Tuesday 21 January 2014

South Africa’s biggest wind farm is nearly ready to deliver power




INSIDE TRACK is an opinion piece by a Frontier Market Network staffer. It will appear from time to time, as someone spots something interesting in the world of business and investment – and wants to comment on it.

The 5th tee of the St Francis Links golf course is a good place to be for a number of reasons, not least because if you are standing there, you are probably on holiday. It has always offered great views, but now it’s also a great spot to see the birth of a whole new economic sector.

Dotting the landscape behind Jeffrey’s Bay and next to Humansdorp in the Eastern Cape are fifty huge wind turbines, concrete evidence that South Africa’s renewable energy programme really is under way.

An industry that practically didn’t exist a couple of years ago is now up and running hard, attracting significant amounts of foreign investment and creating jobs.

A 75-megawatt solar photovoltaic power station started delivering electricity to the national grid on November the 12th last year, three months ahead of schedule. The Kalkbult plant in the Northern Cape was built by Norwegian company Scatec Solar.

South African solar company On Track Solar earned high praise from the luxury game lodge voted Number One hotel in the world in 2013, for installing a photovoltaic system that has made this Wilderness Safaris property 100% solar-powered. Each one of a total of 440 solar panels provides 250 watts of energy.

Mombo Camp in the Moremi Game Reserve in Botswana is 100km away from the nearest village and was voted Best Hotel in the World by readers of Travel + Leisure magazine.

Solar PV and wind are the two big winners in the South African government’s Renewable Energy Independent Power Producer Procurement Programme (REIPPP). Minister of Energy Ben Martins says that the programme has already attracted R150-billion in foreign direct investment.

The winning bids in the third window in the process were announced late in 2013, with Italian company Enel Green Power doing particularly well in the solar PV stakes; it had four projects approved.

Other countries in Africa are following suit. As Christopher Clarke, founding partner at Inspired Evolution Investment Management, says, “Many countries are now moving towards a more regulated procurement regime. An example is Get-Fit in Uganda or auction processes that are following the South African public procurement model. The broader African RE market will grow exponentially in 2014 off a relatively low base.” Clarke expects competition to be intense, with West Africa and East Africa leading the way.

Wind
Wind power is not universally loved. Some argue that it’s bad for bats and birds, and then there’s the aesthetic question of how metal towers look in a rural landscape.

Denmark produces huge amounts of wind power and the experience of the inhabitants of the island of Samsø is instructive. At first the mostly farming community didn’t like the idea: then they received shares in the power-generating wind turbines.

As the director of the Samsø Energy Academy, Søren Hermansen, told Scientific American, "If you own a share in a wind turbine it looks better, it sounds better." He said that it sounded like ‘money in the bank’. Denmark has a strong tradition of community involvement and sharing.

The Jeffreys Bay Wind Farm covers 3 700 hectares on both sides of the N2 highway east of Humansdorp. Each turbine is 80m tall and the blades are 49m in length. Sixty turbines are planned.

Globeleq is the majority shareholder in the farm, and will manage the operation with Siemens Wind Power, who are installing and commissioning the turbines.

Other shareholders include Old Mutual Life Assurance, Thebe Investment Corporation, Mainstream Renewable Power and the Amandla Omoya Trust which will carry out public benefit work for the local community. Murray and Roberts Construction and Conco are doing most of the construction.

St Francis Links’ 5th tee is in the midst of fragrant fynbos, it introduces a fine golf hole, and it offers great views over St Francis Bay and of the Kouga mountains. It also gives a fine vantage point to confirm that South Africa’s newest energy sector is up and turning.

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