Floating Photovoltaics
Floating Photovoltaics
Business Model Description
Develop, construct, and operate grid-connected utility-scale floating photovoltaics (FPV) systems in a lagoon or offshore areas as an Independent Power Producer (IPP) with Public Utilities Corporation (PUC) as the off-taker and liaising with the Marine Spatial Planning. Acting as an IPP, firms might be active in the whole value chain, which includes pre-feasibility, site selection and development, financing, and operation. Pricing should be below the marginal cost of electricity production in Seychelles, which is approximately the cost of fuel oil.
Expected Impact
Increase renewable energy share in the national grid to improve secure access to energy, reduce electricity costs and price volatility from imported fuel, and save land space and forested areas.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Seychelles: Greater Victoria
- Seychelles: Praslin
- Seychelles: Rural Mahé
- Seychelles: Outer Islands
Sector Classification
Renewable Resources and Alternative Energy
Development need
Seychelles' energy supply is generated from imported fossil fuels, accounting for about 25% of the country's total net imports. Therefore, securing energy supply and price stability is intrinsically bound to the cost of fuel, pressure on the national budget and foreign debt sustainability. In addition, 95% of the country's greenhouse gas (GHG) emissions come from the energy sector (1, 2, 3).
Policy priority
Seychelles' updated 2021 Nationally Determined Contribution (NDC) targets are 15.5% energy efficiency and 15% renewable share in national electricity production by 2030. Seychelles' 100% Renewable Energy Strategy foresees full energy sector decarbonization by 2050. NDC includes 293,8 ktCO2e economy-wide reduction in greenhouse gas emissions by 2030 (1, 4).
Gender inequalities and marginalization issues
In Seychelles, more than half of the households are headed by females. Poverty Profiling 2017/2018 by the National Bureau of Statistics (NBS) reveals that households with lone women (living out of union) at the head, aged 25 to 62, are more likely to be affected by income poverty. Hence, energy security in terms of affordability and continued access remains crucial for women's perception of safety and livelihood (5, 6).
Investment opportunities Introduction
Seychelles consistently ranks among the top three countries in Africa regarding governance and the top ten in foundations for economic opportunity. Reliability of the supply of electricity and the off-taker enhance solar energy use as Mahé alone has the theoretical potential to supply 125MW of solar energy through rooftop installations (12, 15).
Key bottlenecks Introduction
Isolated and limited land capacity for large-scale ground installations, insufficient number of the local workforce and technical experts for growing sector needs, hardship in access to blended and concessional financing, sector's highly political and regulated image, subsidized tariff scheme and cap in production of grid-connected energy are main bottlenecks (16).
Alternative Energy
Development need
In Seychelles, with universal access to electricity, only up to 5% of energy needs are supplied by renewable resources, accentuating the need for improving national energy security, meeting the rising demand, targeting subregional disparities in energy infrastructure, and reducing transport and tourism-related greenhouse gas (GHG) emissions (1, 8).
Policy priority
Seychelles Vision 2033 and National Development Strategy 2019-2023, strategize environmental sustainability and energy security in the country, as energy imports account for 12% of the total government budget annually. The targets share of renewable energy in electricity supply is 15% by 2030, according to Seychelles' updated 2021 Nationally Determined Contribution (NDC) (4, 9, 10).
Gender inequalities and marginalization issues
In Seychelles, parastatals are the main employer in the energy sector, including electricity, gas, steam, and air conditioning supply, with a higher share of the expatriate male workforce, which might undermine the participation of local female workforce in the renewable energy sector. Subregional storage and battery investments are required as 90% of the nation's population live in three main inner islands with grid connectivity (3, 11).
Investment opportunities introduction
Seychelles Energy Efficiency and Renewable Energy Programme (SEEREP) financing, net-metering programme by Public Utilities Corporation (PUC) and tax incentives promote alternative energy development with adequate land use as in the case of rooftop and floating PV systems in land-scarce Inner Islands and off-grid solution in outer islands (13, 14).
Key bottlenecks introduction
In grid-connected areas, dominant roofing structure, steep and made from corrugated iron sheets, voltage fluctuations, which affect the inverter, and subsidized household tariffs constrain private-led investments. The high cost of finance and battery investments, especially in Outer Islands, limited incentives, and equipment costs limit the scale of implementations (16).
