OVERVIEW Energy The
OVERVIEW Energy The Eastern Cape is the wind power province. With the signing off on four new wind projects in April 2018, the Eastern Cape reinforced its position as a prime destination for wind power. More than half the wind farm projects so far approved in the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) have been allocated to the Eastern Cape. The Kouga area west of Jeffreys Bay and the Cookhouse/Bedford area about 95km north-west of Makhanda (Grahamstown) represent two wind power hubs, with a collective capacity of 1 185MW. South Africa’s National Development Plan (NDP) requires 20 000MW of renewable energy by 2030 and wind power technology, together with solar photovoltaic, are the two primary methods of reaching that target. The April signing ceremony by new Energy Minister Jeff Rabebe restarted the REIPPPP when he signed off on projects totalling R56-billion that will add 2 300MW to the national grid. There had been a long delay in the process as national utility Eskom argued against accepting more power purchase agreements while they had a surplus. Most of South Africa’s electricity comes from coal and Eskom is building two huge coal-fired power stations. One of the unfortunate side effects of Eskom’s refusal to agree to buy renewable power for two years was the closing down of a wind tower manufacturer in the Eastern Cape. DCD Wind Towers SECTOR INSIGHT The IDC plans to revive a wind tower manufacturing plant. was a joint venture between the DCD Group and the Industrial Development Corporation (IDC). A factory was built in the Coega Industrial Development Zone (IDZ) in 2013 with the intention of localising the manufacture of renewable energy sector components. The factory closed in 2016 as uncertainty affected the market. The Coega IDZ was working on positioning itself as a renewable energy hub. This process has been restarted and the IDC is looking for new partners to revive the wind tower plant. The Department of Trade and Industry EASTERN CAPE BUSINESS 2019 24
OVERVIEW (dti) offers a number of green technology incentives. At the end of the annual Windaba conference in Cape Town in 2018, the South African Wind Energy Association (SAWEA) issued a Commitment Statement which noted that the REIPPPP has a “built-in demand for local procurement”, not only offering business opportunities to local companies, but also incentivising the industry to identify and support emerging entrepreneurs. The rollout of renewable energy has met some resistance in South Africa from constituencies as diverse as coal-truck drivers and advocates of nuclear power. In response, renewable energy advocates cite not just investment figures, but they note how much good work has been done in communities. According to figures released by the National Department of Energy, the REIPPPP by 2016 had not only delivered multiple millions in investments, but also created more than 30 000 jobs and benefited local community development to the tune of R256-million. Figures released by SAWEA showed shareholding for local communities reached an estimated net income of R29.2-billion over the lifespan of the projects. Some 14 000 new jobs are expected to be created, mostly in rural areas, and more than R30-billion has already been spent on Black Economic Empowerment (BEE) in the construction phase. Part of the SAWEA Commitment Statement reads, “Our aim over time is to transform and indigenise leadership at all levels in the South African Renewable Energy sector.” The average lead time in the projects that have so far been approved in the province is two years, with local content averaging out at about 47%. When the projects are complete, R142.9-billion will have been spent on procurement, R65.7-billion of which will be local. Wind projects in the province include Globeleq’s 138MW Jeffreys Bay facility, the 140MW Cookhouse project (African Clean Energy Developments) and two run by Cennergi at Tsitsikamma (94MW) and Bedford (134MW). Cennergi is a joint venture between South ONLINE RESOURCES IPP projects: www.ipp-projects.co.za National Energy Regulator of South Africa: www.nersa.org.za South African Photovoltaic Industry Association: www.sapvia.co.za South African Renewable Energy Council: www.sarec.org.za South African Wind Energy Association: www.sawea.org.za Sustainable Energy Society of Southern Africa: www.sessa.org.za African resources company Exxaro and Indian company Tata Power. There are several other projects with capacities ranging from 20MW to 97MW. Scatec Solar has commissioned a plant in Burgersdorp. The 75MW plant has panels mounted on single axes, enabling them to track the sun and optimise electricity generation by a further 20%. POWERX has recently signed up with AKM Foods to supply power to all the KFC outlets in Nelson Mandela Bay. POWERX trades in renewable energy through licences granted to it by the national energy regulatory authority, NERSA. By aggregating power purchases, the company is able to mitigate risk in a way that an individual purchaser may not be able to. POWERX now supplies over 40 national and local customers in Nelson Mandela Bay and its aim is to expand the customer base. The support of two of South Africa’s biggest institutional investors, the Industrial Development Corporation (IDC) and the Public Investment Corporation (PIC), has been crucial in getting the renewable energy sector off the ground. They have also played a role in helping communities fund their participation in community trusts. According to Business Day, the PIC has so far invested in 16 unlisted projects and its total investment stands at R11- billion. The IDC’s 24 projects are valued at R14-billion and will contribute 1 100MW to the national power grid. 25 EASTERN CAPE BUSINESS 2019
