly
correlated with the upfront expenditure required to procure the
solar array. Despite global trends of declining solar PV costs, the
price of the panels secured by an individual investment could be
a critical variable. Therefore, the effect of the PV module price
on the solar pump LCOE has been tested through a sensitivity
analysis, with the results displayed against the fixed diesel and
grid-connected pump LCOE in Figure 5.
It can be seen that for the 1 ha case, a 30% reduction of PV panel
price against a static diesel LCOE results in a positive case. On the
0.1 ha plot20
, a less than 20% decrease in the PV pumping unit
price results in the solar option becoming attractive against the
grid-connected alternative. This is considering a static tariff and no
requirement for a back-up generator in the event of grid downtime.
FIGURE 5. Sensitivity of LCOE of solar PV pumps
based on the price of PV modules (EUR/W) compared
to the static LCOE of diesel and grid connected
pumps
20) The 0.1 ha scenario is based on a combined pump and PV panel unit
where the PV modules are not priced separately. Therefore, the
sensitivity test was performed on the pump unit cost
A note on backup diesel generation
In many cases, plot owners should consider the impact of backup
diesel generator due to grid downtime. In a case where grid
downtime is considered, the 5 ha plot grid-powered pump LCOE
increases from EUR 0.28/kWh to EUR 0.34/kWh (15% downtime)
and to EUR 0.43/kWh (30% downtime). This is compared to an
LCOE of EUR 0.50/kWh for the solar PV pump. The difference
between the solar PV and grid pump LCOE narrows even further
if costs for a new grid connection are considered.
2.5
2.0
1.5
1.0
0.5
0
Price of solar PV pump (EUR)
Micro-scale irrigation (0.1 ha)
LCOE
(EUR/kWh)
1.4
1.2
1.0
/kWh)
0.9
0.8
0.7
0.6
0.5
(EUR/kWh)
7
5
0
7
0
0
6
5
0
6
0
0
5
5
0
5
0
0
4
5
0
4
0
0
3
5
0
3
0
0
2
5
0
0.5
0
Price of solar PV pump (EUR)
Micro-scale irrigation (0.1 ha)
L
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0
Price of solar PV modules (EUR/W)
Small-scale irrigation (1 ha)
LCOE
(EUR/kWh)
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
LCOE
(EUR/kWh)
2.5 2.0 1.5 1.0 0.5
7
5
0
7
0
0
6
5
0
6
0
0
5
5
0
5
0
0
4
5
0
4
0
0
3
5
0
3
0
0
2
5
0
2.5
2.0
1.5
1.0
0.5
0
Price of solar PV pump (EUR)
Micro-scale irrigation (0.1 ha)
LCOE
(EUR/kWh)
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0
Price of solar PV modules (EUR/W)
Small-scale irrigation (1 ha)
LCOE
(EUR/kWh)
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
Price of solar PV modules (EUR/W)
Small-scale group irrigation scheme (5 ha)
LCOE
(EUR/kWh)
LCOE-Solar
LCOE-diesel
LCOE Grid electicity
Modelled pricing point
2.5 2.0 1.5 1.0 0.5 2.5 2.0 1.5 1.0 0.5
7
5
0
7
0
0
6
5
0
6
0
0
5
5
0
5
0
0
4
5
0
4
0
0
3
5
0
3
0
0
2
5
0
8
GET.INVEST MARKET INSIGHTS — SENEGAL: RENEWABLE ENERGY APPLICATIONS IN AGRICULTURAL VALUE CHAINS
MODEL BUSINESS CASE: SOLAR PHOTOVOLTAIC (PV) WATER PUMPING FOR SMALL-SCALE IRRIGATION SCHEME WITH LOW WATER DEMAND
KEY TAKEAWAYS
—
— An individual decision to invest in a solar powered irrigation
system is unique to each case. Careful consideration should
be given to critical factors such as water demands and
dynamic head requirements with regards to local conditions
and the crops planted. Further attention should be given
to the impact of the irrigation on future yields including
the potential for additional harvests and the method of
financing for the upfront investment.
—
— The upfront cost for solar irrigation pumps remain a
significant investment decision given the average farming
household income levels in Senegal. For the three plot sizes
modelled in this case, the approximate CAPEX requirements
covering the pump and solar array are EUR 600 (0.1ha),
EUR 3,800 (1ha) and EUR 9,500 (5ha).
—
— Investment in solar PV pumping technology can be
attractive when considering the discounted net savings
compared to diesel pumps across a ten-year timeframe on
plot sizes of 0.1ha — EUR 70 and 5 ha — EUR 4,529. This
is due to the solar pump low OPEX compared to the high
fuel costs associated with the diesel option. Break-even
analysis of the cumulative total discounted expenses (CAPEX
and OPEX) further supports this with PV pumps becoming
attractive within seven (0.1ha) and five (5ha) year time-
frames.
—
— The sensitivity analysis demonstrates the role of critical
parameters on the viability of different pumping alternatives:
a) The number of growing seasons (1 to 3) can signifi-
cantly impact the economic feasibility of solar irrigation
pumps. The PV pumps become more attractive with an
increase in growing seasons and therefore the utili-
sation rate. This is linked to the water needs for which
factors such as the crop and geographical location
(rainfall and temperature) are important;
b) A drop in solar panel prices by 30% makes solar
pumping attractive compared to a static LCOE for diesel
pumps on a 1 ha plot;
c) This trend applies for grid-connected pumps, where a
panel price decrease of 17% against current market rates
generates a positive outlook for solar on a 0.1 ha plot;
For grid-connected pumps, in general terms, electricity network
downtime and requirement for a backup diesel fuelled option
already swings the situation in favour of solar. For example, the
LCOE for a grid-connected pump on a 5 ha plot increases from
EUR 28/kWh to EUR 0.43/kWh considering 30% downtime
compared to EUR 0.50/kWh for the equivalent solar PV pump.
