Energy and the future

South Africa’s exciting renewable energy programme is back on track.

Anew Integrated Resource Plan was released by South Africa’s Energy Minister in August 2018. This was a major event because the first Integrated Resource Plan (IRP) was printed in 2010 and was supposed to be updated regularly to guide the nation’s approach to electricity.

Instead, the release of updated IRPs was delayed. In that uncertain environment, there was a strong push for expensive nuclear options. The release of IRP 2018 brings certainty to the market again. Nuclear will not be considered again until at least 2030. The South Africa Photovoltaic Industry Association (SAPVIA) welcomed what it calls the “rational” draft Integrated Resource Plan.

When South Africa ran out of power in 2008, a programme to get private investors to build renewable energy capacity was instituted. It was called the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP). Between November 2011 and July 2016, South Africa received commitments of investments to the value

of nearly R200-billion through this innovative and efficient programme with encouraged private investment into the South African power generation sector.

According to the Department of Energy, the REIPPPP by 2016 had not only delivered multiple millions in investments, it also created more than 30 000 jobs and benefited local community development to the tune of R256-million. Figures released by the South African Wind Energy Association (SAWEA) showed shareholding for local communities reached an estimated net income of R29.2-billion over the lifespan of the projects. Some 14 000 new jobs are expected to be created, mostly in rural areas, and more than R30-billion has already been spent on Black Economic Empowerment (BEE) in the construction phase.

In April 2018, new Energy Minister Jeff Radebe restarted the REIPPPP when he signed off on projects totalling R56-billion that will add 2 300MW to the national grid. There had been a long delay in the process as national utility Eskom argued against accepting more power purchase agreements while they had a surplus. Most of South Africa’s electricity comes from coal and Eskom is building two huge coal-fired power stations.

Most commentators on the IRP 2018 have praised its basis in science and the fact that it has adopted the “least-cost” method of analysing options. With renewable energy costs having been dramatically reduced, the IRP concludes that wind, gas and solar power (photovoltaic) will be the three methods to be allocated the most new projects up to the year 2030. The other form of solar power (concentrated solar power, CSP) is very effective and some projects have been successfully commissioned, but it is relatively expensive. Despite the emphasis on renewables in the IRP, SA’s energy mix is still weighted towards coal. Two new power stations, Kusile and Medupi, are being built by Eskom and 1 000MW has been allocated to private producers to build coal-powered stations known as Thabametsi and Khanyisa. The IRP has attracted criticism for enabling an expansion of the coal industry.

Koeberg nuclear power station is due to be decommissioned soon after 2045.

In commenting on the IRP 2018, SAPVIA raised a question about the role of the Small-Scale Embedded Generation market in the form of facilities such as rooftop-PV installations and the growth in demand for LPG gas for cooking. The association stated that the 200MW allocation is insufficient to address what it believes is a growing market.

POWER GENERATION TO 2030

Technology Wind New allocation to 2030 % of mix in 2030

8 100MW 15%

Gas 8 100MW

Solar (photovoltaic) 5 670MW

Concentrated solar power 300MW Hydro Nuclear 2 500MW*

None

Pumped storage Coal None

1 000MW 16%

10%

1%

6%

2.5%

4%

46%

* This takes into account the possible Inga project in the Democratic Republic of Congo.

Gas

Gas in various forms is very much in the spotlight. South Africa’s neighbour Mozambique has large offshore deposits and a sub-committee of the Southern African Development Community (SADC) has been tasked with working out a master plan for the region.

A study prepared by the Energy Centre of the Centre for Scientific and Industrial Research (CSIR) reports that wind and solar power (supported by natural gas, biogas and hydro-electric power) could be up to the task of providing “baseload” power. The base load is the permanent minimum amount of power that the grid must be able to deliver to keep the country working. There is special interest in natural gas as a source of a versatile and mobile back-up for the main types of renewable energy: if the sun goes behind a cloud or the wind does not blow, it is very easy to turn on the gas.

