Department to decide on Refit bidders
Solar companies keen for slice of SA’s renewable energy pie, but Department of Energy has not yet created clarity around the rules of the game
MARK ALLIX
Published: 2011/06/23 08:38:25 AM
CONSTRUCTION and engineering company Group Five and German-listed partner Solar Millennium expect to know within weeks whether they will be eligible to become preferred bidders for the Department of Energy’s renewable energy feed-in tariff (Refit) programme for independent power producers.
The step-by-step bidding process will further clarify the government’s thinking on a "greener" energy future, as groups from SA, Spain, Switzerland and Saudi Arabia vie for the first bite of SA’s on-grid renewable energy feed-in from sites in the Northern Cape.
Group Five and Solar Millennium’s proposed R5bn, 150MW parabolic trough facility in the Kalahari will use concentrating solar power (CSP) instead of photovoltaic technology.
Concentrating solar power focuses sunlight from a vast array of mirrors onto a tube filled with heating oil that creates steam to generate electricity.
Photovoltaic technology directly converts solar radiation into electricity using panels made of cells containing photovoltaic material.
Group Five says it has already submitted its environmental impact assessment and has lined up its investment team, with about 70% of funding made up of debt, and the remainder equity.
"In the CSP space we have a very developed product that we believe has a good chance of getting into the first round," Rowan Goeller, director of Group Five investments and concessions division, says.
"We have commitments from commercial banks and development agencies. I think bidding documents will come to market in the next week or two," he says, despite the process having experienced earlier delays.
Solar Millennium has developed three concentrating solar power plants in Spain, one in Egypt and is soon to break ground in the US, among other projects. The company says SA is doing well in charting a transition from traditional energy regulation, towards a framework for renewable sources.
"It takes a lot of time to formulate policy. I think SA is doing a very precise and careful job," Ruud Dekkers, Solar Millennium senior executive manager, project development, says.
"The Department of Energy is setting the pace in the whole Refit programme, but has not yet exactly released what the rules of the game are."
Other concentrating solar power plants in the running to be built in the Northern Cape include Spanish group Abengoa’s R5bn 100MW plant; Solafrica’s R3,5bn 75MW parabolic trough facility; and Ilangalethu’s proposed 125MW plant.
Among dozens of players in SA’s renewable energy space, many, such as Ilangalethu, are not well known.
"We are used to setting up large-scale concentrating solar power plants that can be from $0,5bn to $1bn," Mr Dekkers says. "I think the government is committed to demonstrate … it is taking its renewable energy policy seriously. The government will be asking for a lot of localisation in manufacture, financing and operating, it wants to see the pennies rolling back into SA’s economy."
Solar power needs sunlight, clear skies and high radiation levels. But Mr Goeller says concentrating solar power can provide electricity more continuously than wind and photovoltaic technology, because it can cost-effectively store heat energy for about seven hours.
He says bidders have been led to understand about 70% of Refit contracts will go to wind generation, with concentrating solar power and photovoltaic technology sharing much of the rest.
"There has never been an official allocation per technology. The thinking is 1000MW is in the first wave of procurement", but this has not been defined, Mr Goeller says. "Wind has a lot more capacity installed around the world. It’s a much bigger resource … than sun in the northern hemisphere."
However, parabolic trough power plants have been in commercial operation in California since 1985, generating, in total, solar electricity for about 12- million people a year. Compared with about R265bn being spent on SA’s new giant coal-fired power plants, Medupi and Kusile, which will generate nearly 10000MW of electricity, Mr Goeller says about R25bn will be spent on generating 1000MW for the first phase of Refit.
Although coal power generally is cheaper to install, he says renewable energy has lower maintenance costs, and prices are falling across all such technologies, which can directly power heavy industries and smaller towns, while supplementing capacity in the national grid.
In addition to wind, concentrating solar power and photovoltaic technologies, Refit also plans generation from biomass, landfill gas and hydroelectric schemes of less than 10MW.
allixm@bdfm.co.za
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