Western Cape Business News

Send  Share  RSS  Twitter  06 Jun 2011

VENTURES: Cape's Big Wind Farm Rush


Recent Western Cape Business News

There may be an ill wind blowing across the Cape that can bring disappointment – even hardship – to many an entrepreneurial effort. Alternatively it could turn into an economic breeze with abundance for a number of opportunists.

The wind does not go by the name of the notorious Cape Doctor, rather ‘farm’. ‘Wind farms’ is the name of the game and already there is a surge of activity, almost reminiscent of the great Kimberley Rush, to be part of the action which is now mostly playing itself off in the Western Cape.

This all follows from South Africa’s integrated resources plan (IRP) which, amongst others, calls for a huge amount of renewable electrical generation capacity to be built, including 8 400 MW of wind generated power, 8 400 MW of solar photo-voltaic (PV) power and 1 000MW of concentrated solar power (CSP).

And it’s especially in the Cape where the rush by independent power producers for ‘wind farms’ is in full force. The reason is simple: it’s in the Cape where the wind is; the Highveld, for example, has almost none.

According to a spokesman of the Department of Environmental Affairs of the 150 wind farm environmental impact assessment (EIA) allocations, no less than 115 were from hopeful operators in the area from Cape Town to Upington.

So big is the interest that the department has placed a moratorium on processing wind farm applications. Ompi Aphane, the depute director-general of electricity, clean energy and nuclear in the Department of Energy, has reportedly indicated that it would pass the risk of securing EIA approvals on to the developers. In the Western Cape, the rush is big: Wesgro, the agency tasked with economic development in the province, says wind farms could require capital investments of some R8.3 billion. Others who have taken an interest in the Cape’s potential, environmental consultants involved in EIAs, put the figure closer R12 billion.

Bearing in mind the IRP’s required 8 500MW and farm costs estimated between R15 million and R25 million per megawatt, the figures become breathtaking.

The most recent private initiative in the Western Cape is that of Western Wind Energy, which is planning to build 40 wind turbines of 3MW each, generating about 120MW and 80 000 PV solar panels (generating 20MW) spread over an area of about 1 000 ha on three farms just 3 km north of the little Moravian hamlet of Mamre (about 13 km south of Darling). Associated infrastructure will include a small substation on site, ‘twee spoor’ access tracks and an electricity transmission line to the Dassenberg Substation in Atlantis.

This, at 140MW, is no small fry, considering that nearby Koeberg Nuclear Power Station has a capacity of 1 800MW.

Western Wind Energy is being driven by Stellenbosch entrepreneur Paul McNaughton, who has partnered with Estonian Randar Tamm. Tamm himself was responsible for the establishment of a 30MW wind farm in Estonia and two 60MW each farms in Finland.

McNaughton tells Cape Business News that the first phase of the project will require some R1 billion to bring to fruition. It will also require a prior 18 months period to complete the EIA “and then get a bankable permission”.

And there lies the crux of potential problems. Basically this means a Power Purchase Agreement with Eskom, the big grid operator. But before this can be achieved a number of concerns will have to be addressed, the chief being the possible imposition of environmental criteria for all but some projects which could amount to a pre-selection of wind farms before bidding for the first phase of the renewable energy feed-in tariff (Refit) programme starts. Refit, which tops up fees paid for renewable energy generation, will give preference to projects that have all the necessary sign-offs to begin construction.

There’s more: the National Energy Regulator of SA’s (Nersa’s) review of renewable energy feed-in tariffs could deal a severe blow to market confidence in the government’s commitment to promoting green energy. Recently Nersa proposed a reduction in tariffs in the period up to 2013.

Ensuring investor security needs consistency and certainty. Right now, there is not much of that.

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