Johannesburg - If Bio2Watt managing director Sean Thomas previously thought he knew the full meaning of perseverance and fortitude, he certainly does now.
The engineer who previously worked for Eskom and who left SA Breweries (SAB) in 2007 to start the biogas renewable energy company is only now starting to realise the dreams he had for the company.
Bio2Watt last month started producing power from its first plant at a Beefcor feedlot in Bronkhorstspruit, making it the first viable commercial biogas project in South Africa.
The bulk of the power it produces is going to BMW South Africa for use in its production plant in Rosslyn, Pretoria, in terms of a 10-year off-take power purchasing agreement the vehicle manufacturer signed last year with Bio2Watt.
Thomas admits when he left SAB in 2007, he told his wife that within three years Bio2Watt would be generating power.
“It didn’t work out like that. We have only started generating now,” he said. “At the time there was a perfect storm happening in the country from a developer’s perspective.
“The power crisis had started and the green agenda and sustainability was very high. In my view, the risk I took in leaving SAB was a calculated risk,” he said.
“As an engineer, I wrongly assumed we had a proven technology and a perfect storm so there is no reason for this project not to happen as quickly as possible.”
However, the licensing and regulatory framework to take the project forward then dragged on.
Thomas said the pilot national cogeneration programme came out in 2010 but was abruptly stopped because the Public Finance Management Act did not allow for a feed-in tariff.
It had to go through a bidding process, which was only concluded in 2012 when the Renewable Energy Independent Power Producers Procurement (REIPPP) Programme came on line, he said.
Electricity Act
“At that time I was at quite a crossroad. I’d invested resources, put my house up as collateral, convinced my wife but she was starting to get jittery... because things just weren’t happening,” he said.
Thomas decided to approach industry which, he said, was interested but the feeling at the time was “it can’t be done” because Eskom has a monopoly and nobody could sell power privately.
He studied the Electricity Act and discovered nothing in the act indicated that someone could not sell power privately, something confirmed by the regulator and the Department of Energy although it had not been done before.
This resulted in Thomas in 2010 starting discussions with BMW SA.
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The equity to cover the R150 million cost of the Bronkhorst-spruit plant came from various sources. They include the Norwegian Development Fund; two high-net-worth families; an Industrial Development Corporation loan after the corporation got concessionary funding from the French Development Agency; and a R16m grant from the Department of Trade and Industry.
“It took eight years from when we started the project until we generated the first power on October 10. Our legal costs were in excess of 5 percent of the total costs,” he said.
Thomas said the project created about 10 direct and indirect jobs per megawatt of power produced compared with 0.8 or 0.9 jobs per megawatt produced by solar and wind power projects.
“Typically each of these plants creates about 30 direct and indirect jobs,” he added.
About 4 000 to 5 000 tons a day of cattle manure and a further 2 000 tons of mixed organic waste that was diverted from landfill sites were fed into two anaerobic digesters to produce methane that is ultimately used in the gas engines as a fuel to generate power.
Fertiliser comes out of the plant, and is returned back to the farming community.
Bio2Watt plans to expand the Bronkhorstspruit facility over the next six to 12 months.
The line it has built to feed the power produced at the plant into the Eskom grid caters for 12 megawatt an hour. The plant currently only produces 4.4MW an hour.
Thomas said customers for the energy produced by the plant currently had to be willing to take the power at a price premium.
However, if the price of electricity continued to escalate over the next two years as it had been, it would be “a straight forward business case”, he said.
Bio2Watt has plans for plants in other parts of the country.
Thomas said they were busy with plans for two, possibly three, other plants and would be making a submission this month through the REIPPP programme for a plant in Malmesbury.
The shareholders in Bio2Watt are the Thomas family, which owns a 70 percent stake, and the Bertha Foundation owned by a wealthy family, with about 10 percent set aside for Bio2Watt staff.
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