Solar Energy in South Africa

Solar Energy in South Africa has really taken off with a raft of new deals signed between international solar project developers and the government. Note Solar Energy in SA will see a mix of all 3 technologies with solar panels, solar thermal and concentrating solar power plants being built. The solar panel plants which have closed financing have significant funding from Chinese sources and are using Chinese solar panels from Hanwha and Sutech. Note South Africa is heavily dependent on coal for its energy requirement and is trying to diversify it fuel supply. The country is suffering from heavy electricity price hikes and power supply in the country is a mess.

Electricity in South Africa – a Mess

South Africa the most economically developed country in the African continent is also is one of the most dependent countries on Coal Energy. Almost 90% of the country’s  requirements of Electricity comes from GHG emitting dirty Thermal Power Plants. Sasol which is a leading energy provider in South Africa is the global leader in Coal to Liquid and Coal to Gas Technologies. In fact most of the Fuel Production in South Africa comes from Sasol plants built long time ago to take advantage of the country’s mineral rices and avoid the oil embargo placed on the country during apartheid. The country’s electricity situation is massively mismanaged with Eskom a monopoly producer and supplier of electricity hardly adding any capacity. This is due to low prices of electricity which now is being added suddenly at 25% each year. This comes after huge shortages slowing down the economy.

Renewable Energy Independent Power Producer Program (REIPPP) of South Africa

The REIPPP was introduced by South Africa’s Energy department in August 2011, with the first bid submission for Window 1 scheduled for November 2011. Window 1 awarded 1,400 megawatts of renewable energy. The South African government has allocated 1,416MW for this first round of the procurement process, worth about R47 billion (US$5.3 billion) of fixed investment, of which the majority, around R27 billion (US$3.1 billion), will be funded by debt.28 approved bidders from the first window of the Department of Energy’s renewable energy program for independent power producers (REIPPP)with  the majority of the bidders foreign companies. The 28 projects, involving an estimated R47-billion in new investments, are spread across some of South Africa’s most rural and least developed provinces, including the Eastern Cape, Northern Cape, Limpopo, North West and the Free State and the solar and wind projects will be integrated into the Eskom grid by 2014. Further bidding rounds are expected to take place roughly six months apart from 2013 onwards to allocate the total 3725MW. In line with the country’s long-term power plan, South Africa aims to secure a total of 17,800MW of renewable energy or 42% of South Africa’s new generation capacity by 2030.

Solar Energy Developers in South Africa

1) Standard Bank – The bank has allocated $1 billion in debt and is funding more than  600 MW in wind and solar energy capacities.

2) Moncada Group – Italian renewables company Moncada Group has won the second tender issued by the South African Department of Energy to build a 189 MW, €240 million photovoltaic plant in De Aar, near Cape Town.

3) Mainstream Renewable Energy – The Irish renewable energy developer Mainstream Renewable Power Ltd. will begin building one wind and two solar plants costing 500 million euros ($636 million) in South Africa within weeks after agreeing power-purchase, funding and implementation deals with the state.Siemens AG (SIE) will supply wind turbines and Suntech Power Holdings Co. solar panels, O’Connor said. Eskom will buy the power, with guarantees from the government, he said.The developments, the 138-megawatt Jeffreys Bay wind farm in Eastern Cape and the De Aar and Droogfontein solar parks both with 50 megawatts in the Northern Cape, are expected to produce enough power for 48,000 households from 2014, he said.

4) Scatec Solar – Norway-based Scatec Solar has begun construction on a 75 MW photovoltaic project in South Africa, having signed a final agreement with the country’s Department of Energy.

5) SolarReserve LLC -Equity financing, which accounts for 25 percent of the total, was provided by SolarReserve and its project partners, Kensani Capital Investments and Intikon Energy, along with IDEAS Managed Fund and GCL-Poly Energy Holdings Ltd. The 75-megawatt solar farms will use photovoltaic panels from Hanwha SolarOne.

6) Abengoa – Abengoa announced that it has begun construction on the 50 MW solar power tower Khi Solar One and the 100 MW parabolic trough plant KaXu Solar One in South Africa. Abengoa is partnering with the state-owned Industrial Development Corporation (IDC), South Africa´s largest development finance institution. Abengoa will build, operate and maintain the plants, owns 51 % of the projects, the IDC holds 29 %, and the Black Economic Empowerment program maintains the remaining 20 %. Both plants signed today long term power purchase agreements with Eskom, South Africa’s power utility, and closed project finance agreements with a group of South African and international financial institutions.