What is a carbon credit in the solar industry?
When a solar power project is developed, such as a large solar farm or small-scale installation, it replaces electricity that would otherwise come from fossil fuels like coal or oil. Since solar power is clean and emits no carbon dioxide (CO₂), it means:
• Every unit (kWh) of clean electricity generated prevents CO₂ from being released into the atmosphere.
• These avoided emissions can be converted into carbon credits.
How is it used?
1. Generating credits:
- A solar project measures and verifies how much CO₂ it prevents from being emitted (through an accredited body).
- For each tonne of CO₂ avoided, the project receives one carbon credit.
2. Selling credits:
- These credits can be sold to companies or individuals who want to reduce their carbon footprint (e.g., airlines or heavy industries).
- This generates extra income for the solar project, making it more financially viable.
Why is it important?
- It promotes investment in renewable energy.
- It provides a financial incentive to adopt clean technology.
- It helps countries meet their climate targets.
Example: Solar Farm in South Africa or Namibia—Carbon Credit Flow
1. Project Setup
A company builds a 10 MW solar farm near Windhoek or Cape Town, aiming to supply clean electricity to the national grid.
2. Emissions Avoided
- The solar farm generates ~20,000 MWh per year.
- This displaces fossil fuel-based electricity (e.g., coal or diesel), avoiding an estimated 15,000 tons of CO₂ annually.
3. Certification Process
- The avoided emissions are verified and certified by a recognised carbon registry, such as PhotonSmart, which is represented by ProGo Group.
- After thorough assessment and validation, the project is issued carbon credits equivalent to the verified amount of CO₂ emissions avoided.
4. Selling the Credits
- These credits are sold on the voluntary carbon market to companies looking to offset their emissions.
- Let’s say the average price is R10 per credit.
5. Revenue Earned
- The solar farm earns R150,000 per year from selling carbon credits, on top of electricity sales.
- This boosts the project’s financial sustainability and can attract more investment or fund expansion.
The Carbon Flow Summary
Clean power → Emissions avoided → Verified credits → Sold to buyers → Revenue to the solar project