16 April , 2015

Wind Industry upbeat as government energy response creates another 4-5 year visibility for wind power in SA

In a far-reaching expression of a clean energy vision, the Department of Energy today announced that the procurement of renewable energy will be accelerated and expanded. In announcing the preferred bidders for REIPPPP Round 4, the Minister of Energy, the Honourable Ms Tina Joemat-Petterssen, announced that she intends making a ministerial determination for an additional 6,300 MW of renewable energy to be procured, over and above the existing 5243 MW’s that have taken the REIPPPP process to the end of Round 4.

In the past it has been implied that wind power will receive approximately half the allocated MW’s. “By this logic”, said SAWEA CEO Johan van den Berg, “we’re looking at perhaps an additional 2,500 – 3,000 MW of wind power and a procurement process that extends another 3 – 4 years into the future. This, once gazetted, should give comfort to international investors to invest in local factories that can push the local content of wind farms to about 54%, with the upper 60’s in reach. Moreover, the money being put into local community development around wind farms will rise from the present ZAR 5 billion over the next twenty years, to at least ZAR 10 billion and perhaps much more.”

The 1121 megawatts (MW) granted for this round constitute an expanded allocation as only around 400 MW was originally earmarked for this window. Wind Energy projects have been awarded a total of 676 MW, spread between five separate projects. A further 415 MW has been attributed to solar PV projects, 25 MW to biomass and 5MW to hydro power.

Successful wind energy bidders awarded contracts in Round 4 are as follows:

  • Golden Valley, 117MW, Eastern Cape – to be developed by Biotherm Energy.
  • Roggeveld, 140MW, Northern Cape – to be developed by Building Energy.
  • Kurusa Wind Farm, 140 MW, Northern Cape; Nxuba Wind Farm 139 MW and Oyster Bay Wind Farm, 140 MW, both Eastern Cape. All three are to be developed by Enel Green Power.

The South African wind sector is generally regarded as one of the three most vibrant destinations worldwide, alongside Mexico and Brazil. “The wind resource is excellent, the country large and the need for energy acute,” said Steve Sawyer, Secretary General of the Global Wind Energy Council. “We see South Africa as a strong growth market for the medium and long term.” He further pointed to the sophisticated banking sector and deep capital markets as factors that are underpinning the rapid growth of wind power in the country. South Africa had eight wind towers in 2012, this number has now grown to about 300 with another 500 in construction already.

The government sentiment expressed at this morning’s media release underpin these sentiments. Minister Joemat-Petterssen said inter alia that she “would leave no stone unturned” to ease the energy challenges of the country and during question time thanked the renewable energy industry for their positive attitude in working with government.

Prices for wind power in Round 4 are understood to have averaged about 62c/kWh, which is about 40% less than the projected cost of coal power from the Eskom Medupi power plant. Load shedding has been said to cost the country as much as ZAR 75/kWh, with the Minister of Public Enterprises being quoted recently as saying it was costing the country up to ZAR 80 billion per month.

Renewable energy is coming just at the right time”, Van den Berg, concluded. “There is a lot of it ready to be built immediately. Government is recognising this and has now communicated a vision that, given the volatility in pour sector, is remarkable for its courage and perspicacity. Wind power is core to this and we expect our industry to continue its very fast growth, while continuing to deliver on the social compact with government. Jobs and rural development, industrialisation and enterprise development are aspects as important as electrons on the grid. We’re in this together, and we’re starting to get it right.”

For further information or to interview Johan Van den Berg, please mail: [email protected] or call +27 (0) 11 214 0664.

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SAWEA is a non-profit, industry organisation representing the wind industry in South Africa. Its members include both national and international entities active in the entire wind energy supply chain. Its aim is to promote the sustainable use of commercial wind energy in South Africa; to contribute knowledge and human resources to the streamlining of the policy and regulatory framework for wind in SA; to facilitate synergy between the growth of the industry and the achievement of the broader socio-economic aims of Government (including training, job creation and localisation); to disseminate information; to act as a focal point for discussion between members, government, the media and the public.

For more information visit: www.sawea.org.za


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