Renewable energy developer Red Cap has received environmental approvals for three contiguous wind farm sites in the Eastern Cape and has also concluded an agreement with the Industrial Development Corporation (IDC) to facilitate material community ownership in its proposed projects.
CEO Mark Tanton tells Engineering News Online that it is now keen for the long-awaited procurement process to begin “in whatever shape, or form”. But it also wants to be given a reasonable timeframe in which to refashion its bid to fit with the new procurement framework.
He also believes that it would not be “unreasonable” for potential developers to expect some form of consultation from the Department of Energy and the National Treasury, which will together run a procurement process that will include both price and non-price selection criteria.
In a joint open letter to policymakers, the South African Wind Energy Association, the South African Photovoltaic Association and the Southern Africa Solar Thermal and Electricity Association said new consultations were necessary to ensure the revised procurement process is “workable”.
Tanton says such consultation need not take the form of a review, which would delay the process. Instead, government could simply outline the new principles and extend the response period for the request for proposals to between 90 and 120 days to allow developers time to recalibrate their bids to the new rules.
For its part, Red Cap is continuing with its noncommercial preparation and sees the receipt of a positive record of decision (RoD) from the Department of Environmental Affairs, following a two-year environmental-impact assessment process, as a key milestone.
The RoD covers sites in close proximity to Oyster Bay, Humansdorp, St Francis Bay and Jeffries Bay, which together comprise what is known as the ‘Red Cap Kouga Wind Farm’.
The sites collectively have the potential to host wind turbines capable of producing 300 MW, but will be developed in phases.
Tanton says the company is planning for a 100 MW, R1.8-billion development for the first phase, which would involve between 33 and 41 turbines, depending on the final technology choice and configuration.
Prior to the as yet unpublished changes to the procurement process, which is now unlikely to be premised on a renewable energy feed-in tariffs (Refit) published in 2009, the project was expected to be funded through a combination of 70% debt and 30% equity. However, that ratio could change as Red Cap and its partners, Standard Bank, Evolution One and the IDC-backed community trust, realign the bid to the new procurement rules.
Currently, 26% has been set aside for the community trust, which will be funded through a R150-million IDC loan.
The beneficiaries of the trust, who will be named once the bid is underway, will repay the loan, which will be offered on favourable terms, through forfeiting some of the dividends in the initial years.
“As a purely South Africa-focused developer, we will be pragmatic in our response to the changes. But we will continue to engage with government and the regulator to ensure that future procurement rounds are placed on a sustainable footing,” Tanton says, indicating that Red Cap still sees the Refit as the most sustainable model.
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