Renewable energy firms join SA programme
SA’s energy shortage shows that there will be substantial increase in its generation capacity in an environmentally sustainable manner.
The Renewable Energy Independent Power Producer Procurement (REIPPP) Programme is able to provide additional energy to be fed into the grid within a reasonably short period of time.
According to the Overview of the IPP Procurement Programme, published by the IPP Office on March 31, the REIPPP Programme has resulted in the investment of about $14bn in SA’s renewable energy sector, of which about 28% constitutes foreign direct investment.
Jinko Solar, the world’s fourth-largest solar PV manufacturer, set up an R80m solar PV module manufacturing plant in Cape Town in 2014. The factory, the company’s first outside of China, was expected to produce up to 1,300 solar panels a day, translating to 120 megawatts (MW) in solar power generating capacity per year. Jinko was reported to bid in the fourth round of REIPPP Programme.
Following the opening of Jinko Solar’s plant, Wuxi Suntech also announced it would open a subsidiary company in SA. Founded in 2001, Suntech has supplied more than 10 GW PV panels to more than 1,000 customers in over 80 countries. In March 2015, the company announced the establishment of a local warehouse in Cape Town. This new facility was expected to store 500kW of modules initially and expand its storage capacity to 1MW. According to its website, Suntech supplied 100MW of its high-efficiency PV modules to two projects selected during the Department of Energy’s REIPPPP first bid round.
An industry report says in 2016 the global electricity produced by solar power has doubled seven times over since 2000, partly because solar is not a fuel, but a technology. Owing to economies of scale and increasing efficiency, prices of solar technology and supply continue to fall, as does the price of batteries for energy storage. In SA, solar power can be produced at a cost of less than 70c/KwH.
In terms of wind power, in 2015 Chinese wind turbine maker Xinjiang Goldwind Science & Technology announced that it would equip and construct the 120MW Golden Valley wind park in SA under a deal with project developer BioTherm Energy, a domestic independent power producer (IPP). As part of the deal, Goldwind would deliver 48 units of 2.5MW wind turbines and would serve as the engineering, procurement and construction (EPC) contractor.
The wind park is located in the Eastern Cape. BioTherm Energy won an off-take contract for the farm, which was selected as a preferred bidder in the fourth round of the REIPPP Programme.
Sinovel, a Chinese firm that has manufactured more than 5,600MW of wind turbine generators in operation, is the second largest turbine manufacturer in the world and holds a global market share of 11.1%. It is a supplier of BioTherm in the Klipheuwel-Dassiefontein wind energy facility according to the BioTherm website.
Longyuan South Africa Renewables, together with Mulilo Wind Enterprises, formed a consortium that won two De Aar projects in the third bid of the REIPPP with a total installed capacity of 244.5MW.
Longyuan South Africa Renewables, the main developer of the two projects, was registered in 2011. The company is a wholly owned subsidiary of the China Longyuan Power Group Corporation Limited which was founded in 1993 and is the largest wind power developer in China and Asia, and the second largest in the world. By the end of 2014, China Longyuan had an installed wind power capacity of 14,5GW.
Longyuan Engineering South Africa, of which 30% shares are held by a local Community Education Trust, and also a subsidiary of China Longyuan, is reported to design and construct the wind energy facilities with the assistance of local consultants and contractors. Guodian United Power Corporation will supply the wind turbine generators from China.
Leading Chinese renewable energy producers are almost all participating in the REIPPP Programme, providing the financial backing. In March 2013, Standard Bank signed a R20bn funding support agreement for renewable energy projects in SA with ICBC, its largest shareholder. Under the agreement, ICBC co-lends into renewable energy projects with Standard Bank, where Standard Bank is mandated as the lead arranger, through to 2025.
The statement from Standard Bank said: “ICBC’s involvement will help to reduce liquidity and capital pressure and will provide further diversification of our sources of funding in addition to domestic asset managers who are keen to invest in such projects.”
Following the success of the REIPPPP, the minister of energy published determinations for electricity from other sources to be procured by IPP procurement programmes in August 2015 and has published a determination for further electricity to be procured from renewable sources.
Leading Chinese renewable energy producers are almost all participating in the REIPPP Programme