Solar Technology and Project Developers
Pipeline Opportunity
Floating Photovoltaics
Develop, construct, and operate grid-connected utility-scale floating photovoltaics (FPV) systems in a lagoon or offshore areas as an Independent Power Producer (IPP) with Public Utilities Corporation (PUC) as the off-taker and liaising with the Marine Spatial Planning. Acting as an IPP, firms might be active in the whole value chain, which includes pre-feasibility, site selection and development, financing, and operation. Pricing should be below the marginal cost of electricity production in Seychelles, which is approximately the cost of fuel oil.
Business Case
Market Size and Environment
Total electricity consumption exceeding 400 million kWh
Electricity consumption in Seychelles reached 402 million kWh in 2020, having increased by 25% in the last five years and by 55% in the last ten years (19, 20).
Electricity consumption from renewable resources in Seychelles was 41 TJ in 2018. Renewable energy supply was 73 TJ for the same year, 24% of which was supplied from solar. Renewable electricity consumption grew by 62.7% between 2013-18 (8).
Two of the ten most significant announced greenfield projects in Small Island Developing States (SIDS) in 2020 are two huge projects in Seychelles with a combined value of USD 330 million, making the country a pioneer in utility-scale floating PV farms in Africa (18).
Indicative Return
10% - 15%
Floating PV installations are expected to generate a positive return in eight to ten years, partly balancing out the higher initial capital cost compared to ground-mounted installations with a higher yield (27).
Investment Timeframe
Medium Term (5–10 years)
Floating PV installations are expected to generate a positive return in eight to ten years, partly balancing out the higher initial capital cost compared to ground-mounted installations with a higher yield (27).
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Business - Supply Chain Constraints
Business - Business Model Unproven
Impact Case
Sustainable Development Need
Seychelles' national grid is supplied through imported fossil fuels, renewables making only as much as 5% depending on the capacity utilisation, which undermines reduction in greenhouse gas (GHG) emissions according to the Nationally Determined Contribution (NDC) target and budgetary discipline (1).
Seychelles is an archipelagic nation with mostly mountainous terrain and preserved forests. An essential part of the nature offering of high-end tourism is observed in the most populated islands, underscoring the land scarcity and the high-cost land lease and infrastructure development.
High electricity and fuel costs impede growth and business operations in Seychelles, aggravated by global price volatility and supply disruptions (22).
Gender & Marginalisation
Land scarcity impedes the development of social services and scalable business operations that will benefit the poorest segments of society.
Expected Development Outcome
Decreased energy import costs in budget and reduction in greenhouse gas (GHG) emissions add to national targets in clean energy transition, climate change action, and environmental preservation.
Floating solar panels add to utility-scale renewable energy generation, save land space, mitigate pressure on forested landscapes, have a lower cost of connection to the grid, and may perform better than ground-mounted models due to the cooling effect of water (17).
Reduced electricity and fuel costs support business growth in Seychelles, improving secure and clean access to energy.
Gender & Marginalisation
Saving land space and decreasing resource conflict over the land area will benefit low-income households through improved land availability for public service provision and small business operations.
Primary SDGs addressed
7.2.1 Renewable energy share in the total final energy consumption
1.99% in 2019 (1).
15% by 2030 (4).
9.2.1 Manufacturing value added as a proportion of GDP and per capita
7% of GDP in 2021 (23).
N/A
13.2.2 Total greenhouse gas emissions per year
790 ktCO2e in 2019 (24).
Reduction in total Greenhouse Gas (GHG) emissions by 293.8 ktCO2e in 2030 (26.4%) compared to business as usual (BAU) scenario (4).
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Outcome Risks
Construction and operation of floating solar farms may disturb the seabed and disrupt the habitat (25).
Siting a saltwater floating solar farm in a fragile ecosystem may cause coral bleaching and harm the natural habitat (25).
Lacking adequate infrastructure to recycle end-of-life solar panels may exacerbate risks associated with the export of waste, such as soil contamination and illegal dumping of hazardous waste.
If built-in existing fishing grounds, floating photovoltaic systems lead to resource conflicts with small-scale fishers, negatively affecting their livelihood and cultural identity (25).
