Ireland’s Mainstream Renewable Power and local developer Genesis Eco-Energy have announced an €850 million (about R11 billion) plan to develop 18 wind farms by 2014, adding 500MW of electricity to the national grid.
 

The project comes amid increasingly ambitious efforts to kickstart South Africa’s renewable energy sector, driven by its potential to spur growth and create jobs, plus mounting concerns about the contribution of coal-based electricity to climate change.

At a conference yesterday to evaluate the country’s renewable energy target, Minerals and Energy Minister Buyelwa Sonjica said she would like renewable energy to account for between 6 percent and 9 percent of electricity generated by 2013, and between 9 percent and 15 percent by 2018.

The current 2013 renewables target, set six years ago, is equivalent to about 4 percent of projected electricity demand.

The upper range of Sonjica’s desired 2018 target is in line with calls at the recent climate change summit for a 15 percent renewable energy target by 2020.

Davin Chown, the director of operations at Genesis, said the joint venture was ready to start construction of two wind farms with combined capacity of 70MW next year – one in Jeffrey’s Bay and the other at Colesberg. They are expected to be operational in 2011. The other projects would be in Western Cape, Eastern Cape and Northern Cape, each generating between 30MW and 150MW.

Mainstream and Genesis would put in between 30 percent and 40 percent of the project equity, with the rest debt-funded on a project-by-project basis, Chown said.

Commitments had already been received from local financial institutions such as Absa, while the Development Bank of Southern Africa had put up some funds for the 30MW Jeffrey’s Bay wind farm. One of Mainstream’s investment partners was Barclays Capital.

The company had opted not to wait for the National Energy Regulator of SA (Nersa) to announce the renewable energy feed-in tariff next week, because it had adopted a “bullish and aggressive stance” on the renewables market, Chown said. “We know the renewables market will happen. There’s no other way it can go.”

The company’s projects would require a feed-in tariff for wind energy of between R1 a kilowatt-hour (kWh) and R1.05/kWh, he said. Should the tariff come in below this level, the partners would rethink financing mechanisms.

“It may slow things down … but it’s not going to stop us,” added Chown.

Following hearings last month to assess the initial 65.48c/kWh wind tariff proposed by Nersa, the regulator’s member for electricity, Thembani Bukula, said he believed Nersa had “no other option”, but to raise the tariff in the direction of 90c/kWh.

Chown said Mainstream and Genesis would initially import the turbines from a supplier to be selected in a bidding process. Suppliers were likely to be those with proven technology

Mainstream is to hold a majority stake in the joint venture, with Genesis acting as developer. Local shareholders will take stakes in individual projects.

In one Eastern Cape project, the proceeds accruing to a local trust are to be used to install solar water heaters in community houses.

Chown said the partners were locating the farms on the land of several communities that had benefited from the land restitution programme.

The wind farms are set to supply the national electricity grid, but Mainstream has not yet negotiated a power purchase agreement because of uncertainty about whether Eskom, Nersa or the Department of Minerals and Energy is the correct vehicle.

Mainstream’s chief development officer, Torben Andersen, said South Africa had “excellent” wind resources, with 10 000MW of market potential.

Mainstream has other wind farm projects in Canada, Chile, Scotland, the US and Europe.

Source Business report 

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