More power to the peo­ple of SA

With lo­cal com­mu­ni­ties in the North­ern and East­ern Cape be­ing given a di­rect stake in re­new­able en­ergy plants, the fu­ture looks bright

CityPress - - News - YOLANDI GROE­NEWALD yolandi.groe­newald@city­ Re­ported by City Press and spon­sored by the IDC

Re­new­able en­ergy is bring­ing power to the peo­ple, and South Africa’s green en­ergy pro­gramme has al­ready cre­ated a new gen­er­a­tion of own­ers who never imag­ined they would one day have shares in an elec­tric­ity plant. Those who live next to the new clean power sta­tions are part of one of the big­gest suc­cess sto­ries to come out of the coun­try’s Re­new­able En­ergy In­de­pen­dent Power Pro­ducer Pro­cure­ment Pro­gramme.

In the North­ern Cape, those who had lit­tle hope of find­ing jobs now have shares in the fu­ture. In Pofadder, res­i­dents say the power plants emerg­ing among their kop­pies have given them new hope for a bet­ter life.

“It is still un­real for so many peo­ple in Pofadder that they have shares in th­ese beau­ti­ful struc­tures,” said Fadiel Farao, chair­per­son of the KaXu Com­mu­nity Trust, which owns 20% of the KaXu So­lar One plant that be­gan op­er­at­ing last year.

The rest of the plant is owned by Span­ish re­new­able gi­ant Aben­goa So­lar, which has a 51% stake, and the In­dus­trial De­vel­op­ment Cor­po­ra­tion (IDC), which owns 29%.

“The pro­ject has stim­u­lated the lo­cal econ­omy and will go a long way to­wards help­ing to gen­er­ate much-needed eco­nomic op­por­tu­ni­ties for peo­ple in this area,” said Farao.

He added that, through the trust, div­i­dends would be in­vested in long-term projects to ben­e­fit res­i­dents for gen­er­a­tions to come.

The res­i­dents of Pofadder are not alone. At the mo­ment, lo­cal com­mu­ni­ties coun­try­wide have a 10.5% stake in South Africa’s new re­new­ables plants, which the IDC has helped to fa­cil­i­tate.

The IDC’s in­dus­trial in­fra­struc­ture head, Lizeka Mat­shekga, said she wit­nessed first-hand how a so­lar pro­ject in the North­ern Cape helped res­i­dents ac­cess clean drink­ing wa­ter for the first time and pro­vide wa­ter for emerg­ing black farm­ers.

“Sus­tain­able com­mu­nity de­vel­op­ment is a top pri­or­ity for up­lift­ing or im­prov­ing the so­cioe­co­nomic level of un­der­priv­i­leged com­mu­ni­ties. That’s what the IDC wants to achieve,” she said.

South Africa’s new­est con­cen­trated so­lar plant is the Khi So­lar One tower north of Uping­ton, North­ern Cape. The IDC has al­lo­cated a 20% stake to the Khi Com­mu­nity Trust, which dis­penses funds to the com­mu­nity.

The Kouga Wind Farm in the East­ern Cape has one of the largest com­mu­nity equity schemes in the pro­gramme, with the Kouga Wind Farm Com­mu­nity De­vel­op­ment Trust hold­ing a 26% stake. Its in­come will be used to fund health, wel­fare, education, lo­cal in­fra­struc­ture and en­ter­prise de­vel­op­ment projects.

Also in the East­ern Cape, the Chaba Winds of Change Com­mu­nity Trust owns 26% of the Chaba Wind Farm near Komga that be­gan op­er­at­ing in Septem­ber.

Its sis­ter plant, the Grass­land Wind Farm near Mother­well, Port El­iz­a­beth, has the same agree­ment with its Grass­ridge Winds of Change Com­mu­nity Trust. The trust, which rep­re­sents the in­ter­ests of Mother­well res­i­dents in the pro­ject, will also re­ceive up to 26% of all div­i­dends gen­er­ated from the sale of wind en­ergy.

Re­spected aca­demic Pro­fes­sor Bar­ney Pityana is one of its trustees and says the money will be used to fund com­mu­nity-boost­ing projects in the ar­eas of education, sport, en­ter­prise de­vel­op­ment and skills de­vel­op­ment.

South African equity share­hold­ing across re­new­able en­ergy pro­grammes now amounts to 47%, or R30 bil­lion, of the to­tal R65.8 bil­lion in­vest­ment, ac­cord­ing to the depart­ment of en­ergy’s State of Re­new­able En­ergy in SA re­port. This is sub­stan­tially higher than the 40% re­quire­ment. The depart­ment re­quires re­new­able en­ergy pro­ject de­vel­op­ers to in­vest in com­mu­ni­ties liv­ing within a 50km ra­dius and help them stim­u­late lo­cal eco­nomic de­vel­op­ment. Lo­cal com­mu­ni­ties need to own at least 2.5% of a new plant, but their equity stakes have shot up to 10.5%. The IDC has sup­ported com­mu­nity par­tic­i­pa­tion in 22 out of the 25 projects it has funded, amount­ing to R2.6 bil­lion, or 18%, of its to­tal in­vest­ment in re­new­able en­ergy projects.

Mat­shekga said the IDC fa­cil­i­tated the par­tic­i­pa­tion of com­mu­ni­ties in dif­fer­ent ways. “For ex­am­ple, we have used com­pet­i­tive pric­ing at sub­sidised rates to drive de­vel­op­ment. This is in line with govern­ment’s ini­tia­tives for pro­mot­ing black own­er­ship and com­mu­nity de­vel­op­ment.” The IDC also car­ries equity risk on be­half of com­mu­ni­ties. “We do not take any se­cu­rity in the com­mu­nity share­hold­ing we fund,” said Mat­shekga, adding they had also funded the es­tab­lish­ment of trusts and had trained trustees.

But in the sparsely pop­u­lated North­ern Cape, a 50km ra­dius does not net many peo­ple, so the IDC de­cided to ex­pand it.

Ac­cord­ing to the depart­ment of en­ergy’s re­port, those ben­e­fit­ing from the com­mu­nity trusts are set to reap huge re­wards, but there are some prob­lems. For in­stance, the IDC’s cur­rent re­new­able en­ergy projects are funded through loans and, be­cause of this, com­mu­ni­ties do not ben­e­fit im­me­di­ately.

There­fore, says Mat­shekga, the IDC al­lows a por­tion of the div­i­dends to go to com­mu­ni­ties while the IDC loan is out­stand­ing. “We want to en­sure our in­vest­ment ac­tiv­i­ties con­trib­ute to­wards the achieve­ment of a pos­i­tive legacy – buyin and en­gage­ment – to en­sure we have a vested com­mu­nity.”

The next step, says Mat­shekga, is to es­tab­lish sus­tain­able busi­nesses around the green power plants.

“We will not rest un­til a com­mu­nity-owned busi­ness sup­plies com­po­nents – for ex­am­ple, mir­rors – to a so­lar plant,” she said.


A NEW ERA KaXu So­lar One near Pofadder is the first so­lar ther­mal elec­tric­ity plant in SA. It is also the big­gest of its kind in the south­ern hemi­sphere. KaXu, which means ‘open skies’ in the lo­cal Nama lan­guage, will add 100MW of elec­tric­ity to the na­tional grid


PRO­JECT HOPE KaXu So­lar One is one of two so­lar plants in Pofadder that carry with them bet­ter prospects for the sur­round­ing com­mu­nity

Fadiel Farao

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