80% of the employed in the electricity sector are male. New investments may exacerbate the issue if gender balance is not accounted for (19).
Impact Risks
The high cost of installation and logistics, which requires 18 to 25 40-foot containers per MW of floating solar system, is reflected in the end-consumer price, restraining affordability by the poor (17).
As a recently commercialized technology built for a projected lifespan of more than 25 years, high-quality data for the environmental and social impacts of floating photovoltaics do not exist (17).
Impact Classification
What
Innovative marine renewable energies such as floating photovoltaics increase the share of clean energy sources in the national grid while reducing price and supply volatility.
Who
Population and businesses benefit from a secure, stable, modern energy supply.
Risk
High cost of installation and logistics may deprive the producers of investments, reduce scale, or raise affordability concerns.
Contribution
Floating photovoltaics, nearshore or offshore, offer large-scale renewable energy generation in Seychelles, eliminating issues like land scarcity vis-a-vis other solar technologies.
How Much
Floating photovoltaics is one of the renewable energy applications to increase renewable energy share to 15% by 2030.
Impact Thesis
Increase renewable energy share in the national grid to improve secure access to energy, reduce electricity costs and price volatility from imported fuel, and save land space and forested areas.
Enabling Environment
Policy Environment
Seychelles Energy Policy, 2010-2030: sets the country's long-term energy strategy, which includes a target of supplying 5% of Seychelles' energy from renewable sources by 2020, 15% by 2030 and 100% in the long term (2).
Seychelles’ Updated Nationally Determined Contribution (NDC), 2021: maintains the power sector targets from the previous NDC, including 15% energy efficiency improvement and powering 15% of the national mix by renewable sources in 2030 (4).
Seychelles Vision 2033: the long-term national vision envisages that renewable energy and efficient technologies will provide the country's energy needs (9).
Seychelles National Development Strategy (NDS), 2019-2023: focuses on using renewable energy to achieve targets of energy security and economic resilience (10).
Reserved Economic Activities Policy, April 2020: ensures that certain economic activities that are doable and affordable to the Seychellois investors and businesses shall remain reserved for them; the list includes electrical contractors (33).
Financial Environment
Fiscal incentives: Imported renewable energy-related commodities, including imported solar panels, are exempt from goods and services tax (28).
Regulatory Environment
Seychelles Energy Act, 2012: provides the legal basis for the development and utilization of energy resources in Seychelles, functions of the regulator, Seychelles Energy Commission (SEC), the establishment of Seychelles Energy Board, and the tendering procedure for independent power producers (IPPs) (26).
Nature Reserves and Conservancy Act, 2021: governs the conservation of biological diversity and the sustainable use of its components in Seychelles and is a relevant regulation for Seychelles Marine Spatial Plan (SMSP) (29).
Seychelles Environment Protection Act, 2016: provides the legal basis for protecting, improving, and preserving the environment in Seychelles and is a relevant regulation for Seychelles Marine Spatial Plan (30).
Seychelles Meteorology Act, 2015 establishes the Seychelles Meteorological Authority, which provides forecasts for weather and climate phenomena and monitors climate change (31).
S.I. 76. - Seychelles Investment (Economic Activities) Regulations, 2022: lists general construction work for civil engineering class one only as an activity a non-Seychellois may invest in with the requirement to conduct an Economic Needs Test (ENT) (34).
Marketplace Participants
Private Sector
Qair, Sun Tech Seychelles, Energy Solutions Seychelles (ESS), VetiverTech, Swimsol, Complete Energy Solutions (CES), Masdar, Sustainable Power Solutions (SPS), Mettle Solar Investments, Gridworks, Trinity International LLP, Multiconsult Norge AS.
Government
The Ministry of Agriculture, Climate Change and Environment, the Ministry of Investment, Entrepreneurship and Industry, Public Utilities Corporation (PUC), Seychelles Energy Commission (SEC), The Seychelles Investment Board (SIB), Islands Development Company (IDC).
Multilaterals
United Nations Development Programme (UNDP), the Global Environment Facility (GEF), International Renewable Energy Agency (IRENA), Abu Dhabi Fund for Development (ADFD), Institute for Environmental Analytics (IEA), African Legal Support Facility (ALSF).
