Wind leads the renewable energy charge
Five years ago there were just eight wind turbines spinning in South Africa. Today there are at least 495 on 13 wind farms and they supply energy to more than half a million households.
Meanwhile Eskom’s coal-fired power stations Medupi and Kusile remain many years behind schedule and many millions of rands over budget. It’s one of many reasons the utility applied for a 16.6% tariff hike, although this week the National Energy Regulator of South Africa (Nersa) granted an increase of 9.4% for this financial year.
Wind energy in South Africa has surpassed the one gigawatt (GW), or 1 000 megawatt (MW), milestone, which amounts to the energy consumption of 511 000 average households, according to the South African Wind Energy Association (Sawea).
This calculation is based on an average capacity of 35% from each turbine – in other words, the turbines produce energy 35% of the time. This figure is conservative, given that many produce closer to 40% or more, the association said.
The government’s renewable energy independent power producer’s programme has allocated contracts for 3 000MW of wind energy, including the 1 000MW already in production. And there’s more to come.
Wind power is just one source of renewable energy. It is the largest single component of the programme, under which 6 377MW had been procured by December 31, and which has connected 44 renewable energy projects with a capacity of 2 021MW to the national grid.
The programme is self-funding, with bidders and investors paying for development. The energy contribution of the independent power producers is expected to grow to about 7 000MW, with the first 47 renewable energy independent power producers becoming fully operational by mid-2016.
Private investment in the programme currently exceeds R194-billion.
“The rapid increase in government’s renewables ambitions reflects not just the proven success of the programme but the economic reality that wind has become a no-brainer,” said Sawea chief executive Johan van den Berg. Wind power is now about 40% cheaper than new coal power from the likes of Medupi and Kusile, with the latest round of wind projects priced at between 60c and 70c a kilowatt hour (kWh). Power from Medupi is likely to be 97c/kWh.
“It is also four to six times quicker to construct than conventional energy and infinitely safer,” Van den Berg said. “It’s modular and can better use existing grid capacity.”
The drop in the price of wind power has continued, even though the rand has fallen dramatically against the dollar over the past year.
“It’s a combination of factors,” Van den Berg said. “The cost of capital has come down, and people have been very innovative in terms of financing structuring. The good prices also coincide with very good wind sites and, over the years, there has been optimisation through learning how to do better. The risks are also better understood.”
Under the renewable energy programme, for which four bidding rounds have already been completed, the department has set a target of 13 225MW of renewable energy generation by 2025. As announced in the 2016 budget speech, the programme will now be extended to include coal and gas projects.
Drawing on information from global industry, the Japan Times reported how, this year, global wind power generation capacity exceeded nuclear for the first time. The Global Wind Energy Council said the capacity of wind power generation worldwide reached 432.42GW at the end of 2015. The global nuclear power generation capacity was lower at 382.55GW as of January 1 this year, according to the London-based World Nuclear Association.
According to the Global Wind Energy Council, the big wind markets – China, the United States, Germany and Brazil – all set new wind power installation records in 2015. The Middle East and African wind energy market, the council said, is being led by South Africa.
The department of energy’s expansion plans include another R200-million this year for transactional advisers and consulting services on the new nuclear build programme.
“The advisers will assist with the call for proposals for procuring nuclear energy and provide transactional advice to the department as a procuring agent for the new nuclear build programme,” the department said in its vote.
But nuclear technology, according to the International Energy Agency, is extremely water-intensive. South Africa is suffering from water shortages and, Van den Berg said, it is important to take into account that renewable energy saves on water.
“For each kilowatt hour of renewable energy that displaces fossil fuels in the national grid, 1.2 litres of water will be saved. At full operation of the entire portfolio, the programme will save 52-million litres of water each year, equal to 371 428 standard-sized bathtubs,” he said.
Eskom’s poor financial position has been flagged as a potential problem for connecting future renewable projects to the grid. The parastatal is responsible for footing this bill. But last year, it stopped issuing budget quotes, which independent projects require to reach financial close.
Sawea, as a member of the South Africa Renewable Energy Council, said the council was finalising a report on the matter, which it will present to the grid code advisory committee.
The bulk of the first 1GW of operational wind energy was procured under the first and second rounds of the renewable energy independent power producers’ programme. The Western Cape’s Darling wind farm is feeding in 1.3MW, another 1.8MW is coming from the Coega industrial development zone and 100MW from Eskom’s Sere Wind Farm near Vredendal in the Western Cape.
Eskom also has six solar photovoltaic sites with an installed capacity of 2.5MW, which are used for powering its office blocks and operations.