Cape Town - Africa’s biggest wind energy facility – the 60-turbine Jeffreys Bay Wind Farm just off the N2 near this Eastern Cape coastal town – has been hailed as a symbol of the government’s highly successful renewable energy programme.
The privately funded R2.9-billion wind farm, with a 138MW (megawatt) capacity, was officially opened this week after six years of development planning and a tight 18-month construction programme.
It was one of the successful bids in the first round of the government’s renewable energy independent power producer procurement programme that, after next month’s fourth round, should see a total of 3 650MW of “green” electricity produced by private operators using wind, solar, hydro, landfill gas and biomass generation.
All this electricity will be bought by Eskom at prices established through the open bidding process that costs up to $1-million (R10.7m) a bid.
The Jeffreys Bay wind farm was developed and partly financed by Mainstream Renewable Power, a world leader in renewable energy projects headed by industry pioneer and global entrepreneur Dr Eddie O’Connor, with majority financing from Globeleq, an industry leader with green energy projects totalling close to 14 000MW in about 25 countries.
Other investors are Old Mutual, black empowerment group Thebe, a dedicated community trust, black-owned electrical contractor Enzani Technologies and Joburg-based Usizo Engineering.
O’Connor, who built Ireland’s first wind farm and the UK’s first offshore wind farm, said his company’s long-term goal had been to work with the South African government and local communities.
They had put in six bids in the first round of the renewable energy procurement programme and been successful with three of them: this wind farm and two solar energy projects. “This is the end product of a vision we’ve had for 20 years.”
Experts had been brought in from all over the world to work on the wind farm, and that had resulted in significant skills transfer, he said. “The Jeffreys Bay wind farm is a clear landmark for the future of South Africa and the whole of Africa.”
Globeleq chief executive Mikael Karlsson said the “very clear rules” set by the government had helped make the procurement programme “the most successful” programme of its kind in the world.
Noting that 1.5 percent of the wind farm’s revenue, or about R10m a year, would be put into local education projects, Karlsson said the facility had achieved its 41 percent capacity factor target – wind turbines do not generate at 100 percent of capacity most of the time – and was “the best wind farm we’ve ever built anywhere in the world”.
O’Connor noted that by under-writing the cost of renewable energy projects through the procurement programme, the government was attracting capital investments from sources such as pension funds across the world. “You have to say the South African government has got that very right.”
Wind energy generation in South Africa was now 25 percent cheaper than coal, he added – “and that’s without putting any price on the carbon dioxide that is killing our atmosphere. This is the way forward for this country and for the world”.
The average price that would be paid to wind energy producers who bid successfully in the procurement programme round three was 76c a kilowatt-hour – down from about R1.15/kWh in the first round – while the estimated cost of electricity from the new Kusile coal-fired mega-power station was R1.05/kWh. “And that’s without a charge for carbon. It’s a non-debate – if you can do wind (energy), it’s the cheapest.”
However, both executives cautioned the government not to allow the price paid to independent power producers to fall too far, saying this could lead to financial failures.
O’Connor said his company was “very content” to continue bidding for new renewable projects in South Africa but warned that the price obtained was “getting dangerously low now”. He had witnessed the industry “fall apart” in earlier years in Ireland, Britain and Morocco because bids had been too low.
He cautioned against companies trying to secure “bragawatts” that would look good in their annual reports but that were commercially unsustainable. “We’re in this to make a profit… All you need here is one big failure and you’ll set the industry back 10 years.”
Karlsson praised Costa Rica’s model where the government set ceiling and floor prices for independently produced power and invited bids within that band. A price was required that was sufficient to ensure sustainability over 20 years, he said.
Wind farm general manager Mark Pickering said the facility would contribute about 460 000 megawatt-hours of electricity to the national grid each year – enough to meet the needs of around 100 000 average households.
Jurie Swart of the Old Mutual Investment Group, which holds a 21 percent share of the wind farm, said his company had invested some R8 billion in equity in infrastructure projects in South Africa, putting “ordinary man’s savings” into these projects that were “making a difference”.
Kouga municipality mayor Booi Koerat described the development of the wind farm as “a milestone in the economic development of the Kouga region” and had brought temporary employment and training to almost 300 local residents, “each with a family to support”.
Department of Energy deputy director-general Dr Wolsey Barnard said there were 14 renewable energy projects connected to the national grid, with a combined capacity of just over 600MW.
“And we hope for another 400MW by the end of the year.”
Of the 28 projects approved in round one, 14 were already active. Overall, another 19 were under construction. The call for bids for round four was scheduled for the next couple of weeks and there would be a total from all four rounds of 3650MW – “all green energy to be supplied to the national grid”, Barnard said.
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