Energy

Policy decisions hold the key to stabilising power supply.

The open-cycle gas turbine plant at Shakaskraal in KwaZulu-Natal.

The decision in May 2019 that power projects generating less than 10MW do not have to get licences from national government has given hope to independent power producers and city governments across South Africa that a new era in energy policy has begun.

These smaller projects can go ahead (up to a total of 500MW) outside of the country’s Integrated Resource Plan but the next step – allowing companies to sell any excess power they generate to the grid – will be a real game-changer.

South Africa’s vaunted Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) attracted about R200-billion in committed investments in just five years but it was limited to large projects.

An example of the potential that lies within companies is Tongaat Hulett. This company’s sugar mills are producing between 12MW and 14MW of power. The company believes that the national sugar industry could generate between 700MW and 900MW. The same could be said for Sappi’s wood and fibre mill and all of the country’s breweries. Most mining companies are now investigating (or have started) generating power for their own use.

Discussions about feed-in tariffs will have to be finalised before the huge energy-generating potential of these sectors can be fulfilled. If

SECTOR INSIGHT

Small-scale independent generation could be a game-changer.

national utility Eskom is broken into separate business units then the likelihood of the tariff discussions taking place will greatly increase.

In his first medium-term budget policy statement in late 2018, new Finance Minister Tito Mboweni, expressed an opinion on the unbundling of Eskom. Mboweni said, “Restructuring of the electricity sector is underway. This must include a long-term plan to restructure Eskom and deal with its debt obligations.”

Eskom runs electricity genera-

tion, transmission and distribution and it is a monopoly. Mboweni’s statement opens up the possibility that a long-stalled plan to divide up these functions could happen. In 2013, a parliamentary bill called the Independent System and Market Operator (ISMO) was passed but allowed to lapse in the same year.

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 2018, then Energy Minister Jeff Rabebe 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 as Eskom argued against accepting more power purchase agreements. Most of South Africa’s electricity comes from coal and Eskom is building two huge coal-fired power stations.

Most commentators on the Integrated Resource Plan (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.

A majority of wind projects have been allocated to the Eastern Cape, but approximately 60% of the projects so far allocated in the programme have been in the Northern Cape, the nation’s sunniest province.

Projects such as Kathu Solar Park (100MW), a concentrated solar power (CSP) project, and the Roggeveld Wind Farm (147MW) are indicative of the large scale of most of the energy generation that is being rolled out.

Abengoa’s three plants in the Northern Cape use CSP which reflects the sun’s rays during the day into a molten salt storage system. The energy is then slowly released during the night. The 205m tower that collects the rays at the Khi Solar One site is one of the tallest structures in South Africa.

Despite the emphasis on renewables in the IRP, South Africa’s energy mix is still weighted towards coal. 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.

Gas

While the main sources of renewable energy being pursued are solar and wind power, an open-cycle gas turbine plant at Shakaskraal in the iLembe District Municipality (pictured) points the way to another method being encouraged by energy planners. This 670MW gas turbine plant can be converted to gas-fired technology. Its project company, Avon Peaking Power, is jointly owned by a community trust, Mitsui (Japan), Legend Power Solutions (South Africa) and ENGIE of France, which is the largest shareholder.

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 Department of Energy is targeting the procurement of 3 126MW and intends spending R64-billion on port, pipeline, generation and transmission infrastructure at three key ports.

ONLINE RESOURCES

IPP projects: www.ipp-projects.co.za National Energy Regulator of South Africa: www.nersa.org.za South African Renewable Energy Council: www.sarec.org.za South African Wind Energy Association: www.sawea.org.za

Dr Tobias Bischof-Niemz, CEO

BIOGRAPHY

Before joining ENERTRAG in September 2017, Tobias successfully established and led the Energy Centre at the Council for Scientific and Industrial Research (CSIR). Tobias served as a member of the inaugural South African Ministerial Advisory Council on Energy (MACE). He was recently appointed as Professor in Practice by the University of Johannesburg. He is author of the book “South Africa’s Energy Transition” that outlines a roadmap for a lowcost, decarbonised and jobrich future for South Africa’s energy sector.

OVERVIEW The economic power of renewable energy

Dr Tobias Bischof-Niemz, CEO of ENERTRAG South Africa, aims to bring local value-add into the business of solar and wind power.

Why has ENERTRAG entered the South African market? We believe in the power of economics. The economics for solar and wind technologies in South Africa are so superior compared to the conventional ways of producing energy, that we have absolutely no doubt that there is a bright future ahead for the South African renewables market. Our company always has a long-term vision based on strong fundamentals.

What are your priorities?

One is a focus on the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) – large-scale, utility, wind and solar photovoltaic power. The other focus is “new segments”, hybrid projects which combine solar and wind, where we optimise all the customers’ options with a mix of technologies. We are looking at hydrogen production from wind and solar as well.