ANNEX A
Technology overview
Solar-powered irrigation is based on PV technology that converts
solar energy into electrical energy to run a Direct Current (DC) or
Alternating Current (AC) motor based pump. The technology is
similar to any other conventional water pumping system except
that the power source is solar energy.
A typical solar water-pumping unit (Figure 6) includes three main
components: the PV panels, the solar pump and the controller.
In addition, selected systems include storage facilities being
physical water storage methods (e.g. overhead tanks) and/or
energy storage i.e. batteries. However, due to their relatively
high cost, batteries are rarely used for storage compared to
their alternatives, i.e. overhead tanks, small irrigation dams or
canalisation systems (used for channelling water for example in
rice paddies).
Additional system components include the mounting structure,
wiring, piping and float switch. Often a lockable security
structure is used to house critical equipment, including for
example the pump and control panel, to protect against the risk
of vandalism and theft.
9
GET.INVEST MARKET INSIGHTS — SENEGAL: RENEWABLE ENERGY APPLICATIONS IN AGRICULTURAL VALUE CHAINS
MODEL BUSINESS CASE: SOLAR PHOTOVOLTAIC (PV) WATER PUMPING FOR SMALL-SCALE IRRIGATION SCHEME WITH LOW WATER DEMAND
FIGURE 6. Schematic diagram of a PV surface pump21
Solar water pumps are classified into three types according to
their applications: submersible, surface and floating. A sub-
mersible pump draws water from deep wells, a surface pump
from shallow wells, springs, ponds, rivers or tanks, and a floating
pump from reservoirs being adjustable to the water height.
For utilising the pumped water three irrigation methods are
commonly applied: hose, sprinkler and drip.
The reason for irrigating is to provide water to crops in the field
with the aim of increasing yields. In this regard, hose irrigation
is inefficient in that only a limited amount of the water spread
onto the field is available to the growing crops. In comparison,
sprinkler irrigation has a higher efficiency, whilst of the three
drip irrigation is considered the most efficient. In water con-
sumption terms if the irrigation methods are directly compared
against the same outcome, with drip irrigation set at 100%,
sprinkling would require 133% and use of a hose 250%. The latter
figure indicating why hose systems are commonly paired with
the diesel driven pumps that allow for a high flow over a short
period of time.
21) Unknown creator, “Solar Water Pumping System”. Not licensed. Link:
https://greenlifesolution.in/solar-photovoltaics/solar-water-pumping-
system/ — accessed April 2019
ANNEX B
FIGURE 7. Net savings based on discounted costs of
Solar PV versus Diesel irrigation pumps
600
400
200
0
(200)
(400)
(600)
(800)
2,000
1,000
0
(1,000)
(2,000)
(3,000)
(4,000)
(5,000)
Micro-scale irrigation (0.1 ha)
EUR
Investment cost Saved cost — Diesel Net
EUR
Small-scale irrigation (1 ha)
Investment cost Saved cost — Diesel Net
6,000
4,000
2,000
0
(2,000)
(4,000)
(6,000)
(8,000)
(10,000)
EUR
1 2 3 4 5 6 7 8 9 10
1 2 3 4 5 6 7 8 9 10
600
400
200
0
(200)
(400)
(600)
(800)
2,000
1,000
0
(1,000)
(2,000)
(3,000)
(4,000)
(5,000)
Micro-scale irrigation (0.1 ha)
EUR
Investment cost Saved cost — Diesel Net
EUR
Small-scale irrigation (1 ha)
Investment cost Saved cost — Diesel Net
6,000
4,000
2,000
0
(2,000)
(4,000)
(6,000)
(8,000)
(10,000)
EUR
1 2 3 4 5 6 7 8 9 10
1 2 3 4 5 6 7 8 9 10
600
400
200
0
(200)
(400)
(600)
(800)
2,000
1,000
0
(1,000)
(2,000)
(3,000)
(4,000)
(5,000)
Micro-scale irrigation (0.1 ha)
EUR
Investment cost Saved cost — Diesel Net
EUR
Small-scale irrigation (1 ha)
Investment cost Saved cost — Diesel Net
Small-scale group irrigation scheme (5 ha)
Investment cost Saved cost — Diesel Net
6,000
4,000
2,000
0
(2,000)
(4,000)
(6,000)
(8,000)
(10,000)
EUR
1 2 3 4 5 6 7 8 9 10
1 2 3 4 5 6 7 8 9 10
1 2 3 4 5 6 7 8 9 10
ABOUT GET.INVEST MARKET INSIGHTS
The first series of GET.invest Market Insights are published
in early 2019 covering four renewable energy market
segments in three countries, namely: renewable energy
applications in the agricultural value-chain (Senegal),
captive power (behind the meter) generation (Uganda),
mini-grids (Zambia) and stand-alone solar systems (Zambia).
Each Market Insight package includes a) a ‘how to’Devel-
oper Guide, b) Model Business Cases and c) Case Studies.
The Developer Guide enables the reader to navigate the
market and its actors, to understand the current regulatory
framework and lays down the step-by-step process of
starting a new project/business. The Model Business Case
analyses project economics and presents hypothetical, yet
realistic, investment scenarios. It hence indicates the criteria
for a viable project/business to enable the reader to identify
the most cost-effective project/business opportunities.
