SunEdison Inc., the best-performing U.S. solar company, is acquiring a 60 percent stake in 48.5 megawatts of clean-energy capacity in South Africa from BioTherm Energy Pty Ltd.

The plants, two solar and one wind, are selling electricity to state-owned Eskom Holdings SOC Ltd. under contracts with about 19 years remaining, according to an e-mailed statement Tuesday. The purchase from Denham Capital Management LP-backed BioTherm is expected to close “in the near future” after a review by the country’s energy department. Terms weren’t disclosed.

SunEdison will take over managing the 27-megawatt Dassiesklip wind farm and the Konkoonsies and Aries solar farms, each of which generate about 10.8 megawatts, a year after the deal closes. The projects all became operational in the first half of last year.

SunEdison has gained about 55 percent over the past year, the most of any U.S. company on the 21-member Bloomberg Intelligence Global Large Solar Energy Index.

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The Kathu solar photovoltaic (PV) facility, in the Northern Cape, is expected to deliver 179 GWh/y of clean energy to the national grid.

Project owner, Renewable Energy Investments South Africa (REISA), had achieved the scheduled commercial operations date in August 2014 under its power purchase agreement (PPA) and the project had since been operating at full capacity, successfully delivering electricity to the national grid. The project started commercial production in November.

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A consortium led by SolarReserve and International Company for Water and Power Projects (ACWA Power) has been selected as the preferred bidder for a 100 megawatt (MW) Concentrating Solar Power (CSP) in South Africa.

The Redstone Solar Thermal Power project, with the lowest tariff bid to date among CSP projects in South Africa, is scheduled to achieve financial close later in 2015 and commence operations in early 2018, officials said.

The electricity generated from this project will be the cheapest among the CSP projects in the country.

The project is developed in response to the DOE’s Round 3 (CSP) Renewable Energy Independent Power Producer Procurement Program (REIPPPP).

This CSP project is estimated to cost around R6 billion over the first 20 years of operation. In addition, another R150 million per year will be spent on operating cost of the project.

The Redstone project with 12 hours of full-load energy storage is expected to supply power to more than 200,000 South African homes.

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The announcement of the preferred bidders arising from the fourth bid window of South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), scheduled for Monday November 24, has been delayed, Engineering News Online can confirm.

The delay comes after financial close for the 17 third bid window preferred projects was shifted out, owing primarily to grid connection problems.
Seventeen round-three preferred bidders were named on October 29, 2013, after 93 bid responses were received for an allocation of less than 1 500 MW.

The projects were initially scheduled to close on July 30, but the Department of Energy (DoE) subsequently indicated that it would pursue a staggered financial-close protocol, which would possibly begin this year, but continue into 2015. Engineering News Online has learned that the bidders have been requested to extend the validity of their bids to March.

The staggered closure framework was a departure from the previous two bidding rounds, when all power purchase agreements, direct agreements, implementation agreements and connection agreements were concluded on a single day by all bidders.

A total of 47 renewables projects were currently either producing electricity for sale into the Eskom grid, or remained under construction across the country. To date, the REIPPPP, held up internationally as a successful process, had stimulated about R120-billion in private investment into South Africa’s supply-stressed electricity sector.

However, it emerged earlier in the year that Eskom had serious grid constraints, which had become a major impediment to the connection of some of the round-three projects. The so-called “low handing fruit” had been absorbed by the initial projects and it had become both difficult and expensive to connect a number of the proposed projects.

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South Africa has raised the hopes of small solar PV developers with projects of less than 5MW, after proposing a dedicated fund to enable them meet their capital expenditure.

The Department of Energy has also announced changes to the procurement procedures Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) to enable Small Independent Power Producers (IPPs) cut on costs.

The developers could soon find alternative funding after big lenders shunned them for larger projects under REIPPPP, which hopes to generate 1,450MW of solar PV by 2030. The 20-year $645 billion program is also expected to generate an additional 2,275MW from onshore wind, concentrated solar thermal, biomass solid, biogas, landfill and small hydro.

