Western Cape Business News

Send  Share  RSS  Twitter  17 Sep 2012

POWER SUPPLY: Wind Farming Picking Up Speed


Recent Western Cape Business News

THE Round 1 procurement of wind power was a bold step by government that continues to have sufficient critical mass to instantaneously create the beginnings of a wind sector in South Africa. So says the SA Wind Energy Association (SAWEA).

Following years of fruitless activity in the wind sector, it was a strong signal to the pioneer developers that the sector is finally opening up and that they will be rewarded for their years in unchartered territory - and their willingness to undertake substantial risk in spending large amounts on development while the regulatory regime was still maturing. It should be highlighted that Round I developers are creating the industry norms, and laying the much needed initial group work for subsequent Round II bidders to follow, according to the SAWEA website.

Government’s target for financial close within a little more than six months is ambitious (this is not the norm traditionally in renewable projects in the global market) and it must be said that a sterling effort by government followed to deliver on this proposed target, especially in a brand new industry where lenders, developers, EPC contractors together with government are trying to navigate an intricate closing process.

The amount of work involved for ‘SA Wind Incorporated’ (Government in multiple ministries, provincial authorities, municipal authorities, developers, equity providers, BEE partners, communities, banks, development agencies, firms of attorneys, firms of accountants, EPC providers, logistics providers, equipment providers, construction firms, community development experts, Eskom, grid integration experts, radar experts, bird and bat experts, biodiversity experts and many others) has been nothing short of immense.

It appears the majority of wind projects that reached preferred bidder status are on track to close successfully. This has required a Herculean effort with many people working seven days a week for months on end.

The impressive fact of the matter is that , despite the very tight timeframe, South Africa is largely on track to deliver a renewable energy programme dwarfing (in rands invested) an imposing initiative like Gautrain.

The delay recently announced was only two weeks. Some rather obscure legislative ‘tick-boxes’ only revealed themselves recently and it may happen that the financial close date moves out again – but once more, the likely delay will be weeks and not months. Given all the unproductive years that passed since the White Paper on Energy in 1998 and the Renewable Energy White Paper in 2003, this delay is insignificant and probably allows developers some welcome breathing space to ensure all formalities are indeed in place.

Thereafter, the shovels can turn soil and the building of a new infrastructure sector will be well underway. On present projections, South Africa will be in the global top 15 countries of wind power installed by 2015 – from a base of insignificance today.

In terms of the government vision of a developmental state where a competent bureaucracy enables private sector to assist in developing the country, renewable energy may just become a very good example. In wind power, with the very large equipment and concomitant challenges that are involved, such a success will be particularly pleasing.

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