The Case Study analyses the viability of operational or high-­
potential projects/businesses to highlight lessons learnt and
industry trends.
GET.invest Market Insights therefore summarise a con-
siderable amount of data that may inform early market
exploration and pre-­
feasibility studies. It is recommended
to cross-read all three products to gain a comprehensive
overview. The products are accessible at www.get-invest.eu.
ABOUT GET.INVEST
GET.invest is a European programme which supports
investment in decentralised renewable energy projects.
The programme targets private sector business and project
developers, financiers and regulators to build sustainable
energy markets.
Services include project and business development support,
information and matchmaking, and assistance in imple-
menting regulatory processes. They are delivered globally
and across different market segments.
GET.invest is supported by the European Union, Germany,
Sweden, the Netherlands, and Austria, and works closely
with initiatives and industry associations in the energy
sector.
GET IN TOUCH
We welcome your feedback on the Market Insights by
sharing any questions or comments via email at
info@get-invest.eu.
CONTACT
GET.invest
E info@get-invest.eu
I www.get-invest.eu
Place and date: Brussels, June 2019
Photo credits: ©GIZ, except where otherwise
indicated
DISCL AIMER
The information in this document is derived from carefully selected
sources and interviews. However, GET.invest does not guarantee its
accuracy or completeness and liability claims through the use of incorrect
or incomplete information are excluded. This document does not
necessarily represent the views of GET.invest or the countries mentioned.
GET.invest does not endorse or recommend any commercial products,
processes, or services mentioned in this document. This document is
not intended to replace primary project and business studies. A detailed
analysis for a specific project or business needs to be conducted before any
investment decision.

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GETinvest-Market-Insights_SEN_PV_MBC-Small-scale_2019.pdf

  • 1. GET.invest is supported by Senegal: Renewable Energy in Agricultural Value Chains Model Business Case: Solar Photovoltaic Water Pumping for Small-Scale Irrigation Scheme with Low Water Demand INTRODUCTION This Model Business Case studies the viability of solar photovoltaic (PV) powered water pumping investments for irrigation compared to diesel and grid-connected options in Senegal. The modelling covers water pumping systems powered by diesel, grid electricity and PV for small-scale1 plot sizes of 0.1, 1 and 5 hectares (ha). This plot size range represents about 90% of Senegalese farmers cultivating plots below 5 ha2 and considering horticulture of relatively low water demand crops such as peanuts, onions and carrots. It is assumed that these schemes could be imple- mented at the individual farmer or group level (5 ha), with the latter applying a shared solar array and pump. 1) A second Model Business Case investigates the feasibility of solar pumps for large-scale irrigation systems: 50 ha and 250 ha; accessible at www.get-invest.eu 2) Centre for Environmental Economics and Policy in Africa (CEEPA) research Globally, the solar irrigation market has a significant potential for growth. One recent study predicted a global increase of installed units from around 120,000 in 2014 to 1.5 million by 2022.3 For Senegal, the accompanying GET.invest Developer Guide estimated a market opportunity of over EUR 554 million considering a significant expansion of the area under irrigation. The area of land in Senegal with relatively good potential for irrigation is estimated at 497,500 ha and is concentrated around the Senegal River in the north, the Niayes area in the west and the Groundnut Basin in the centre. Until recently, 3) HYSTRA (2017) Reaching scale in energy access: Lessons from Practitioners, at: www.hystra.com/a2e/ — accessed January 2019 4) Please refer to the accompanying Developer Guide for details; accessible at www.get-invest.eu GET.INVEST MARKET INSIGHTS DEVELOPER GUIDE / MODEL BUSINESS CASE / CASE STUDY
  • 2. 2 GET.INVEST MARKET INSIGHTS — SENEGAL: RENEWABLE ENERGY APPLICATIONS IN AGRICULTURAL VALUE CHAINS MODEL BUSINESS CASE: SOLAR PHOTOVOLTAIC (PV) WATER PUMPING FOR SMALL-SCALE IRRIGATION SCHEME WITH LOW WATER DEMAND the total area under irrigation is estimated at 95,400 ha, includ- ing 26,000 ha for horticulture and about 69,400 ha for cereals being predominantly rice. The role of irrigation is fundamental to agricultural production in the country with the FAO/IFC (2016)5 stating that irrigated small scale (0.2 ha) plots utilising surface water provide for 90% of the vegetables sold at local markets. Currently, for small-holder farmers in Senegal irrigating up to a 2–3 ha surface area, diesel-powered lower capacity pumps (<5 kilowatts (kW)) are widely used. Electric-powered pumps, on the other hand, are generally of a higher capacity (50–90 kW) and are mostly operating on existing and emerging medium and large-scale agri-businesses. The daily operating expenditure (OPEX) including fuel for a diesel pump on the small-scale plots ranges between EUR 1.55/ha to EUR 2.63/ha. This is over 3 times higher than the price of grid electricity, though grid access remains limited with around 40% of rural households connect- ed.6 Diesel also accounts for approximately one third of pumping energy requirements of grid-connected farms due to frequent power blackouts. Diesel systems are often paired with a hose7 , pumping a large amount of water over a short period of