Are there opportunities in hydrogen fuel cells for electric vehicles?

Absolutely. The economics for the individual truck or bus owner are such that hydrogen fuel cells, purely on the fuel side, are already very close to parity with diesel.

What are your key differentiators?

Our socio-economic approach is key. Wherever we go we want to be as local as possible. We maximise local value-add in developing, implementing and operating our projects. For us and for our 15 employees, ENERTRAG South Africa is a proudly South African company.

On the technical side what’s different is that we are not a “produce and forget” wind turbine operator, we are a power plant operator and we take full system responsibility. Our power plants are based on solar and wind as the primary energy source; those are components. The actual power plant combines them and spans across an entire region.

Does the regulatory environment encourage investment?

Over the last five years there were no investments. We need an updated Integrated Resource Plan (IRP). The draft IRP 2018 is a positive move in the right direction, but it is not promulgated yet. In the smaller megawatts category, we need the regulations to embrace that. All studies show that the future of South African electricity lies in solar and wind.

ENERTRAG

One energy ahead

ENERTRAG is a German, family-owned energy company that specialises in sustainability and generates electricity exclusively from renewable sources – mainly from wind energy. We rank among the leading wind power producers in Europe with more than 762 installed wind turbines and 2.5-billion kilowatt-hours generated annually.

We combine all the competencies necessary for the successful operation, generation and supply of renewable energy. From planning, permitting, development and financing to the construction and the operation up to feeding into our own power grid with the associated transformer substations and connection to the interconnected European power system, we are one of the few companies worldwide that operate every necessary link in the production chain with sustainable energy. ENERTRAG has comprehensive knowledge and experience along the entire value chain of renewable energy projects. Since its establishment, ENERTRAG has been focusing on accelerated technological development with great determination to increase the efficiency of renewable energies.

We know that a secure, sustainable and inexpensive energy supply is only possible through wind power, photovoltaics and hydrogen. All other solutions are either too

Darling Wind Farm, 5.2MW total installed capacity.

expensive, not sustainable, too uncertain or simply not available at sufficient scale. We are putting this insight into practice. Furthermore, we store energy in the most durable and simplest of all energy sources: hydrogen. We strive to supply all energy sectors in a balanced manner, from electricity to transport fuels through to heat. Therefore, we are active wherever it is necessary to make wind and solar power compatible and to gain sufficient support for making it the basis of our energy system.

The ENERTRAG success story

As an independent energy company we produce electricity, hydrogen and heat exclusively from renewable sources and deliver secure, affordable energy for all aspects of life.

Renewables leader

>10% market share in German wind auctions in 2017 – tariffs as low as 3.8€ct/kWh

Long-term experience as developer, EPC, operator and service provider for renewables, including 20+

MW of gas-engine-driven biogas plants

Renewable power plant operator

Approximately 5GW renewables in 24/7 remote monitoring/control (thereof 830MW own assets)

Technology-neutral system optimiser and renewable power plant operator 1 000km of medium- and high-voltage grid and substations designed, built, owned/operated

ENERTRAG headquarters, including its 24/7 control centre, runs on 100% renewables.

Solutions for mines and large industries

High availability and reliability of renewable power plant and grid solutions

Reliable, long-term partner for large industrial customers

Optimal choice of components and design from a system perspective to minimise the cost of energy delivered

The brand ENERTRAG

Pioneer of the Energy Transition: first wind turbine in operation since 1992

Reliable, pragmatic shaper and implementer of the

Energy Transition

Experienced in leveraging grant funding opportunities for innovation projects.

Locations

A total of more than 600 employees work along the entire value chain of renewables at ENERTRAG

in four countries. The headquarters in Dauerthal is supported by six more offices in Germany. ENERTRAG is also present in France, Poland and South Africa.

ENERTRAG South Africa

ENERTRAG entered the South African renewable energy market in 2016 and has established itself as an important player in the renewable energy industry with a pipeline of more than 2GW of wind and solar projects under development, plus green hydrogen projects to provide innovative transport solutions.

A 100% subsidiary of ENERTRAG AG, ENERTRAG South Africa is committed to delivering reliable electricity supply, and inclusive and innovative renewable energy development to South Africa and beyond.

ENERTRAG South Africa highlights

Proud owner and operator of the Darling

Wind Farm, South Africa’s first wind energy facility.

Our highly skilled, proudly South African team is motivated to develop projects that maximise benefits for our local economy, leverage and capitalise South

Africa’s advantage in renewable resources on the global stage.

More than 2GW renewables projects pipeline under development.

Innovative green hydrogen solutions for the transport sector under development.

ONLINE RESOURCES

Physical address:

Unit 101 B Heritage House, 20 Dreyer Street, Claremont, Cape Town, 7708 Tel: +27 21 207 2180/5 Email: info@enertrag.co.za Website: www.enertrag.co.za