This fits in well with the Department of Energy’s enthusiasm for gas-to-power. It is targeting the procurement of 3 126MW through its programme and intends spending R64-billion on port, pipeline, generation and transmission infrastructure in at three key ports, Richards Bay, Coega and Saldanha Bay.

Hydraulic fracturing (fracking) has not been in the news for a long time but it has not been ruled out by the government. Controversy arose when this method of extracting gas was proposed for large parts of the central Karoo region. A bill currently working its way through parliament, the Mineral and Petroleum Resources Development Act (MPRDA), will deal with gas supplies and the contentious fracking issue.

Financing

The creation of an entirely new economic sector in a very short timeframe has been a boon for financing and banking.

An innovative project was announced in 2018 with the bundling of five projects into one. All of the projects are being built by Enel Green Power but by creating one holding company to distribute the funds, Absa and Nedbank, the lenders, were able to reduce costs. Law firm Norton Rose Fulbright concluded the R3.5-billion financing arrangement.

The support of two of South Africa’s biggest institutional investors, the Industrial Development Corporation (IDC) and the Public Investment Corporation (PIC), has been crucial in getting the renewable energy sector off the ground. They have also played a role in helping communities fund their participation in community trusts. According to Business Day, the PIC has so far invested in 16 unlisted projects and its total investment stands at R11-billion. The IDC’s 24 projects are valued at R14-billion and will contribute 1 100MW to the national power grid.

Many partnerships between local and international companies have been established. South African partners are often local energy companies and representatives of residents. Typically, a community trust is established to represent the interest of the local community.

Investment by black people into the RE programme is not limited to community trusts. Pele Green Energy is engaged with a photovoltaic plant at Touwsrivier in the Western Cape as a shareholder and as a provider of construction management services. Once the facility starts generating power, Pele will operate and maintain the plant.

Among the international investors active are Enel Green Power (Italy), Scatec Solar (Norway), Globeleq (UK), Mainstream Renewable Power (Ireland), Gestamp Renewable Energies and Abengoa (Spain), Solar Capital (Phelan Energy Group, Ireland), SunEdison (USA), ACWA Power (Saudi Arabia), China Longyuan Power Group, (China), Engie (France), juwi Group (Germany) and Tata Power of India. The last-named company has teamed up with the energy unit of Exxaro Resources to form a company called Cennergi.

Partnerships with foreign utilities or power companies are becoming more common, in part because the competition is bringing down the price which bidders are offering to sell power. This makes it difficult for South African firms to compete on their own. Many foreign investors such as large national utilities have strong reserves of cash and don’t need to borrow money.

The new bank created by the five nations of BRICS, the New Development Bank (NDB), has made $180-million available to Eskom to help it integrate power from renewable energy sources to the national grid.

Realising Africa’s Renewable Energy Potential

Wind - Solar PV - Commercial & Industrial Solar Rooftop - Hybrid Solutions

w www.genesis-eco.com m +27 (0)83 460 3898 e davin@genesis-eco.com c/o Unit B10, Century Plaza, Heron Crescent, Century City, Cape Town PO Box 363, Newlands, 7725, Cape Town, South Africa

Davin Chown

BIOGRAPHY

Davin has been active in Genesis since becoming a shareholder in 2002. His experience in the renewable energy sector extends from 1995. He has been part of developing and commercialising the various companies in the Genesis group, which is developing over 2 500MW of renewable energy projects in South and Southern Africa, 600MW of which is part of the REIPPPP. Davin has been the Chairperson for SAPVIA since 2014, served on the board of SAWEA for four years and was a co-founder and Steering Committee member of the SA RE Council. He has also founded a number of sustainability consulting companies.

Utilising South Africa’s natural assets more effectively

The Director of Genesis Eco-Energy Developments, Davin Chown, describes his company’s vision for renewable energy in growing the economy.

What does your company do?