time, therefore resulting in significant runoff including of fertiliser and diminishing crop yield and quality. Within this context, Senegal’s abundant solar energy resource combined with the falling price of PV panels and emerging financing schemes may provide attractive conditions for solar-powered irrigation for some farmers. TARGET AUDIENCE — — Farmers and their associations, who are considering solar pumping to lower operational costs among other potential benefits — — Project developers and financiers, who may be interested in an estimated solar-powered irrigation market of over EUR 55 million and need to understand a potential future client base 5) FAO/IFC (2016) Senegal Irrigation Market Brief , at: http://www.fao. org/3/a-i5365e.pdf — accessed January 2019 6) The World Bank (No Date) Access to Electricity, % of Rural Population, at: https://bit.ly/2QEo0Hk — accessed January 2019 7) More information on the irrigation methods can be found in Annex A TECHNOLOGY OVERVIEW Annex A provides more details. ASSUMPTIONS AND MAIN PARAMETERS Three pumping alternatives are modelled supplying the three plot sizes (0.1 ha, 1 ha and 5 ha) with an irrigation need of between 63–70 mÂł/ha/day8 . This water need corresponds to lower demand crops such as peanuts, watermelon, carrots, crucifers (broccoli, cauliflower, cabbage), onions and lettuce. Two growing seasons per year, totalling 274 irrigation days between March and November were assumed9 , with the specific irrigation needs adjusted per season based on temperature and rainfall.10 Publicly available information about the most common pumps in the Senegalese market was taken into account including the specifications and costs. Suitable pumps are selected from supplier catalogues to satisfy the needs of the estimated flow rate and head for each of the profiles. A head of 30m is consid- ered in order to allow for system losses and ensure the necessary water pressure to run all available irrigation technologies (hose, sprinkler & drip11 ) and support systems containing water storage tanks. In order to ensure security of supply, the capacity of the accom- panying solar PV array is dimensioned with relevance to the pump. A pump requires a certain power to produce a desired amount of pressure and flow. Therefore the PV array size has to be optimised for the required amount of power. A higher capacity PV system — while it increases the cost — will allow the pump to start earlier and operate for longer periods during low insolation conditions. In general, water demand as well as the required dynamic head is highly dependent on the local conditions and crops planted. Even though all assumptions made reflect a typical situation 8) FAO (1986) Irrigation Water Management: Irrigation Water Needs, at: https://bit.ly/2TFqvea — accessed January 2019 9) While many farmers in Senegal use only one growing season, it is expected that those with access to (improved) water pumping will use two growing seasons. The impact of the number of irrigation days is analysed in the “Sensitivity Analysis” section of this document 10) The climate data for Dakar is applied in this case as an average representation for the country 11) More information on the listed irrigation methods can be found in Annex A
  • 3. 3 GET.INVEST MARKET INSIGHTS — SENEGAL: RENEWABLE ENERGY APPLICATIONS IN AGRICULTURAL VALUE CHAINS MODEL BUSINESS CASE: SOLAR PHOTOVOLTAIC (PV) WATER PUMPING FOR SMALL-SCALE IRRIGATION SCHEME WITH LOW WATER DEMAND in Senegal, specific local conditions can vary significantly and therefore influence the calculated results and financial viability. Table 1 summarises the main system parameters used. TABLE 1. Main layout parameters INPUT PARAMETERS VALUES Plot size (ha) 0.1 1 5 No. irrigation days 274 274 274 Irrigation demand (mÂł/ha/day) 70 70 70 Irrigation demand (mÂł/day) 7 70 350 Pump sizes (kW) 0.07 0.74 3.7 Dynamic head (m) 30 30 30 PV capacity (kWp) 0.9 0.87 4.3 INVESTMENT AND OPERATING COSTS The capital expenditure (CAPEX) in all cases covers the direct cost of the pump. For the solar pump, the cost of the solar array is included. The 0.1 ha plot case is specifically based on a combined pump and PV panel unit. For electric pumps, the costs associated with grid connection are not considered, though the charge for connection to a low voltage line at the 0.1 ha plot is considered. Import duty is not considered as the equipment is readily available in Senegal. It is assumed that all three options have similar costs for installation, logistics, transportation and civil engineering works, hence these are excluded for comparison purposes.12 For the operating expenditure (OPEX), solar pumps are subject to a naturally low operating and maintenance (O&M) costs of around 2% of CAPEX. Diesel pumps incur higher operating costs at around 10% of CAPEX, in addition to fuel consumption costs which specific to this model case range from EUR 1.20/litre (l) to EUR 1.29/l depending on the system size.13 For electric pumps, 12) Although there are differences in cost, this approach was taken for simplification. This Model Business Case serves to directly compare the costs of alternative pumping options (solar, diesel and grid-connected) for irrigation in Senegal 13) Diesel fuel prices have been adjusted from the national average (EUR 0.92/l) to account for higher pricing and costs in rural and remote areas electricity from the grid is considered an operational cost. The tariff for “Professional Use”(usage professional) applied by Senelec14 and determined by the national regulator (CRSE — Commission de rĂ©gulation du sect EUR Ă©lectrique) is utilised for these