Apr 02 2009

Breakthrough for (private) green energy in SA

Published by at 10:50 am under Companies,Top Stories

The South African government today took a big step in the direction of clean, renewable energy generation, when it announced favourable new terms for accepting energy generated by privately-owned wind, solar and land-fill gas installations into the national power grid.

Included in the terms: A list of prices at which clean energy will be accepted into the national electricity grid – and which are guaranteed for 20 years. 

Not only is this a big vote for clean energy, but it’s also a big boost for private energy-generation. All in all, a VERY encouraging step. 

Here is the full article as published by Industrial Info Resources on its website today (only open to subscribers):

South Africa’s Regulator Sets Renewable Power Rates Positive for Project Development

JOHANNESBURG–April 2, 2009–Renewable energy projects in South Africa have received a major boost with the announcement by the National Energy Regulator of South Africa (NERSA) (Pretoria) of a new set of tariffs for the feed-in of renewable power to the grid.

The new tariffs cover wind, small hydro, landfill gas and concentrated solar renewable technologies and guarantee the purchase price of electrical power supplied by the different technologies. Thembani Bukula, head of electricity regulation at NERSA, said the term covering the revised tariffs had been extended to 20 years from the previous 15 years, giving project developers reasonable returns and government guarantees covering the period.

South Africa is aiming to meet a renewable energy target of 10,000 gigawatt-hours of total consumption by 2013.

The new renewables rates could be a sign of things to come for independent power producers (IPP) with Eskom (Johannesburg) and NERSA due to announce the imminent agreement on the rise in tariffs for base- and peak-load power generated by major grid suppliers, which currently is de facto state-owned Eskom. The country’s inherited system of subsidized power purchase rates for users has inhibited the desired entry of IPPs into the South African generation scene. Guaranteed and commercially viable rates could see the launch of a number of power projects, which have been held at the design stage for some time.

Under the new tariffs, project developers in the wind sector will receive 1.25 South African rand (U.S. 13 cents) per kilowatt-hour (kWh), up from 0.65 rand (U.S. 6.78 cents) per kWh. Landfill-gas-sourced power will pay 0.90 rand (U.S. 9.5 cents) per kWh, up from 0.43 rand (U.S. 4.5 cents). Concentrated solar developments will pay 2.10 rand (U.S. 22 cents) per kWh, and small hydro will pay 0.94 rand (U.S. 9.9 cents) per kWh. The U.S. prices given here are based on an average current dollar-to-rand exchange rate.

Various potential players in the renewables sector gave a very positive welcome to the new rates when they were announced this week. An official of Cullinan Energy Solutions said the rates are good enough to encourage long-term investment in the sector given the relatively high capital expenditure required. He said NERSA has taken a proactive and inclusive approach by listening and taking the concerns of players in the sector into account.

Davin Chown, Director of Genesis Eco-Energy (Cape Town), said that the rates are encouraging and that they would facilitate the growth of the industry. The opportunity beckons with 10,000 megawatts (MW) of good wind resources and with the government promoting a contribution of renewable energy to the national total of up to 9% by 2013 and 15% by 2018.

In the second half of March, Genesis announced a $1.15 billion plan with Mainstream Renewable Power (Ireland) to develop 18 windfarms, which would add 500 MW to the national grid by 2014.

Genesis plans to start construction of two windfarms next year, in Jeffreys Bay and Colesberg, with a combined capacity of 70 MW to be operational by 2011. These projects would be followed by others in the western, eastern and northern Cape regions. Initially, turbines will be imported from suppliers with proven technology. Mainstream and Genesis will provide 30% to 40% of project equity with the balance debt funded on a project-by-project basis. Mainstream will hold a majority stake in the joint venture and Genesis will act as developer. Individual projects will offer stakes to local shareholders. Mainstream currently has wind projects in Canada, Chile, Scotland, the U.S. and Europe.

One response so far

One Response to “Breakthrough for (private) green energy in SA”

  1. adminon 25 May 2009 at 6:23 pm

    Here some more on the same topic…

Trackback URI | Comments RSS

Leave a Reply