Genesis Eco-Energy is one of South Africa’s pioneering renewable energy companies providing project development, management and operations services across a range of renewable energy technologies. This includes hybrid PV-biomass energy storage solutions and smart power solutions coupled with energy efficiency. Genesis develops, implements, owns and operates the projects.

Where did you start?

Jeffreys Bay Wind Farm was one of our first projects back in 2001. That started as a very small project which was a 15MW wind farm with 5.5MW pumped storage component. As the market changed the project changed and it became one of the very first successful large-scale wind farms as part of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).

That was a large project for a first project.

When we started with Genesis we were one of the pioneering renewable energy companies in South Africa. Many people used to say renewable energy is only fit to be rural energy. As technologies matured the markets matured and people have come to understand the scope and scale and application of renewable energy as a modern energy source. We had an old saying which we borrowed and adapted: think big, start small and scale fast. It’s very similar to the succesful and rapid evolution of cellphones and personal communications.

Obviously, the market changed once the national government was looking for power?

We started off understanding that given climate change challenges and global market shifts, the whole move to clean, decentralised and distributed power would eventually catch up with South Africa. We spent a lot of time and energy in working with government to

get them to understand how renewable energy could play a role in achieving government’s economic and development objectives, ranging from power supply at a much more affordable rate right through to building new skills and catapulting South Africa into a new era. We started with that in 2001, way before the REIPPPP was even dreamt of. We had the vision, we had the tenacity and the wherewithal to stick it through – and that still holds today. It’s in our pioneering DNA. Together with others, we have been able to convince policy-makers that renewable energy has a fundamental role to play in reshaping the way that we deliver and use energy.

I presume that you are pleased that there is an Integrated Resource Plan (IRP) and that RE is part of it?

Yes, we are pleased. Renewable energy is starting to take its rightful place. The IRP in itself still needs to go a long way to reflect adequately the realities of the 4th Industrial Revolution. We think this will happen as South Africa comes to terms with all the demands for jobs and for economic growth. The economic challenges that we have today need to be reflected in the IRP. Renewables are uniquely positioned to drive economic growth.

Are you interested in technologies besides wind and solar?

We talk about hydro-marine and bio-energy because we also have a very strong interest in the full spectrum of renewables. It is still early days for marine energy though it holds promise.

What underpinned the decision to develop Jeffreys Bay and when did you exit the project?

The team identified an opportunity for wind technology to play a role at local scale and deliver on the needs of a local municipality and industries who were struggling with power quality. The project was born with the objective of strengthening the grid, strengthening power quality and playing a major role in economic development in the Jeffreys Bay area. We exited the project when we sold it on at financial close in Round One of the REIPPPP.

Where else are you active now?

We also secured two 50MW PV plants in Round One. In Round Three we were successful with three wind farms, all three of which are now operational and in which we still retain a 15% shareholding. The wind farms in the Northern Cape are Khobab, Loeriesfontein and Noupoort. We are actively developing projects in three Southern African countries.

Did retaining your share represent a shift in thinking?

Genesis is a South African born and bred company. We aim to hold on to our projects for the long term if we can. We have a long-term vision of owning and operating a significant portfolio of projects. Genesis is one of the few 100% South African-owned development companies that have been around for some time. We believe that South Africa has wonderful natural assets and they are under-utilised. The country’s natural resources and its human resources are under-utilised, and we’re finding innovative ways to harness both to the benefit our country and its people.

Celebrating 100 years of innovation and sustainable growth

While we are a global player, we adopt a very strong local focus and ensure that we make an indelible footprint in all the locations where we are active. KAEFER team with their 3rd consecutive award for Painting Contractor of the Year at RBCT.

Since its inception in 1918 in Bremen, a small town in Germany, KAEFER has developed into a market leader for asset integrity services and solutions in Industry, Marine & Offshore and Construction. With over 27,000 employees in 30 countries at 2000 locations, we are a true global player – there for you all over the world.

We offer a wide range of industry solutions such as insulation, access, surface protection, passive fire protection and asbestos removal to the South African and Sub-Saharan market. In everything we do, the client takes centre stage and we take pride in our efficient and innovative approach to overcoming challenges and providing services and solutions.