calculations with no fixed charge being applicable for all three plot sizes. The 5 ha plot falls under the medium consumer category (UD-MP — usage professionel moyenne puissance), with the small consumer rate (UD-PP — usage professionel petite puissance) being applicable to the other two plot sizes. Other tariffs could apply in cases where electricity is provided by third party actors other than Senelec. In general, replacement of pumping installations depends on the reliability of the system and the operating environment (e.g. water quality, diesel quality, direct exposure to sunlight, excessive temperature) as well as the level of maintenance performed. Based on sector knowledge and discussions with pump suppliers, an estimated project lifetime of 10 years has been assumed. No equipment replacement costs are foreseen during the 10 years across the three scenarios. Table 2 summarises the pumping system CAPEX and OPEX. As expected, solar pumps require higher upfront investment while incurring the lowest operating costs. Figure 1 compares the total solar PV pump CAPEX with the cost per kW, showing the impact of economies of scale. TABLE 2. CAPEX and OPEX overview INPUT PARAMETERS VALUES Plot size (ha) 0.1 1 5 CAPEX (EUR) Diesel 300 800 1,500 PV 600 3,814 9,504 Grid 442 1,000 1,500 OPEX incl. fuel (EUR/year) Diesel 78 544 2,386 PV 12 82 216 Grid 23 169 794 14) Senelec is the national electricity company of Senegal (SociĂ©tĂ© nationale d'Ă©lectricitĂ© du SĂ©nĂ©gal). Please see the accompanying Developer Guide; accessible at www.get-invest.eu for the Senelec tariffs
  • 4. 4 GET.INVEST MARKET INSIGHTS — SENEGAL: RENEWABLE ENERGY APPLICATIONS IN AGRICULTURAL VALUE CHAINS MODEL BUSINESS CASE: SOLAR PHOTOVOLTAIC (PV) WATER PUMPING FOR SMALL-SCALE IRRIGATION SCHEME WITH LOW WATER DEMAND FIGURE 1. Solar PV pump cost (pump and PV array) Financing15 scenarios In this Model Business Case, no grant or concessional funding is assumed. Please refer to the accompanying Case Studies where a concessional financing scenario was studied. Table 3 summarises the financial assumptions used in this Case: TABLE 3. Financial assumptions INPUT PARAMETERS VALUES Plot Size (ha) 0.1 1 5 Debt/equity ratio % 80/20 50/50 50/50 Weighted average cost of capital (WACC), pre-tax, real % 16 15 15 Interest rate, real16 % 15.7 12.5 12.5 15) Please refer to the accompanying Developer Guide; accessible at www.get-invest.eu for more details on potential financing options 16) Based on average commercial bank nominal rates INPUT PARAMETERS VALUES Plot Size (ha) 0.1 1 5 Loan grace period months 6 12 12 Loan repayment period years 1.5 3 3 FINANCIAL ANALYSIS Levelised cost of electricity (LCOE)17 and net present value (NPV)18 of cost savings Figure 3 summarises the results of LCOE calculations using the pre-tax real weighted average cost of capital as the discount rate. Table 3 summarises the NPV of saved costs of using solar PV pumps against those powered by diesel and grid electricity, using the pre-tax real weighted average cost of capital as the discount rate. It is evident that investing in a solar PV pump is a better option for the 0.1 ha and 5 ha irrigation scenarios compared to diesel pump. For the 1 ha plot size, the diesel pump is more attractive than the solar option despite the close LCOE values. In reality, whether diesel or solar PV pumping is more attractive would depend on the individual conditions of each farm and ­ further consideration should be given to the sensitivities presented in this document. On the other hand, compared to a grid-connected electric pump, the cost advantage of solar pumps is less definitive. However, if power service quality is considered and outages are factored in, means of backup generation should be considered which might tilt the cost advantage to the solar PV pump (see the sensitivity analysis section for more information). 17) LCOE is used here as an indicator to compare the cost of electricity of different options. LCEO is the ratio of lifetime costs to lifetime electricity generation, both discounted back to a common year using an appropriate discount rate 18) NPV is the difference between the present value of the project future cash flows and initial investment. The present value is the current worth of a future sum of money or stream of cash flows given an assumed discount rate representing the investment risk 0.1 ha CAPEX (EUR) EUR/kW 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 1 ha 5 ha
  • 5. 5 GET.INVEST MARKET INSIGHTS — SENEGAL: RENEWABLE ENERGY APPLICATIONS IN AGRICULTURAL VALUE CHAINS MODEL BUSINESS CASE: SOLAR PHOTOVOLTAIC (PV) WATER PUMPING FOR SMALL-SCALE IRRIGATION SCHEME WITH LOW WATER DEMAND FIGURE 2. LCOE (EUR/kWh) per pump alternative at three plot sizes TABLE 3. NPV of saved costs of using solar PV vs. diesel and grid electricity pumps 0.1 ha PLOT 1 ha PLOT 5 ha PLOT NPV of saved costs of using Solar PV pump against: (EUR) Diesel pump 70 –346 4529 Grid- powered pump –94 –2313 –4665 Break-even analysis The break-even analysis of the cumulative total discounted expenses (CAPEX and OPEX) is presented to illustrate the relative economic feasibility of each scenario. Figure 3 summarises the results. It is evident that PV pumps become more attractive than diesel pumps within seven and five years respectively for installations on 0.1 and 5 ha plot scenarios. For the 1 ha plot size scenario, break-even of the solar pump is not reached across the ten-year timeframe as modelled. In general it can be observed, that solar irrigation pumps are attractive due to the high fuel cost associated with the diesel option. This is not the case for the 