Yolandi Groenewald takes stock of what solar and wind renewable energy projects in SA have delivered so far
As coal increasingly becomes the pariah fuel of the world, South Africa is looking for solutions to power our economy into the future, and renewable energy could be the answer.
Just five years ago, the green energy footprint was minuscule in the country, but now more than 2 000 megawatts is coming from 42 projects that have been installed across South Africa – and there is more to come.
This month, Eskom CEO Brian Molefe said renewable energy contributed a maximum of 1 600MW to the utility.
The reason for the difference between the installed capacity and the maximum production is that the sun is not always shining and the wind is not always blowing, so solar and wind plants don’t always produce to maximum capacity.
Unfortunately, however, coal is still king in South Africa, and provides 86% of South Africa’s needs.
Despite making big inroads into clean energy, only about 4.5% of South Africa’s 44 000MW of generating capacity comes from renewable sources.
The department of energy has committed South Africa to increasing renewable energy generation to 13 225MW by 2025 in terms of South Africa’s Integrated Resource Plan.
Part of this plan is to expand the renewable procurement programme to generate 6 000MW by 2020, and 92 independent producers have been selected for the programme. Of these, 79 projects have reached financial close and are either generating power or are being constructed.
Eskom’s 100MW Sere wind farm in the Western Cape, which is outside the Renewable Energy Independent Power Producer (IPP) Procurement Programme, is another project that is being used to bump up renewables in South Africa and, last month, Eskom also committed to increasing its green energy with further renewable projects.
Following the historic climate change agreement signed in Paris at the end of last year, it’s clear that the days are numbered for coal-fired power plants.
The agreement, which South Africa signed, forces countries worldwide to switch to a low-carbon economy to combat climate change.
If South Africa keeps to the pledge it made, Medupi and Kusile will probably be the last coal-fired power stations built in the country.
But what comes after coal?
The programme has run five bidding rounds to select the IPPs that will generate South Africa’s renewable energy, but the programme is not without its challenges.
Eskom’s financial woes cast a dark shadow over the programme. In October, the cash-strapped utility stopped issuing so-called budget quotes to IPPs until 2018.
Budget quotes – final quotes and technical specifications for the infrastructure needed to connect energy projects to the Eskom grid – are required for financial close.
This has affected the winning projects in the past two bid rounds, and projects that will generate about 2 000MW are now in limbo.
Moneyweb quoted a letter from Eskom stating that Eskom’s “serious liquidity issues” made it impossible to commit to any of the programmes after bid window three. In the first three rounds of bidding, 3 922MW of power capacity was bought.
Also, the rand exchange rate has hampered international companies because they are being paid by Eskom in rands for the electricity they deliver.
South Africa’s energy department released a report last year on the state of renewable energy in South Africa, which showed that by June last year, 37 IPPs had already started commercial operation, adding 1 860MW to the system.
Since then, the Bokpoort concentrated solar plant, located in Groblershoop in the Northern Cape, came online in December and Abengoa’s latest 50MW concentrated solar plant, the Khi Solar One near Upington, started operating last week. Three new wind farms have also started feeding into the grid, adding 270MW to the system.
Across the five bid rounds, 3 357MW of wind energy has so far been procured, a third of the planned capacity. At the moment, wind IPPs are delivering 960MW to the power grid.
Solar comes in second, with a total of 2 292MW solar photovoltaic capacity procured in all the bid rounds, and is contributing more than a third of South Africa’s total procured renewable energy capacity. At the moment, solar photovoltaic projects deliver 960MW to the grid.
Concentrated solar is delivering 200MW, with three operational plants. Two other plants, which will add 200MW installed capacity, are being constructed.
Renewable energy has also been a boon for the economy. Official figures show that so far the programme has attracted R192.6 billion in committed investment, of which 28%, or R53.2 billion, is foreign investment across the bid windows. This is equal to 85.8% of all foreign direct investment in the country in 2013.
Spanish energy company Abengoa was on the brink of bankruptcy as its latest local renewable energy project started producing power this week.
Khi Solar One’s 50-megawatt plant is South Africa’s third concentrated solar plant to come online and is based in Upington in the Northern Cape.
The project employs 35 people and will supply enough energy to power about 45 000 households.
Abengoa owns a 51% stake in the project, the Industrial Development Corporation has a 29% interest and the Khi Community Trust owns the remaining 20% stake.
However, Abengoa has been scrambling to avoid ruin amid reports that it needs €90 million (R1.6 billion) in emergency funding.
It filed for preliminary creditor protection in November and has until the end of next month to decide whether to file for bankruptcy.
To avoid going bankrupt, Abengoa could sell its more valuable projects.
In September, Abengoa filed a shareholder market update, in which Khi Solar One was listed as one of its assets that could be sold to generate cash.
However, nothing has happened since the market update to indicate that Abengoa wants to sell Khi Solar One and no sale figure has been mentioned.
During its construction, Khi Solar One was hit by delays after a crane accident at the end of 2014 killed two people and injured seven.
The plant’s technology is revolutionary but still expensive compared with other renewable projects. Its site features a 205m tower surrounded by 4 200 concave solar mirror panels, which reflect the sun’s rays on to the top of the tower.