Reducing transaction costsThe fund for small renewable projects could be up and running by February next year, according to top government officials, for the  benefit of projects being developed under the Small Independent Power Producer Programme with a combined capacity of 200MW. No allocation has been given for each of the renewable energy technologies for this particular category of projects.

Energy minister, Tina Joemat-Pettersson, says the financing of projects with a capacity of less 5MW is a major challenge, but pledged government intervention in ensuring development of standard documents for the projects “to reduce transaction costs.”

She confirmed South Africa is working at a proposal for a dedicated fund to assist small IPPs with transaction costs.

“This will ensure that new entrepreneurs can also enter the renewable energy IPP market. I want to give the small IPP entities and developers the assurance that the fund will be up and running by February 2015, in time for the second round (of small IPP procurement).”

The fund will be established with the support of the German government-owned development bank KfW. The bank will make the funds available to the government on concessionary terms to enable beneficiaries to achieve their project objectives.

The Department of Energy explains that the Small Independent Power Producer Programme, whose first request for proposals was released in August 2013, is “to allow South African citizens who are, or who own or control, small or medium-sized enterprises (SMEs) and/or emerging, smaller power developers an opportunity to participate in the Renewable Energy generation sector”

The programme also affords South African power generation equipment manufacturers, “who may not have international certification the opportunity to supply equipment for the projects procured under the Small Projects IPP Procurement Programme.”

Effective implementation of the small IPP programme will also make it possible “to limit the cost‐at‐risk incurred by bidders through participating in the Small Projects IPP Procurement Programme in two stages.”

Reducing costs of procurementApart from the push for a dedicated fund to cushion small IPPs from high project costs, the government has also announced drastic changes to the procurement process to make it cheaper for the “little” developers to bring their projects on board within timelines.

Senior project adviser in the Private Public Partnership at the National Treasury, Karen Breytenbach, says the department of energy would make the changes before the fourth bidding round in November.

“To reduce costs incurred in submitting tender documents, the department would reduce the number of documents required,” she said. 

"We are also going to change the request for proposal to make it less expensive for small IPPs to bid. We are looking at ways for bidders to submit their bids without going through sourcing support letters from banks."

The amendments to the bidding process and proposal for fund for small-scale renewable energy projects come barely months after developers raised concerns over the requirement that they, too, be subjected to the high compliance costs under the department of energy’s REIPPPP for projects bigger than 5MW.

South African Photovoltaic Industry Association (Sapvica) Vice-Chairperson, Mike Levington, said in an interview with the Engineering News online magazine two months ago that lack of capacity in the debt market to fund smaller IPPs is a challenge because banks are not keen on them.

“Delays in the procurement processes, such as the delay in announcing the dates of the bid windows for the small-scale IPP programme, places financial strain on companies and small, medium-sized and micro-enterprises in particular,” Levington said.

The small IPPs were also subject to compliance costs that included the $4,923 that is payable to South Africa power utility Eskom for estimate letters, which gives details on how a particular project could be connected to the grid.

South African Renewable Energy Council chairperson Johan van den Berg said, “This relatively high compliance cost has a significant impact on the price that smaller projects require to be feasible.”

Until the pledge by the Department of Energy on changes to procurement of small IPPs is honoured, the project developers are subjected to the same application process like those constructing projects of larger capacity, which the industry stakeholders argue disadvantages them.

Levington said the proposed changes to RFP for the fourth round would “hopefully be extended to the small-scale IPP process in the future.”

Eskom had previously defended the estimate letter charges saying the utility has to recover its costs related to “detailed engineering, pricing and legal work to produce the cost estimates.”

“Between the first three bid windows (of the REIPPPP), Eskom processed in excess of 1,000 cost estimate letters without direct cost recovery from the potential IPPs and, therefore, this cost had to be recovered from all customers,” Eskom was quoted saying in a previous statement.

“Many of these IPPs eventually never submitted bids (for) the government procurement programme. Preparation of a cost estimate letter requires network planning and grid studies to be conducted and this is followed by a vetting process involving pricing and legal teams,” it said.

South Africa leading in PV developmentMeanwhile, South Africa has now been ranked among the top 10 global leaders in solar PV development according to a July release by wiki-solar.org, which monitors deployment of utility-scale projects globally.