1 ha scenario which can be explained by a relatively significant increase in initial investment costs for the pump at this plot size. This is due the size of the pump required to ensure supply of the water volume according to the pumps available on the market. The net savings of the solar PV system against the diesel option are further presented as charts in Annex B. FIGURE 3. Break-even of different pump alternatives across the three plot sizes 0,0 0,5 1,0 1,5 2,0 1.77 1.60 1.38 0.92 1.00 0.46 0.71 0.50 0.28 Diesel Solar PV Grid 0.1 ha 1 ha 5 ha 800 750 700 650 600 550 500 450 400 350 300 1 2 3 4 5 6 7 8 9 10 Year 0.1 ha plot 1 ha plot EUR Diesel pump Solar PV pump Grid pump 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 1 2 3 4 5 6 7 8 9 Year EUR 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 EUR Diesel pump Solar PV pump Grid pump 10 800 750 700 650 600 550 500 450 400 350 300 1 2 3 4 5 6 7 8 9 10 Year 0.1 ha plot 1 ha plot EUR Diesel pump Solar PV pump Grid pump 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 1 2 3 4 5 6 7 8 9 Year EUR 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 EUR Diesel pump Solar PV pump Grid pump 10
  • 6. 6 GET.INVEST MARKET INSIGHTS — SENEGAL: RENEWABLE ENERGY APPLICATIONS IN AGRICULTURAL VALUE CHAINS MODEL BUSINESS CASE: SOLAR PHOTOVOLTAIC (PV) WATER PUMPING FOR SMALL-SCALE IRRIGATION SCHEME WITH LOW WATER DEMAND SENSITIVITY ANALYSIS A sensitivity analysis was performed on two variables to test the impact on the economic performance of the water pump investment. The variables are: — — The number of growing seasons — — The price of solar PV module Variable 1 — Effect of number of growing seasons on the LCOE of the PV pump The number of growing seasons (1 to 3)19 can significantly impact the economic performance of solar irrigation pumps. Electricity use and diesel fuel consumption increase with more growing seasons, thus increasing the potential savings associ- ated with solar PV pumps, and vice versa. Figure 4 displays the solar irrigation pump LCOE for different growing seasons scenarios with the previously reported LCOE figures marked in green. It is clear that the solar option becomes less economically attractive with shorter growing periods. 19) The scenarios are based on a tripartite growing year, whereby: Season 1 (Dry and Hot — Contre-saison chaude), runs from March to June, Season 2 (Wet — Hivernage) runs from July to November and Season 3 (Dry and Cold — Contre-saison froide) runs from December to February FIGURE 4. LCOE of PV pumps with varying number of growing seasons (Season 2/Season 1/Season 3) LCOE (EUR/kWh) 0 1 2 3 4 5 6 4.98 3.02 3.42 1.88 2.03 1.60 1.21 0/0/1 0/1/0 1/0/0 0/1/1 1/0/1 1/1/0 1/1/1 Seasonal use case Micro-scale irrigation (0.1 ha) LCOE (EUR/kWh) 3.20 1.88 2.05 1.21 1.30 1.00 0.78 0/0/1 0/1/0 1/0/0 0/1/1 1/0/1 1/1/0 1/1/1 Seasonal use case Small-scale irrigation (1 ha) 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 0/0/1 0/1/0 1/0/0 0/1/1 1/0/1 1/1/0 1/1/1 Seasonal use case 0 LCOE (EUR/kWh) 0 1 2 3 4 5 6 4.98 3.02 3.42 1.88 2.03 1.60 1.21 0/0/1 0/1/0 1/0/0 0/1/1 1/0/1 1/1/0 1/1/1 Seasonal use case Micro-scale irrigation (0.1 ha) LCOE (EUR/kWh) 3.20 1.88 2.05 1.21 1.30 1.00 0.78 0/0/1 0/1/0 1/0/0 0/1/1 1/0/1 1/1/0 1/1/1 Seasonal use case Small-scale irrigation (1 ha) 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 0/0/1 0/1/0 1/0/0 0/1/1 1/0/1 1/1/0 1/1/1 Seasonal use case 0 9 10 Grid pump 9 5 ha plot 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 1 2 3 4 5 6 7 8 9 Year EUR Grid pump Diesel pump Solar PV pump Grid pump 10 10 LCOE (EUR/kWh) 0 1 2 3 4 5 6 4.98 3.02 3.42 1.88 2.03 1.60 1.21 0/0/1 0/1/0 1/0/0 0/1/1 1/0/1 1/1/0 1/1/1 Seasonal use case Micro-scale irrigation (0.1 ha) EUR/kWh 1.64 0.94 1.00 0.62 0.67 0.50 0.40 0/0/1 0/1/0 1/0/0 0/1/1 1/0/1 1/1/0 1/1/1 Seasonal use case Small-scale group irrigation scheme (5 ha) 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8
  • 7. 7 GET.INVEST MARKET INSIGHTS — SENEGAL: RENEWABLE ENERGY APPLICATIONS IN AGRICULTURAL VALUE CHAINS MODEL BUSINESS CASE: SOLAR PHOTOVOLTAIC (PV) WATER PUMPING FOR SMALL-SCALE IRRIGATION SCHEME WITH LOW WATER DEMAND In order to gain a deeper appreciation for the significance of this variable it is useful to highlight the impact of irrigation needs across seasons and locations within the country. Considering the same plot under cultivation in the southern city of Ziguinchor, water needs per hectare decrease from an average of 63m3 /ha/ day to 55m3 /ha/day during the wet season (July to November). Variable 2 — Effect of PV module price on LCOE of solar pumps compared to diesel and grid-connected pumps The costs associated with utilising a solar pump are directly correlated with the upfront expenditure required to procure the solar array. Despite global trends of declining solar PV costs, the price of the panels secured by an individual investment could be a critical variable. Therefore, the effect of the PV module price on the solar pump LCOE has been tested through a sensitivity analysis, with the results displayed against the fixed diesel and grid-connected pump LCOE in Figure 5. It can be seen that for the 1 ha case, a 30% reduction of PV panel price against a static diesel LCOE results in a positive case. On the 0.1 ha plot20 , a less than 20% decrease in the PV pumping unit price results in the solar option becoming attractive against the grid-connected alternative. This is considering a static tariff and no requirement for a back-up generator in the event of grid downtime. FIGURE 5. Sensitivity of LCOE of solar PV pumps based on the price of PV modules (EUR/W) compared to the static LCOE of diesel and grid connected pumps 20) The 0.1 ha scenario is based on a combined pump and PV panel unit where the PV modules are not priced separately. Therefore, the sensitivity test was performed on the pump unit cost A note on backup diesel generation In many cases, plot owners should consider the impact of backup diesel generator due to grid downtime. In a case where grid downtime is considered, the 5 ha plot grid-powered pump LCOE increases from EUR 0.28/kWh to EUR 0.34/kWh (15% downtime) and to EUR 0.43/kWh (30% downtime). This is compared to an LCOE of EUR 0.50/kWh for the solar PV pump. The difference between the solar PV and grid pump LCOE narrows even further if costs for a new grid connection are considered. 