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Send  Share  RSS  Twitter  17 May 2013

ENERGY: Financial Close Takes SA Closer to Energy Security


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Amid growing concerns that Eskom is headed toward another bout of load-shedding and blackouts, government officials and business are quietly finalising plans for getting more renewable energy onto the grid, taking the country a step closer toward energy security.

Financial Close for the second round of bidding of the REIPPP (Renewable Energy Independent Power Producer Procurement Programme) is set for Thursday, May 9. It will clear the way for construction of seven new wind farms and will be a major step toward alleviating the country’s energy shortage, which has seriously hampered economic growth. Nersa estimates that the 2008 load-shedding cost the country around R50bn.

This important milestone couldn’t be happening at a more important time: In the last fortnight, peak demand was around 31 228MW, perilously close to Eskom’s capacity of 31 708MW. Reserve margins – the amount of excess capacity in an electric system – should, by international norms, be in the region of 15%. South Africa, by contrast, had a reserve margin of less than 1% this week. Whilst the Department of Energy’s IRP2010 (Integrated Resource Plan) will addresses this situation over the long term, the current situation is being aggravated by a variety of factors including continued delays on Medupi and Kusile sites and increased energy consumption in winter.

Peter Venn, MD of Windlab Developments, says, “Over the next 36 months, more than 2500MW of green energy will be added to the grid. More than half of this capacity will come from wind energy, including 560MW from the seven wind farms reaching financial close on May 9. Around 40% of this capacity will come from Projects developed by Windlab.”

“In this critical situation it is important to recognise that most types of renewable energy are much faster to construct than fossil-fired facilities. We urgently need every kilowatt of energy on the grid that we can muster. Wind energy is reliable and mature technology, it provides the cheapest new build electricity available, it is rapid to construct and can be financed with private capital.”

The Wind energy projects in the second round of the REIPPP Program will sell their electricity to Eskom at an average price of 89 cents per kilowatt hour. This compares very favourably to the first phase of the new Medupi coal-fired power station, which according to Nersa will start generating power at around 97c/kWh.

The Wind Energy projects constructed under the REIPPP will also make substantial investments in socio-economic and enterprise development providing significant benefits to the communities surrounding the projects.

Venn adds: “The Department of Energy must be commended for its role in driving REIPPP: It is a very large and complex program. Whilst some delays have naturally occurred, the successful closing of the second round projects should path the way for a more rapid role out of government RFPs, project awards and construction. We believe that the industry can deliver 1,000MW of wind energy capacity a year to the grid, every year for the next decade. This would go a long way towards fulfilling the needs of the SA government’s IRP2010 and providing energy security for our nation.”

Roger Price, global CEO of Windlab concludes; “South Africa is a very important growth market for our company. Using our world leading atmospheric wind modelling and prospecting technology we have worked in South Africa since 2008 to identify and develop the best wind farm sites in the country. This milestone is a very important and exciting achievement for all stake holders. Using our technology we can confirm that South African is blessed with some of the best wind resources in the world and believe that Wind Energy will play a critical role in addressing the nation’s energy challenge.”

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