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
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