Non-Profit
Seychelles Islands Foundation (SIF), Sustainability for Seychelles (S4S), University of Seychelles (UniSey), Clinton Foundation.
Target Locations
Seychelles: Greater Victoria
Seychelles: Praslin
Seychelles: Rural Mahé
Seychelles: Outer Islands
References
- (1) Republic of Seychelles Ministry of Finance, Trade, Investment & Economic Planning, Economic Planning Department. 2020. Goal 7: Ensure access to affordable, reliable, sustainable and modern energy for all. In Voluntary National Review 2020. https://sustainabledevelopment.un.org/content/documents/26382VNR_2020_Seychelles_Report.pdf
- (2) Ministry of Environment, Energy and Climate Change (MEECC). 2010. Proposal for Energy Policy of the Republic of Seychelles, 2010 – 2030. https://investinseychelles.com/downloads/renewable-energy-documents/seychelles-energy-policy/viewdocument/22
- (3) Government of Seychelles. 2020. Seychelles’ National Climate Change Policy. Ministry of Environment, Energy and Climate Change, Seychelles. http://www.meecc.gov.sc/wp-content/uploads/2019/10/seychelles-national-climate-change-policy-may-2020.pdf
- (4) Republic of Seychelles Climate Change and Energy Department of the Ministry of Agriculture, Climate Change and Environment. 2021. Seychelles’ Updated Nationally Determined Contribution. https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/Seychelles%20First/Seychelles%20-%20NDC_Jul30th%202021%20_Final.pdf
- (5) National Bureau of Statistics Seychelles. 2019. Poverty Profiling Regional Survey Report 2017/2018 Survey. https://www.nbs.gov.sc/downloads/poverty-profiling-report-2017-2018/viewdocument
- (6) Power Africa. 2017. Exploring the Relationship Between Energy Access and Gender-Based Violence. https://powerafrica.medium.com/exploring-the-relationship-between-energy-access-and-gender-based-violence-ee8d9e320437
- (7) Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH. 2020. Greenhouse Gas Inventory & Mitigation Strategies for the Refrigeration and Air Conditioning Sector in the Seychelles. https://www.green-cooling-initiative.org/fileadmin/user_upload/RAC-Inventory-SEY-20201217-web-alternative.pdf
- (8) International Renewable Energy Agency (IRENA). 2021. Energy Profile Seychelles. https://www.irena.org/IRENADocuments/Statistical_Profiles/Africa/Seychelles_Africa_RE_SP.pdf
- (9) Ministry of Finance, Trade, Investment and Economic Planning. 2019. Seychelles Vision 2033. http://www.finance.gov.sc/uploads/files/Vision_2033.pdf
- (10) Ministry of Finance, Trade, Investment and Economic Planning. 2019. Seychelles National Development Strategy 2019-2023. http://www.finance.gov.sc/uploads/files/Seychelles_National_Development_Strategy_2019_2023_new.pdf
- (11) National Bureau of Statistics. 2021. Statitical Bulletin Formal Employment and Earnings 2020/Q4. https://www.nbs.gov.sc/downloads/employment-earnings-2020-q4/viewdocument
- (12) Mo Ibrahim Foundation. 2020. Ibrahim Index of African Governance. https://mo.ibrahim.foundation/sites/default/files/2020-11/2020-index-report.pdf
- (13) Public Utilities Corporation (PUC). 2021. Application procedure for Photovoltaic (PV) installation. https://www.puc.sc/wp-content/uploads/2021/06/Application-procedure-for-Photovoltaic-PV-installation.pdf
- (14) Seychelles News Agency. 2019. Pro-environment legislation in Seychelles will demand energy efficient appliances and buildings. http://www.seychellesnewsagency.com/articles/10688/Pro-environment+legislation+in+Seychelles+will+demand+energy+efficient+appliances+and+buildings
- (15) Europa-Universität Flensburg Center for Sustainable Energy Systems (CSES). 2017. A 100% renewable Seychelles A plan to change the Seychelles’ power supply to 100% renewables, its costs and possible benefits. https://www.uni-flensburg.de/fileadmin/content/abteilungen/industrial/dokumente/downloads/veroeffentlichungen/diskussionsbeitraege/znes-discussionpapers-008-100ee-mahe.pdf
- (16) Stakeholder consultation conducted jointly with public authorities, a key national supplier of solar equipment in Seychelles and a foreign solar project development firm, in May 2022.
