Renewable energy could light up PPPs
Private power producers could be key in sustainably meeting South Africa’s needs
South Africa has procured six gigawatts of renewable energy since it began the Renewable Energy Independent Power Procurement Programme (REIPPPP) in 2011. Most of the capacity comes from wind and solar, and more projects are expected in the near future, though the department of energy (DoE) has not yet released updated information on the next round of requests for proposals.
The programme could have a significant impact on renewable and eco-friendly power into the future, especially as the energy sector is still struggling with a supply shortage and regular power outages, despite promises that the grid will remain stable.
According to Chris Ahlfeldt, energy specialist with Blue Horizon Energy Consulting Services, thus far the economic benefit of the programme has outweighed the costs, with competitively priced and clean electricity being generated for the country.
“Prices for new solar PV [photovoltaic] and wind [plants] are now cheaper than projected costs of the new coal power plants in the country. The renewable energy projects selected to date are investing an impressive R193-billion in South Africa,” says Ahlfeldt. “Additionally, job creation, socioeconomic programmes, enterprise development funds, local content spending and partial local community ownership aim to provide added benefits, particularly for communities in need.
“Projects already selected have committed to funding over R19.1-billion for socioeconomic development programmes alone.”
Ahlfeldt attributes the success of a public-private partnership (PPP) to its ability to combine sound economics, appropriately allocated risk, reliable political support and effective execution.
“Despite some delays and communication challenges, the political support for this PPP has also been a contributing factor to its success,” says Ahlfeldt. “The DoE, for example, made efforts to conduct the evaluation process in a transparent way, using a well-balanced team of internal and external industry capacity.
Bottleneck
“The Round 5 RFP release for utilityscale renewable energy projects is, however, delayed; it was supposed to be released by the DoE during the second quarter of this year. Furthermore, Eskom has made statements that they do not intend to procure any more power from IPPs after Round 4, which is a self-serving stance, given their own [energy] generation business.
“The DoE is also the bottleneck for the National Energy Regulator’s national embedded generation rules on small-scale renewables, which have already been drafted and were supposed to be published over a year ago.
“Risk for this PPP between government and the private sector has been well-structured by allocating risk to the party best positioned to manage this risk. For example, IPPs [independent power producers] are responsible for building power plants and providing reliable electricity promised to the government, while the government via Eskom is responsible for purchasing this electricity and ensuring customer demand.
“The last measure of success for this PPP will be determined by the IPPs’ performance over their 20-year lifetime in meeting both energy and economic development commitments. Managing socioeconomic programmes for local communities is new territory for many IPPs, and presents unfamiliar challenges. To overcome these, IPPs will need to learn from past experience in other sectors as well as from each other, to ensure measurable and meaningful impact,” says Ahlfeldt.
Landfill gas
“The REIPPPP’s performance to date highlights the potential for PPPs to deliver much-needed infrastructure for sub-Saharan Africa, when conducted in a transparent, competitive, and fair way. PPP project progress in Ghana, Kenya, and Senegal further supports this trend. Whether the South African government can recreate the success of this programme in other sectors remains to be seen, but it had plans to use a similar procurement approach for cogeneration [the joint generation of electricity and useful heat], coal and potentially gas infrastructure.”
Gauteng’s contribution to renewable energy has come from transferring landfill gas to energy plants, with five plants to be developed in Gauteng by UK-based ENER-G Systems, at an investment of around R230-million.
Landfill gas is extracted, then combusted and flared as carbon dioxide to generate electricity. Landfill gasto-energy projects minimise environmental damage by reducing methane emissions.
While ENER-G is the majority shareholder in the project, the landfill sites are owned by the City of Johannesburg, which has been a key partner throughout the project’s seven-year development process. It will share in the revenue generated from a 20-year power sale agreement with Eskom, which will sell the power on to the nation’s distribution network.
The five facilities are expected to produce a total of 13 megawatts of energy and achieve equivalent carbon dioxide emissions savings of approxi- mately 542 495 metric tonnes per year — equivalent to the environmental benefit of removing 180 832 cars from the road.
Construction and development of the sites is planned to take three years, with the first and largest 5MW facility to begin formal operation at Robinson Deep in the fourth quarter of 2016, and the 3MW Goudkoppies facility also planned to open late in 2016. Landfill gas is already being extracted from the Robinson Deep landfill and the Marie Louise project.
Plants at Marie Louise and Ennerdale will open in 2017, and the 1MW Linbro Park facility is scheduled for completion in mid-2018. It is projected that 19MW of electricity will be generated at the five sites, enough to supply around 12 500 households.
ENER-G says this is the first and only landfill gas generation project in South Africa to be successful in the DoE’s REIPPP. These gas generation facilities will create muchneeded jobs, while benefiting local municipalities through revenue sharing and aiding local communities through the ENER-G Community Educational Trust. Local communities will have a 2.5% economic interest in the facilities.