The country has deployed 15 solar PV plants with capacity of 503MW under the REIPPPP.  The projects include SolarReserve's 75MW Lesedi and 75MW Letsatsi in the Northern Cape and Free State provinces respectively.

Others are Norwegian-based firm Scatec Solar's 75MW Kalkbult solar plant near Petrusville in the Northern Cape, Globeleq consortium's 50MW De Aar and 50MW Droogfontein solar plants near De Aar and Kimberley in the Northern Cape, US company SunPower's 22 MW Herbert and 11 MW Greefspan solar plants in the Northern Cape, which it owns jointly with Spain's AMDA energy and South Africa's Alt-E Technologies.

Separately, small rooftop solar PV installers in South Africa have also raised concern over the lack of legislation which hampers the growth of small and medium enterprises (SMEs) from deploying the technology to its full potential.

South African subsidiary of German solar PV mounting systems specialist,Schletter, said in July the Department of Energy should make changes to the legislation around the solar PV industry to enable that small power producers “feed power into the grid structure.”

The company's South Africa head electrical engineer Mr Abdul-Khaaliq Mohamed said, “Grid energy management and metering must be upgraded and legislation should be revised to enable SMEs and property owners with rooftop solar PV systems to sell their excess power to the national grid.”

Mohamed said South Africa's solar PV rooftop market is picking up in tandem with the growing number of SMEs and industries – this mainly as response to the increase in tariffs by the country's power utility, Eskom and a desire to save more on electricity costs.

“If all SMEs strive to have solar PV cater for 20-30% of their energy needs this will reshape South Africa’s energy mix and make a massive difference to the country's carbon footprint, thereby ensuring a sustainable energy supply for future generations.”

Written by Shem Oirere, a freelance writer based in Nairobi who specialises in renewable energy.


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While the Department of Energy (DoE) has indicated that standard documents would be developed to reduce transaction costs related to bidding for the small projects Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), local advisory firm Infrastream director Grant Berndsen has urged prequalified bidders not to delay their preparation for the first Stage 2 submission in anticipation of these documents being released.

The first Stage 2 submission date for prequalified bidders that had submitted proposals during Stage 1 bidding, was November 2, while the second Stage 2 submission date was set for February next year.

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THE government’s plan to bring more power into the national grid through procurement from independent power producers (IPPs) has a hit a technical obstacle — Eskom cannot connect all successful projects from the third window of the renewable energy bid until the grid is strengthened.

The procurement of energy from IPPs is the quickest way to increase SA’s energy supply, which will be precarious for the next five years.

Both Eskom acting CEO Collin Matjila and Public Enterprises Minister Lynne Brown have emphasised the importance of IPPs in closing the power gap.

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SOUTH AFRICA: Financial close for projects selected under the third round of South Africa's renewable energy independent power producers programme (REIPPP) has been postponed from 30 July to end November, energy minister Tina Joemat-Pettersson announced on Monday.Joemat-Pettersson said the delay is because of the volatility of the rand and to allow utility Eskom more time to prepare for the grid connections.

The closing date for bids under round four remains 18 August, with 590MW up for tender. However, plans to select additional projects under round three have been cancelled, due to Eskom's funding problems. 

As the country's supply chain continues to grow, steel producer Arcelor Mittal South Africa (AMSA) plans to upgrade its steel mill at Vanderbijlpark, near Johannesburg, to produce heavy plates of up to 11 tonnes suitable for wind towers. 

The work should be completed by the end of the year, with production to start early 2015. The upgrade will allow AMSA to increase its output and reduce the need to import heavy plates, the company said.

AMSA expects to supply the plates to DCD Wind Towers, whichopened its factory in March, and Gestamp Renewable Industries, which should commission its tower factory by the end of the year.

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South Africa has now connected more than half a gigawatt of utility-scale solar power, moving into the world top 10 of countries harnessing renewable energy from the sun, according to figures released last month by Wiki-Solar.org.