- (17) Island Innovation. 2019. Making Floating Solar A Reality: The Seychelles Case Study. Virtual Island Summit. https://www.islandinnovation.co/summit
- (18) The United Nations Conference on Trade and Development. 2021. World Investment Report 2021. https://unctad.org/system/files/official-document/wir2021_en.pdf
- (19) National Bureau of Statistics. 2021. Seychelles in Figures 2021 Edition. Victoria, Seychelles. https://www.nbs.gov.sc/downloads/seychelles-in-figures-2021-edition/download
- (20) National Bureau of Statistics. 2015. Seychelles in Figures 2015 Edition. Victoria, Seychelles. https://www.nbs.gov.sc/downloads/seychelles-in-figures-2015-edition/download
- (21) National Renewable Energy Laboratory (NREL). 2021. Floating Photovoltaic System Cost Benchmark: Q1 2021 Installations on Artificial Water Bodies. https://www.nrel.gov/docs/fy22osti/80695.pdf
- (22) World Bank Group. 2017. Republic of Seychelles Systematic Country Diagnostic (SCD). https://documents1.worldbank.org/curated/en/191181499447495374/pdf/Seychelles-SCD-FINAL-23Jun17-06282017.pdf
- (23) World Bank Group. 2022. Data: Manufacturing, value added (% of GDP) - Seychelles. https://data.worldbank.org/indicator/NV.IND.MANF.ZS?locations=SC
- (24) Climate Watch Historical GHG Emissions. 2022. Washington, DC: World Resources Institute. Available online at: https://www.climatewatchdata.org/ghg-emissions
- (25) United Nations Environment Programme Finance Initiative. 2021. Turning the Tide: How to finance a sustainable ocean recovery—A practical guide for financial institutions. Geneva.
- (26) Republic of Seychelles. 2012. Energy Act. https://www.climate-laws.org/rails/active_storage/blobs/eyJfcmFpbHMiOnsibWVzc2FnZSI6IkJBaHBBbjhIIiwiZXhwIjpudWxsLCJwdXIiOiJibG9iX2lkIn19--595c7a329005829ff2ce816d82b039d111ecb9a5/f
- (27) World Bank Group, ESMAP and SERIS. 2019. Where Sun Meets Water: Floating Solar Market Report. Washington, DC: World Bank.
- (28) U.S. Department of State. 2022. 2022 Investment Climate Statements: Seychelles. https://www.state.gov/reports/2022-investment-climate-statements/seychelles/
- (29) Republic of Seychelles. 2022. Nature Reserves and Conservancy Act, 2021. https://www.gazette.sc/sites/default/files/2022-03/Act%203%20-%202022%20-%20Nature%20Reserves%20and%20Conservancy%20Act%202022.pdf
- (30) Republic of Seychelles. 2016. Seychelles Environment Protection Act, 2016. http://extwprlegs1.fao.org/docs/pdf/sey177682.pdf
- (31) Republic of Seychelles. 2015. Meteorology Act, 2015. http://extwprlegs1.fao.org/docs/pdf/sey150949.pdf
- (32) World Bank Group. 2022. Progress Towards Inclusive Growth: A Poverty and Equity Assessment report for Seychelles. https://www.nbs.gov.sc/downloads/poverty-and-equity-assessment-of-seychelles/download
- (33) The Ministry of Finance, Trade, Investment and Economic Planning. 2020. Policy Paper on Economic Activities Reserved for Seychellois. https://www.investinseychelles.com/component/edocman/reserved-economic-activities-policy-reap-_april-2020/download?Itemid=0
- (34) Ministry of Investment, Entrepreneurship, and Industry. 2022. Seychelles Investment (Economic Activities) Regulations, 2022. https://www.gazette.sc/sites/default/files/2022-07/SI%2076%202022%20-%20Seychelles%20Investment%20%28Economic%20Activities%29%20Regulations%202022.pdf
- (35) Islands Development Company Ltd. 2021. Annual Report for the Financial Year Ending 31st March 2021. http://www.idcseychelles.com/uploads/8/3/2/7/83270102/annual_report_2020-2021.pdf