South African corporate heavyweights including Exxaro and Group Five are lining up to be independent power producers alongside European and Middle Eastern developers for the first share of South Africa’s on-grid solar thermal power market.
Harnessing solar energy for heat enables turbines to be driven for electricity generation. Also known as concentrating solar power (CSP), solar thermal’s edge over other renewable energy technologies lies in its storage capacity, commercially proven for at least six hours.
Industry insiders said yesterday there were a handful of CSP projects in South Africa that were among the most advanced and would likely compete for an estimated 200 megawatts of CSP power in the first round of the renewable energy feed-In tariff (Refit) programme. All were located in the Northern Cape, and included:
l Spanish group Abengoa’s plan to build a R5 billion 100MW CSP plant;
l Solafrica’s plan to build a R3.5bn 75MW parabolic trough CSP facility in Groblershoop;
l Group Five’s R5bn, 150MW parabolic trough facility in the Kalahari Solar Park outside Kathu; and
l Ilangalethu’s proposed 125MW CSP plant.
The Industrial Development Corporation (IDC) is understood to be involved in all the projects except that of Group Five. In addition, Eskom is planning a 100MW CSP demonstration plant in the Northern Cape using the less popular CSP tower design.
The Department of Energy said recently it was close to finalising policy and bidding details for an initial 1 025MW of Refit allocation. Refit is designed to top up fees paid for the production of renewable energy technologies.
The energy regulator this month proposed a reduction in the tariffs announced earlier, including a 41 percent drop in the rate for CSP with six hours of storage to R1.84 a kilowatt hour.
In terms of the government’s integrated resource plan 2010, 1 000MW has been allocated for CSP by 2025, compared with 8 400MW for wind and 8 400MW for solar photovoltaics, or panels that convert sunlight directly into electricity. Chinese companies like Yingli Solar and Suntech are eyeing the local solar photovoltaics market, alongside European players like Concentrix.
The CSP allocation falls short of the SA Solar Thermal and Electricity Association’s call for 2 000MW of CSP capacity by 2020 and 10 000MW a decade later. The association estimates a 10 000MW CSP allocation would create between 80 000 and 100 000 construction jobs, between 8 000 and 10 000 operation and maintenance jobs, and between 3 000 and 5 000 manufacturing jobs.
Rowan Goeller, the Group Five director for investments and concessions, said CSP created more jobs than other renewable energy technologies, and enabled higher local production content than wind or solar photovoltaic technologies. Group Five’s planned 150MW facility would create about 1 000 construction jobs and 80 permanent operation and maintenance jobs.
Solafrica director Mike Goldblatt said Saudi Arabian independent power producer ACWA Power had been brought in as a strategic equity partner for Solafrica’s project. Other financiers were investment house Lereko Metier and the IDC, while the company had taken a small empowerment partner and was talking to “a large listed firm”.
Thomas Garner, Exxaro’s manager for growth and energy, said the group was involved in solar projects in the Northern Cape “in partnership with others”.
He would not provide details but confirmed that they would apply for licences in the first Refit round.
Exxaro last year opted not to proceed with a proposed CSP project in Limpopo because the returns were not sufficiently attractive due to lower levels of solar irradiation and higher final costs than initially thought.
Group Five and Ilangalethu confirmed they would bid for a slice of the first Refit allocation. – Ingi Salgado