40 MW wind power project planned for South Africa

A memorandum of understanding was signed on Monday at Wittekleibosch in the Eastern Cape between partners hoping to develop the Tsitsikamma Community Wind Farm (TCWF) project. The project would aim to generate about 40 MW of wind power by 2013, and would be worth about R1-billion.

The TCWF consortium consists of a number of key partners. The Tsitsikamma Development Trust, which operates on behalf of the community that owns the land, together with other South African stakeholders, namely South African energy company Watt Energy, and South African mining company Exxaro hold a 46% stake.

The balance is jointly held by the Danish Industrialisation Fund for Developing countries (IFU) and Danish independent power producer European Energy.

Other key partners in the project include: the Eastern Cape Community Wind Energy Development Association (ECCWEDA); Danish wind turbine manufacturer Vestas; The Danish Export Credit Fund, which would provide debt credits; Danish energy utility Dong Energy, which would procure carbon credits from the project; and Danish wind laboratory Riso, which was responsible for wind measuring and mapping.

A feasibility study, including the environmental impact assessment, National Energy Regulator of South Africa licensing applications, and an Eskom grid connection application were currently under way, following the completion of the prefeasibility study, which was undertaken by an independent consultant.

The community has been in discussions with Eskom regarding the construction of a 2x80MW substation on the wind farm site, with a 132KV transmission line to accommodate the project. This connection to the grid was expected to cost no less than R100-million, explained Watt Energy CEO and ECCWED chairperson Mcebisi Msizi.

Riso, together with the Council for Scientific and Industrial Research, would erect a wind measurement mast on the proposed site in January, and two other masts would be erected by Vestas in March. The masts would be at varying heights to ensure adequate wind modelling for the optimum wind yield for the project.

The consortium would still need to establish a power purchase agreement with the single buyers office under the renewable energy feed in tariff programme, and there was, as yet, no guarantee that the power would be sold on to Eskom at this stage.

It was estimated that there were some 5 000 MW of wind power under development in South Africa, while the government had mandated the procurement of 400 MW of wind power by 2013. The wind energy projects under development would, therefore, need to compete for the offtake of their power. These decisions would likely be based on affordability, especially regarding grid connection, as well as the broad-based black economic-empowerment shareholding of a project.

The TCWF project was said to be at a fairly advanced stage, compared with other wind projects under development in the country.

"The Wittekleibosch farm is currently undergoing extensive wind mapping to confirm the feasibility of the project. Thus far the outcome has been extremely positive," said Msizi.

Ambassador of Denmark to South Africa Dan Frederiksen said that there was a strong group of Danish companies willing to enter into this market in South Africa, and which were assisting in establishing a framework to create understanding among authorities, investors, and governments about what was required to create a sustainable renewable energy project in South Africa.

SA urged to increase its renewable energy goal

SA should strive for a target of 25% renewable energy contribution to consumption by 2025, according to Irish wind energy developer Mainstream Renewable Power’s CEO, Eddie O’Connor.

Mainstream and South African wind farm developer Genesis Eco- Energy plans to build a wind energy capacity of about 500 MW in the Eastern, Northern and Western Capes by 2014. That will be the biggest investment in wind energy. A R75m 5,2MW wind farm in the Western Cape is SA’s only commercial wind energy project at present.

Energy Minister Dipuo Peters said the government would not increase its target of a 10000 GWh renewable contribution by 2013. Less than 10% of this target has been achieved.

O’Connor said that a 25% renewable energy contribution to consumption by 2025 was a good target. He said bolder and long-term renewable energy targets would boost local manufacturing.

“It is important to set long-term targets because that will encourage manufacturers to migrate to the South African market. That will create employment opportunities.” A 25% target could also see SA become a renewable energy manufacturing hub for the rest of southern Africa.

O’Connor said such a target would compare favourably with Europe , which has committed to a renewable energy contribution of 24% by 2020. “It will be appropriate for SA to come up with a grand vision. There are a lot of benefits from long-term targets,” he said.

“We have good wishes for the South African government. The (renewable energy feed-in tariff) — an incentive structure to boost investment in renewable energy that indicates how much independent power producers will get for the various renewable energy technologies — is good. The price is good. But there are two missing points though. The first one relates to (the) power purchase agreement that is supposed to go along with the renewable feed-in tariff. We know what the rate is but we do not know who is going to pay.”

