/ 31 May 2013

SA on its way to greener economy

Sa On Its Way To Greener Economy

Minister Dipuo Peters told the Cabinet in May that South Africa now ranks as the "ninth most attractive investment destination for the green economy".

"The positive outcome of our focus in the past year on clean energy initiatives has been more than R70-billion in investments in new-generation capacity," Peters said in her annual parliamentary budget vote speech on May 20.

This is a result of the response to the national climate change strategy, the green economy accord and the national development plan's move to lessen carbon-intensive electricity production through procurement of renewable energy sources.

"Our renewable energy programme was voted by the Global Leadership Infrastructure Programme in New York as the best green energy infrastructure programme in the world for 2012," Peters told the Cabinet.

Investing in a green economy
During his February state of the nation address, President Jacob Zuma elaborated on the country's renewable energy projects: "Government signed contracts to the value of R47-billion in the renewable energy programme. This involves 28 projects in wind, solar and small hydro technologies to be developed in the Eastern Cape, Western Cape, Northern Cape and in the Free State."

The government had established an R800-million national green fund last year. He said more than R400-million in investments in green economy projects had already been approved for municipalities, other organs of state, community organisations and the private sector across all provinces.

At least 315 000 solar water geysers had been rolled out by January this year, most of them for poor households that did not have running water before. South Africa's shift to green power generation started with the department of energy's white paper on renewable energy in 2003. The source of this energy was envisaged "mainly from biomass, wind, solar and small-scale hydro".

The target was to ensure that renewable energy projects would "create additional government revenue of R299-million" a year and ensure "just over 20 000 jobs". It would also "contribute to water savings of 16.5-million kilolitres, which translates into a R26.6-million saving".

The department of energy conducted research that "highlighted the technologies to be implemented first, based on the level of commercialisation of the technology and natural resource availability".

Benefits for local communities
The department's vision is to make adequate and affordable energy available to developing communities through a mix of providing alternative energy resources at a reasonable cost.

"The aim is to satisfy the basic needs of the developing sector and at the same time promote the effective utilisation of South Africa's vast alternative energy sources," said the white paper.

To roll out this alternative power supply plan, the department has had to procure energy projects from a range of companies. This procurement is implemented within the department's renewable energy independent power producer (REIPP) programme.

It first called on bidders in November 2011 to tender for renewable energy projects. A second call for bidders was made in December 2011, and a third is set for August 19 this year. The announcement of preferred bidders for this final round will be made by October 29.

These efforts are part of the renewable energy market transformation project, with funding secured from the Global Economic Forum and World Bank to "help South Africa eliminate barriers to renewable energy development as it strives to reduce the country's greenhouse gas emissions".

The department is charged with rolling out this project and has designated the Development Bank of Southern Africa as its implementing agent. During phase one of the REIPP programme, the department procured the Sere wind farm in the Western Cape from Eskom.

The national electricity supplier confirmed in May that Sere had been granted a licence by the National Energy Regulator of South Africa.

"This opens the way for construction to go ahead on the R2.4-billion project," said Eskom spokesperson Annamarie Murray.

The Sere wind farm is expected to "generate up to 100MW of power for the national grid, avoiding nearly 4.7-million tonnes of carbon emissions over 20 years", she said.

A total of 46 wind turbine generators will be erected at Sere to deliver first power to the national grid in the first half of 2014, with full commercial operation scheduled by the end of 2014.

"The project includes construction of a new substation and a 132KV distribution line. It will create up to 170 direct jobs during the construction phase," said Eskom.

Sere has an expected operating life of 20 years, with average annual energy production of about 233 000 megawatt hours — enough clean energy to power about 97 000 standard homes.

The energy department reportedly also procured at least 19 other renewable energy projects in May. These wind, solar and mini-hydro projects bring the total number of renewable energy projects under way to 47.

Among these is another wind farm project under construction in Jeffreys Bay in the Eastern Cape. Its investors include Mainstream Renewable Power, Globeleq, Thebe Investments, Enzani and Usizo.

Power Technologies, the electrical engineering subsidiary of JSE-listed Allied Electronics, this year also secured R150-million in orders for the service and supply of renewable-energy solutions as part of the REIPP programme.

Job creation a top priority
Auditing firm Deloitte recently released a report on the challenges that renewable energy projects face in Africa, noting that set-up costs are a worldwide challenge.

The report, Localisation of Renewables in Africa, pointed out that energy projects are under pressure to "create as many relevant jobs as possible".

"Increased investment in renewable energy will mean an increase in jobs as the local population will be given employment opportunities at all stages of electricity generation, from power plant construction and grid connection to operation and maintenance," it said.

Simultaneously, a "strong skills development drive needs to be undertaken to build critical mass of technical skills in order to ensure a sustainable, long-term industry".

The report indicated that technical skills would be needed, not only in the manufacturing and construction phase of projects, but also for operating, modifying, producing and innovating renewable energy and energy-efficiency technologies.

The department of energy needed to ensure the transfer of skills from experienced experts to locals if it wanted to build a sustainable renewable energy sector, it said.

"Many renewable projects in Africa require a large component of skilled labour from overseas but often skills transfer to local people is not carried out successfully, resulting in a risk of project failure when expatriates leave. It is important to ensure that local staff is trained."

A lack of understanding of technology, intellectual property rights and experience in developing new technologies are listed as barriers in the implementation of renewable energy programmes.

The department stipulated that successful bidders must adhere to job creation and the development of communities living close to project sites. The recently released outcomes of the second window of bid submissions reflect an increase in the local content proposals.

"The local content in solar photovoltaic for the second window is 47.5% compared to 28.5% in the first window," said Deloitte. "Although the operational success of this programme is yet to be demonstrated, initial indications are encouraging."

But it cautioned that "requiring domestic production for a large portion of the value chain also risks losing access to the latest technology and low-cost components for domestic electricity generation, which may be available only as imports".

"Local content requirements have discouraged the entry of foreign producers into some countries."

On the upside, it said, the department's procurement programme "seeks to enable the development of local manufacturing industries".

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