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SPECIAL FEATURE

Renewable energy An independent producers’ programme is attracting international interest.

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or South Africans of a certain age, De Aar is a town that lingers in the memory. When most travelling was done by train, many hours of waiting took place in this centrally located Northern Cape town. But if you told these South Africans that De Aar’s main hotel was getting spruced up in 2013, they might look at you a little suspiciously – it’s been a long time since this small town was in the news. The fact that it is a company focused on renewable energy – Solar Capital – that is making the large investment says a lot about the impact the sector is making and it has only just begun. For many years there was uncertainty about national government policy with regard to renewables. But that has all changed and two bidding windows for the Renewable Energy Independent Power Producer Procurement (REIPPP) programme have already been held with 2 560MW of a targeted 3 725MW allocated. The third window (which closed in early August 2013) saw the final 1 165MW assigned to bidders. At the moment, about 94% of South Africa’s electricity is generated by burning coal. The country has one nuclear plant and a few small hydroelectric plants. By 2030, the plan is to have added another 17 000MW of renewable energy to the grid.

Bids have been accepted for concentrated solar power (CSP) and photovoltaic (PV), wind power and hydroelectric power. Bids in other sectors (biomass, biogas and landfill-gas) will be dealt with later. The clear winner in the first two bids was PV solar power, with 16 winning bids going to the Northern Cape alone. Ten other PV projects were approved around the country. A large water-based project is underway in the Drakensberg: the Ingula Pumped Storage scheme includes four 333MW pump turbines that will be deployed in times of peak demand. Some of the PV projects, such as Mulilo Renewable Energy’s 9.65MW De Aar project and Acciona and Sishen Solar’s Sishen project (8.9MW) are small, but plans for a solar park outside Upington are spectacularly large. Sixteen square kilometres of land has been identified and Eskom is looking for private partners. The park, which will cost more than R150billion, will generate 1 000MW in its first phase. Eskom has received $250-million for funding this project (and a wind project) from the World Bank. The Eskom-led project is intended to be at the centre of a solar hub. An analysis of 2012 figures released by the Bloomberg New Energy Finance Group by the UK’s Financial Times showed that South Africa had ‘the biggest annual clean-energy invest-


SPECIAL FEATURE ment growth rate in the world’, with a figure of $5.5-billion cited.

Funding The Industrial Development Corporation (IDC), through the Green Industries’ Strategic Business Unit, helped fund 19 bids in the first two windows, with a total value of R7.5-billion. Twenty eight of the bids garnered support from the Development Bank of Southern Africa (DBSA), representing loan facilities of R9.6-billion. The State Department of the US is running a $20-million US-Africa Clean Energy Finance Initiative to support renewable-energy projects, and an office of the US-based Clean Energy Development and Finance Centre has opened in Johannesburg. The Industrial and Commercial Bank of China (ICBC) has allocated R20-billion of the money that it is receiving from its association with Standard Bank to fund renewable-energy projects. ICBC is a 20% shareholder in Standard Bank. Standard Bank committed about R15-billion in funding during the first two windows. Nedbank Capital funded about 40% of the first window’s successful bids.

Companies Absa Capital, which has a power and energy division, is part of a consortium led by another co-operative venture, Mainstream Renewable Power SA. The joint venture is between local company Genesis Eco-Energy and international firm Mainstream Renewable Power. Saudi Arabia’s ACWA Power International is invested in the Bokpoort solar project. In the consulting field, 3E has opened an office in Cape Town. Mulilo Renewable Energy is tackling several projects, as is SunEdison SA. Mulilo is partnering with Gestamp, a Spanish firm. Other Spanish companies that have been associated with successful bids are Acciona and Abengoa Solar.

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Stellenbosch is home to an office of global energy developer Juwi. One of South Africa’s biggest resource companies, Exxaro, has joined forces with Indian conglomerate Tata to form a renewable-energy company, Cennergi. Wind projects in the Eastern Cape are the focus of Cennergi’s initial investments.

Manufacturing SunPower/Tenesol and Solaire Direct are existing solar-panel manufacturers already operating in South Africa. ART Solar is the first South African-owned manufacturer of PV modules. At full production, the factory can produce 250 000 modules per year. SunEdison plans to construct a component plant in the Free State to support its project there, and two projects in Limpopo.

OPINIONS • The chairman of the South African Photovoltaic Industry Association (SPVIA), Davin Chown, has told Frontier Market Network, ‘It’s a lot easier for manufacturers to set up solar plants in South Africa than it is for them to set up big capital plants making wind turbines, nacelles and blades.’ • A representative of Schneider Electric told Engineering News that half of all solar photo voltaic power plant equipment and operations could be done within South Africa. • Sun Edison has urged the South African government to support the building of a plant to make polysilicon, the biggest cost factor in solar cell manufacturing (Business Report). A plant capable of producing 250 000 tons per year would cost $1.5-billion to build.

READ MORE Visit: www.frontiermarketnetwork.com/ article/3803 SOUTH AFRICAN BUSINESS 2014

Profile for Young and Enterprising

Renewable energy in South Africa  

An independent producers’ programme is attracting international interest.

Renewable energy in South Africa  

An independent producers’ programme is attracting international interest.

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