“Together, we support our clients’ asset integrity by delivering reliable and smarter services and solutions throughout the entire life cycle.”

We also pride ourselves in doing things the KAEFER way. It’s what makes us Recognised, Efficient and Different (RED) and is seen clearly in our consistent safety record, cutting-edge technical expertise and strong ethical values that guide us in everything we do. Furthermore, we’re driven by innovation and by doing things differently. We develop new and tailored solutions that benefit our clients and are frontrunners in digitalisation in our industry. We also assure quality, safety, cost-efficiency and continuous improvement with our substantial in-house expertise and fully integrated services.

While we are a global player, we adopt a very strong local focus and ensure that we make an indelible footprint in all the locations where we are active. We have the pleasure to work with and contribute to the success of projects and maintenance contracts for clients such as SAPREF and Richards Bay Coal Terminal (RBCT) in the KZN region as well as Eskom power stations in Mpumalanga and Limpopo, namely Tutuka, Majuba and Matimba and Medupi power station among others.

“Increasing our competitive strength by being Recognised, more Efficient and Different.”

As part of our commitment to corporate social responsibility, we have completed several community projects in the KZN, Mpumalanga and Limpopo provinces where we operate. We strongly believe that sustainable empowerment is achieved through education; children are the leaders of tomorrow. With this focus on impacting South Africa’s future through education, KAEFER has, among other community projects:

› Partnered with SAPREF by contributing towards a project that saw the building of two science labs at the Ogwini and Menzi High Schools in Umlazi. The project, owned and driven by SAPREF, involved converting a classroom at both schools into a fully equipped science laboratory complete with workbenches, cupboards, Bunsen burners, science kits and chemicals. Other teaching aids were also donated to the schools. › Given Phegelelo High School in Lephalale a much needed facelift to their facilities including classroom blocks, toilets and sports grounds.

At KAEFER, we rely on our long history and business continuity which gives us stability and orientation. Our successful track record speaks for itself. And it also serves as a testament to the strength of our strategy, and our vision – to eliminate the energy waste.

World first for Maritz Electrical Lighting the way to St George’s Park lighting quality is unique. new possibilities

Kurt Maritz, Managing Director Kurt Maritz

BIOGRAPHY

What sort of work did you do in the beginning?

When we started, we were two companies helping each other. Cyprian Maritz Electrical is revolutionising stadium experiences. Rosslind and I had a loose partnership. I did the marketing, he did the execution. We did some basic electrical contracting. Some of the first A massive contract to install world-class lighting at the St George’s work we did on contract, we still have that relationship going 17 years Park cricket ground in Port Elizabeth has given Cape-based lighting later. It was for Technical Services of the City of Cape Town. We did the company Maritz Electrical a head-start as a national leader in LED electrical side of water and sanitation. and theatrics lighting for sports stadiums. As company founder and Managing Director Kurt Maritz says, “That’s the sort of project that comes around once in a lifetime.” So you found a niche? The project was a global first because it made St George’s the first stadium to have LED lights fitted with theatrics that was also We actively started looking for things that other electrical companies compliant with International Cricket Council standards. either can’t do, don’t want to do or find really hard to do. The work The R27-million project was completed on time and on budget, despite installing lights on top of the Duckpond Pavilion at night for the city was very difficult, but we had those skills. It was complex in high winds. work, which very few people specialised in. Certainly, there were no The response has been enthusiastic. For Kurt, the television experts provided the really important feedback. “We cared about black companies doing that sort of work. SuperSport the most and they have been raving. If there are light and dark spots on the field the cameraman must remember to Kurt Maritz holds a National Diploma in Accountancy and And beyond the work for the city? change the aperture. They said that the lighting was excellent.” Maritz Electrical wants to be the “go-to” company with respect Computer Practice, but is more accustomed to developWe got more and more work and in 2004 we registered the CC. We to stadium lighting installations. Contracts in Bloemfontein and closer to home suggest this is already happening. “I am pleased ing businesses, as his track continued operating two businesses and that ran on until about 10 to announce we are going to be doing something similar in our