2.5 2.0 1.5 1.0 0.5 0 Price of solar PV pump (EUR) Micro-scale irrigation (0.1 ha) LCOE (EUR/kWh) 1.4 1.2 1.0 /kWh) 0.9 0.8 0.7 0.6 0.5 (EUR/kWh) 7 5 0 7 0 0 6 5 0 6 0 0 5 5 0 5 0 0 4 5 0 4 0 0 3 5 0 3 0 0 2 5 0 0.5 0 Price of solar PV pump (EUR) Micro-scale irrigation (0.1 ha) L 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0 Price of solar PV modules (EUR/W) Small-scale irrigation (1 ha) LCOE (EUR/kWh) 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 LCOE (EUR/kWh) 2.5 2.0 1.5 1.0 0.5 7 5 0 7 0 0 6 5 0 6 0 0 5 5 0 5 0 0 4 5 0 4 0 0 3 5 0 3 0 0 2 5 0 2.5 2.0 1.5 1.0 0.5 0 Price of solar PV pump (EUR) Micro-scale irrigation (0.1 ha) LCOE (EUR/kWh) 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0 Price of solar PV modules (EUR/W) Small-scale irrigation (1 ha) LCOE (EUR/kWh) 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 Price of solar PV modules (EUR/W) Small-scale group irrigation scheme (5 ha) LCOE (EUR/kWh) LCOE-Solar LCOE-diesel LCOE Grid electicity Modelled pricing point 2.5 2.0 1.5 1.0 0.5 2.5 2.0 1.5 1.0 0.5 7 5 0 7 0 0 6 5 0 6 0 0 5 5 0 5 0 0 4 5 0 4 0 0 3 5 0 3 0 0 2 5 0
  • 8. 8 GET.INVEST MARKET INSIGHTS — SENEGAL: RENEWABLE ENERGY APPLICATIONS IN AGRICULTURAL VALUE CHAINS MODEL BUSINESS CASE: SOLAR PHOTOVOLTAIC (PV) WATER PUMPING FOR SMALL-SCALE IRRIGATION SCHEME WITH LOW WATER DEMAND KEY TAKEAWAYS — — An individual decision to invest in a solar powered irrigation system is unique to each case. Careful consideration should be given to critical factors such as water demands and dynamic head requirements with regards to local conditions and the crops planted. Further attention should be given to the impact of the irrigation on future yields including the potential for additional harvests and the method of financing for the upfront investment. — — The upfront cost for solar irrigation pumps remain a significant investment decision given the average farming household income levels in Senegal. For the three plot sizes modelled in this case, the approximate CAPEX requirements covering the pump and solar array are EUR 600 (0.1ha), EUR 3,800 (1ha) and EUR 9,500 (5ha). — — Investment in solar PV pumping technology can be attractive when considering the discounted net savings compared to diesel pumps across a ten-year timeframe on plot sizes of 0.1ha — EUR 70 and 5 ha — EUR 4,529. This is due to the solar pump low OPEX compared to the high fuel costs associated with the diesel option. Break-even analysis of the cumulative total discounted expenses (CAPEX and OPEX) further supports this with PV pumps becoming attractive within seven (0.1ha) and five (5ha) year time- frames. — — The sensitivity analysis demonstrates the role of critical parameters on the viability of different pumping alternatives: a) The number of growing seasons (1 to 3) can signifi- cantly impact the economic feasibility of solar irrigation pumps. The PV pumps become more attractive with an increase in growing seasons and therefore the utili- sation rate. This is linked to the water needs for which factors such as the crop and geographical location (rainfall and temperature) are important; b) A drop in solar panel prices by 30% makes solar pumping attractive compared to a static LCOE for diesel pumps on a 1 ha plot; c) This trend applies for grid-connected pumps, where a panel price decrease of 17% against current market rates generates a positive outlook for solar on a 0.1 ha plot; For grid-connected pumps, in general terms, electricity network downtime and requirement for a backup diesel fuelled option already swings the situation in favour of solar. For example, the LCOE for a grid-connected pump on a 5 ha plot increases from EUR 28/kWh to EUR 0.43/kWh considering 30% downtime compared to EUR 0.50/kWh for the equivalent solar PV pump. ANNEX A Technology overview Solar-powered irrigation is based on PV technology that converts solar energy into electrical energy to run a Direct Current (DC) or Alternating Current (AC) motor based pump. The technology is similar to any other conventional water pumping system except that the power source is solar energy. A typical solar water-pumping unit (Figure 6) includes three main components: the PV panels, the solar pump and the controller. In addition, selected systems include storage facilities being physical water storage methods (e.g. overhead tanks) and/or energy storage i.e. batteries. However, due to their relatively high cost, batteries are rarely used for storage compared to their alternatives, i.e. overhead tanks, small irrigation dams or canalisation systems (used for channelling water for example in rice paddies). Additional system components include the mounting structure, wiring, piping and float switch. Often a lockable security structure is used to house critical equipment, including for example the pump and control panel, to protect against the risk of vandalism and theft.