Wiki-Solar is a leading authority on the deployment of utility-scale solar power - photovoltaic (PV) power stations of 5 to 10 megawatts (MW) and above.

The United States tops Wiki-Solar's list of the top 10 markets for utility-scale solar power, with 349 solar plants together generating 6 498 MW, followed by China (4 607 MW), Germany (3 428 MW), India (1 897 MW), Spain (1 680 MW), the UK (1 523 MW), Italy (875 MW), Canada (714 MW), and France (677 MW).

South Africa is in 10th spot, with 15 solar plants now contributing 503 MW to the country's electricity grid.

Most of these plant were built under the first round of the government's renewable energy programme for private producers - and with several solar projects still under construction, and contracts for further projects having been signed, South Africa is likely to climb still further up Wiki-Solar's rankings.

In November, the Department of Energy signed agreements with 17 new preferred bidders in the third round of the programme, following the signing off of 47 projects in the first and second rounds, bringing to 64 the total number of renewable energy projects approved by the government since December 2011.

Once they are all operational, the 64 projects - representing foreign and domestic investment of over R100-billion - will add around 3 900 megawatts of wind, solar photovoltaic and concentrating solar power to South Africa's energy mix.

And in his State of the Nation address last month, President Jacob Zuma said the government would push ahead with the fourth round of the programme so as to take advantage of wind, solar, biomass and other technologies that increased opportunities for rural development in the country.

First-round solar projects that are delivering power to South Africa's national grid include:

• The 75 MW Lesedi and 75 MW Letsatsi plants situated in the Northern Cape and Free State provinces respectively, built by a consortium lead by US company SolarReserve.
• The 75 MW Kalkbult solar plant near Petrusville in the Northern Cape, built by Norwegian-based company Scatec Solar with local partners.
• The 50 MW De Aar and 50 MW Droogfontein solar plants near De Aar and Kimberley in the Northern Cape, built and operated by a consortium led by British company Globeleq.
• The 22 MW Herbert and 11 MW Greefspan solar plants in the Northern Cape, built by US firm SunPower and owned by a joint venture between Spain's AMDA energy and South Africa's Alt-E Technologies.

Read more: http://www.southafrica.info/business/success/energy-080714.htm#.U70zy_mSzD8#ixzz36yPRWHaL

On 23 June 2014, The Board of Directors of the African Development Bank (AfDB) approved a senior loan of USD 142 million, including a USD 41.5 million concessional financing from the Clean Technology Fund (CTF), to finance the construction of the 100 MW concentrated solar power (CSP) plant XiNa in South Africa. The XiNa Solar One project is the first renewable energy Independent Power Producer (IPP) and the first private sector Clean Technology Fund (CTF) that the AfDB has financed in South Africa.

The Project cost is estimated at USD 908 million (ZAR 9,538 billion equivalent). Senior debt will be financed by the AfDB, and other Development Finance Institutions as well as three South African commercial banks.

XiNa is a 100 MW CSP plant using parabolic trough technology and a superheated steam cycle with a storage capacity of 1,650 MWh (equivalent to approximately 5 hours full load storage), configured to partially cover the South African peak load demand. This facility is located in the Northern Cape Province, South Africa and it shall be interconnected by the Special Purpose Vehicle (SPV) by a 3km transmission line to a nearby existing substation.

This project aligns well with both internal and external policies and strategies. From South Africa's perspective, the project supports the Government's energy strategy that emphasizes the diversification of energy sources as set out in the National Integrated Resource Plan (2010 - 2030). XiNa will support the country's ambitious target to reduce its huge dependence on coal fired power plants increase access to clean power, and reduce the peak power generation costs.

The AfDB's perspective will play an important role by providing much needed long-term finance, enforcing environmental and social standards and working to enhance the development impact of the Project. The project well aligns with the green and inclusive growth objectives of the AfDB's Ten Year Strategy. It also caters to the Ten Year Strategy's core priority areas, such as infrastructure development and private sector development by generating additional power capacity and crowding in private sector financing. Finally, the project is fully aligned with the AfDB's Country Strategy Paper for South Africa which aims to support the country's infrastructure development in the area of clean energy.
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