SA clean energy projects receive $500m global backing

Detailed work is currently in progress to ensure the release of the $500-million approved in October under the international Clean Technology Fund (CTF) for a portfolio of low-carbon energy projects in South Africa, Environmental Affairs DDG Joanne Yawitch tells Engineering News Online.

The CTF, which is administered by the World Bank group, has been created to support financing for programmes with the potential for long-term greenhouse gas emission savings.

South Africa presented its investment plan at a meeting in Washington DC in late October, and has proposed that the CTF cofinance plans to ensure that 4% of the country’s electricity requirements are generated using renewable energy by 2013 and to improve energy efficiency by 12% by 2015.

Investment plans have also been endorsed for Morocco, Egypt, Mexico and Turkey, and the CTF Trust Fund Committee will consider plans for Vietnam, the Philippines and Thailand, in early December.

The $500-million endorsed for South Africa is designed to leverage additional financing of about $1-billion from other bilateral and multilateral financiers, as well as from commercial banks.

The South Africa plan includes using CTF financing for:
– The reduction of the high capital cost associated with the construction and operation of Eskom’s proposed 100-MW concentrated solar power project, planned for Upington in the Northern Cape.
– The development of the first utility-scale wind energy plant, consisting of a 100-MW Eskom wind farm in the Western Cape Province Wind Energy Facility.
– Pioneering private sector wind projects of a further 100 MW and creating a robust pipeline of large-scale wind projects.
– Supporting municipalities and the private sector in the deployment of solar water heaters (SWHs), with a target of achieving 50% of the South African government goal of converting one-million households from electric geysers to SWHs over five years.
– Scaling up energy efficiency investments by catalysing the expansion of bank lending to the commercial and industrial sectors through lines of credit to commercial banks and addressing barriers to energy -efficiency investments.

Yawitch says that the first phase of South Africa investment proposal focuses on energy, but that work is also under way on a range of low-carbon transport initiatives.

South Africa is the world’s eleventh largest emitter of carbon dioxide (CO2) and its energy sector is the single largest source of CO2 emissions, with coal accounting for more than 90% of total emissions by fuel source.

The country will also insist that finance is central to any possible climate change deal that could emerge from the United Nations Climate Change Conference in Copenhagen, Denmark, which is due to begin on December 7.

DDG for international cooperation Alf Wills says that South Africa and Africa will be seeking a deal that guarantees finance, technology and capacity building for developing countries seeking to adapt and to mitigate the impact of climate change.

Wills calculates that there will be a need for funding worth $400-billion by 2020, of which South Africa believes 25% should be set aside for adaptation.

"Such funding is essential to build resilient developing economies that are about the ‘leapfrog’ to low-carbon growth and development trajectories," Wills asserts.

The African Development Bank (AfDB) has approved €1.86 billion (UA 1.70 billion) loan for South Africa’s energy utility company, Eskom Holdings Limited, to finance a power project that will significantly boost the energy capacity of South Africa and the southern African region.

President Donald Kaberuka commended the conclusion of this operation saying: "South Africa’s energy problem has been a major impediment to Africa’s leading economy. The Bank is pleased to be associated with this project. We look forward to working with South Africa towards achieving energy security. This operation should be seen in the context of the Bank ongoing efforts to help Africa bridge the infrastructure gap."

The Medupi plant located in Lephalale, Limpopo Province, is expected to be commissioned by February 2012.

Besides Medupi, Eskom is working on a number of renewable energy programmes including a pilot wind farm in the Western Cape, a 100 MW heliostat pre-feasibility tower-type solar power plant, and a 100 MW wind farm feasibility study. Eskom is also pursuing a demand-side energy conservation program aimed at saving 4,225 MW of electricity.

The total cost of the project is estimated at €11.19 billion, and will be financed with 53% equity and 47% by loans, with the World Bank and the export credit agencies as co-lenders with AfDB.

The Bank Group’s operations in South Africa commenced in 1997, and as at the end of August 2009, the Bank had approved sixteen operations, with a total commitment of UA 1,073.87 million. Ongoing operations as at end August 2009 amounted to UA 737.04 million, with a disbursement rate of 80 percent.