Peter Neilson, Acting Executive Director of Electricity and Energy from the NMBM, at a recent KwaZulu-Natal Sustainable Energy Forum (KSEF) event stated that through this agreement there is one project that is currently running in the NMBM, a 1.8MW Electrawinds Wind Turbine project, and 15 projects in the pipeline. Elvin Fredericks from Amatola Green Power (AGP) adds that the projects range from 100kW to 5MW and that some of these projects will be implemented in the next six months. A range of technologies including bagasse, hydro, biomass, wind and solar will be implemented.
Neilson explained that NMBM has signed a 20 year agreement with AGP and charges them a wheeling fee of 7% on the energy sold via their grid. The wheeling agreement allows for a maximum of 10% of the NMBM’s total energy consumption to come from Amatola Green Power and states that a maximum of 20% of that 10% can be imported from outside of the municipality. Neilson says that the NMBM have signed a “non-exclusive 20 year trading agreement” and that when new green power traders come on board the agreement with AGP will be adjusted.
Neilson explained that at the moment the wheeling fee charged is not financially profitable for the NMBM but that they are trying to promote the renewable energy sector and attract investment in the municipality and are looking at the benefits in the long term, “If we are going to try and develop this market somebody has to lose and that has to be a managed and calculated risk like anything in business, there has to be a risk and a reward.” Neilson explains that municipalities need to take the financial risks in order to make renewable energy projects bankable. “As a municipality you have to weigh up your responsibilities and why you are getting involved,” adds Neilson.
The wheeling agreement is also helping the NMBM to learn more about connecting renewable energy projects to the grid and to document the existing generators in the NMBM. Neilson explains that in ten years time when a Smart grid comes about in South Africa municipalities will not be aware of the existing renewable energy projects. Neilson explains, “The principle of rather creating something that you can manage and understand for the future must make more sense, because at some stage or other even if Eskom increases its energy by 8% for the next four years it’s definitely going to have another price increase and with South Africa having a reasonable regime for solar and for wind it’s going to make no sense for persons investing in new properties not to have roof structures that are built out of solar PV, wind and other type of generators, and if we don’t manage it now as a Municipality we are going to lose that opportunity for the future.”
Neilson explained some of the reasons for the slow uptake of renewable energy in South Africa, “we don’t understand the renewable energy market yet and even though it’s become expensive we don’t see electricity as a budgeted commodity but within the next few years that is going to change totally especially with the new generation coming through.” Nielson further emphasised the potential of renewable energy investment in the future especially with expected increases in electricity prices “we are still used to energy costing 40c but not any more and when that happens investment into renewable sources is definitely going to take place and from a municipal point of view and from a government’s point of view we should manage it and we should take the risks now so that we benefit in the future.”
Neilson adds that there have been some challenges as the four quadrant metres that are required by generators are expensive and project developers are having problems with cash flow. Since the NMBM has started to fund 50% of the cost of the metres and has set up standardised documentation they have seen a greater uptake, says Neilson.