BIOGRAPHYrecord proves. His first job was with First National Bank. While years ago, when we very amicably parted ways. backyard, at Coetzenburg, but not including theatrics. Stellenbosch University has signed with us as part of a massive project.” working in sales, Kurt met an For Kurt, the learning process has been exciting. “We are learnKurt Maritz holds a National How did the stadium work come about?electrical supplier for whom he ing applications from our clients,” he says. “At St George’s for that Diploma in Accountancy and We asked, “What else is nobody else doing?” The answer was stadium went to work. His contracting section grew, and he decided to exciting time when you are waiting for an umpire’s decision, we did a heartbeat with sound and the lights that go with it. We also put a Computer Practise, but is and sports field lighting and maintenance. I had the privilege of workgo on his own and started Mar- ‘6’ in the lights. The umpires asked if we could keep the light level more accustomed to develop itz Electrical in 2000. Through his leadership skills and vision- ing on the old Green Point Stadium. Sports field lighting is now the on the pitch the same and do the theatrics at the same time. The possibilities are endless. In athletics, for the 100 metres, you could ing businesses, as his track re ary outlook, he now employs in - most dynamic part of the business. kill all the lights and follow the guys down the straight.” cord proves. His first job was with First National Bank. While So the 2010 Soccer World Cup was good for you? excess of 150 staff. The company has benefited small businesses, grown skills and given Maritz Electrical is the approved installer of Musco Lighting. A visit to Musco headquarters in the US made Kurt aware of how the lighting system at a stadium can create new revenue sources working in sales, Kurt met an Interestingly, Maritz did not do one of the FIFA stadiums! But it was lifestyle improvements to staff, their families and communities. for clients. As Kurt comments, “If you have a light show before the game, you have better crowd control and there is an opportunity for electrical supplier for whom he still one of our busiest periods ever because FIFA created a Legacy SOUTH AFRICAN BUSINESS 2019 went to work. His contracting 34 Fund to build hundreds of community sports fields, and that’s where section grew, and he decided to we got involved. go on his own and started Maritz

vendors to sell memorabilia or food. The same when you leave, it creates a new revenue stream. We are learning as we move along.”

Stadium lighting falls within the broader category of large-area lighting. The global move to LED lighting has been a positive thing for Maritz Electrical. In South Africa, however, Kurt notes that there is difference between the indoor and outdoor scenarios. For indoors, “everybody is going that route” but that return on investment (ROI) is somewhat different in the outdoor setting.

“With street lighting and security lights (which burn for a long time) the ROI is good. For large areas like sewerage works or plants the ROI is something like three to five years and the power saving is there. That is not the case with sport stadiums, so the equation is different.”

Maritz Electrical is active in large areas such as Cape Town’s Grand Parade, airport runway lighting and city council facilities. The company operates in the commercial, industrial and public sectors and offers a wide range of services.

A new area for Maritz Electrical is reticulation and electrification: low-cost housing projects, street lights, road-side furniture and mini-substations. Says Kurt, “It is a big market and we can’t ignore it. Our new sales manager comes from this background and we are building skills in this area. We are involved in two major projects in the Western Cape, at Overstrand and Stellenbosch municipalities.”

With an expanding workload, Maritz Electrical made a move in 2018 to new premises in Athlone. “We have moved 150 staff from three branches into one customised 3 000-squaremetre facility. It is designed in such a way that we have enough space for 50% expansion. Half of the massive space we dry-walled so that we have a suite of offices.”

There are no specific targets, but Kurt is clearly looking forward with anticipation: “We don’t have any ceiling we want to hit. Our engine is our sales department. As much work as they bring in, that’s how we will grow.”

The staff of Maritz Electrical includes three Master Electricians and 75% of the staff complement is technical.