  • 9. 9 GET.INVEST MARKET INSIGHTS — SENEGAL: RENEWABLE ENERGY APPLICATIONS IN AGRICULTURAL VALUE CHAINS MODEL BUSINESS CASE: SOLAR PHOTOVOLTAIC (PV) WATER PUMPING FOR SMALL-SCALE IRRIGATION SCHEME WITH LOW WATER DEMAND FIGURE 6. Schematic diagram of a PV surface pump21 Solar water pumps are classified into three types according to their applications: submersible, surface and floating. A sub- mersible pump draws water from deep wells, a surface pump from shallow wells, springs, ponds, rivers or tanks, and a floating pump from reservoirs being adjustable to the water height. For utilising the pumped water three irrigation methods are commonly applied: hose, sprinkler and drip. The reason for irrigating is to provide water to crops in the field with the aim of increasing yields. In this regard, hose irrigation is inefficient in that only a limited amount of the water spread onto the field is available to the growing crops. In comparison, sprinkler irrigation has a higher efficiency, whilst of the three drip irrigation is considered the most efficient. In water con- sumption terms if the irrigation methods are directly compared against the same outcome, with drip irrigation set at 100%, sprinkling would require 133% and use of a hose 250%. The latter figure indicating why hose systems are commonly paired with the diesel driven pumps that allow for a high flow over a short period of time. 21) Unknown creator, “Solar Water Pumping System”. Not licensed. Link: https://greenlifesolution.in/solar-photovoltaics/solar-water-pumping- system/ — accessed April 2019 ANNEX B FIGURE 7. Net savings based on discounted costs of Solar PV versus Diesel irrigation pumps 600 400 200 0 (200) (400) (600) (800) 2,000 1,000 0 (1,000) (2,000) (3,000) (4,000) (5,000) Micro-scale irrigation (0.1 ha) EUR Investment cost Saved cost — Diesel Net EUR Small-scale irrigation (1 ha) Investment cost Saved cost — Diesel Net 6,000 4,000 2,000 0 (2,000) (4,000) (6,000) (8,000) (10,000) EUR 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 600 400 200 0 (200) (400) (600) (800) 2,000 1,000 0 (1,000) (2,000) (3,000) (4,000) (5,000) Micro-scale irrigation (0.1 ha) EUR Investment cost Saved cost — Diesel Net EUR Small-scale irrigation (1 ha) Investment cost Saved cost — Diesel Net 6,000 4,000 2,000 0 (2,000) (4,000) (6,000) (8,000) (10,000) EUR 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 600 400 200 0 (200) (400) (600) (800) 2,000 1,000 0 (1,000) (2,000) (3,000) (4,000) (5,000) Micro-scale irrigation (0.1 ha) EUR Investment cost Saved cost — Diesel Net EUR Small-scale irrigation (1 ha) Investment cost Saved cost — Diesel Net Small-scale group irrigation scheme (5 ha) Investment cost Saved cost — Diesel Net 6,000 4,000 2,000 0 (2,000) (4,000) (6,000) (8,000) (10,000) EUR 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10
  • 10. ABOUT GET.INVEST MARKET INSIGHTS The first series of GET.invest Market Insights are published in early 2019 covering four renewable energy market segments in three countries, namely: renewable energy applications in the agricultural value-chain (Senegal), captive power (behind the meter) generation (Uganda), mini-grids (Zambia) and stand-alone solar systems (Zambia). Each Market Insight package includes a) a ‘how to’Devel- oper Guide, b) Model Business Cases and c) Case Studies. The Developer Guide enables the reader to navigate the market and its actors, to understand the current regulatory framework and lays down the step-by-step process of starting a new project/business. The Model Business Case analyses project economics and presents hypothetical, yet realistic, investment scenarios. It hence indicates the criteria for a viable project/business to enable the reader to identify the most cost-effective project/business opportunities. The Case Study analyses the viability of operational or high-­ potential projects/businesses to highlight lessons learnt and industry trends. GET.invest Market Insights therefore summarise a con- siderable amount of data that may inform early market exploration and pre-­ feasibility studies. It is recommended to cross-read all three products to gain a comprehensive overview. The products are accessible at www.get-invest.eu. ABOUT GET.INVEST GET.invest is a European programme which supports investment in decentralised renewable energy projects. The programme targets private sector business and project developers, financiers and regulators to build sustainable energy markets. Services include project and business development support, information and matchmaking, and assistance in imple- menting regulatory processes. They are delivered globally and across different market segments. GET.invest is supported by the European Union, Germany, Sweden, the Netherlands, and Austria, and works closely with initiatives and industry associations in the energy sector. GET IN TOUCH We welcome your feedback on the Market Insights by sharing any questions or comments via email at info@get-invest.eu. CONTACT GET.invest E info@get-invest.eu I www.get-invest.eu Place and date: Brussels, June 2019 Photo credits: ©GIZ, except where otherwise indicated DISCL AIMER The information in this document is derived from carefully selected sources and interviews. However, GET.invest does not guarantee its accuracy or completeness and liability claims through the use of incorrect or incomplete information are excluded. This document does not necessarily represent the views of GET.invest or the countries mentioned. GET.invest does not endorse or recommend any commercial products, processes, or services mentioned in this document. This document is not intended to replace primary project and business studies. A detailed analysis for a specific project or business needs to be conducted before any investment decision.