Sending energy via the Eskom network.
South Africa’s renewable energy industry reached a new milestone recently when the 69MW Msenge Emoyeni Wind Farm became the first independent power producer (IPP) using wind technology and selling to a private offtaker to come into operation.
The buyer is petrochemical giant Sasol. The energy from Msenge Emoyeni, situated near Bedford in the Eastern Cape, is transmitted via the Eskom transmission network to Sasol’s plant in Sasolburg in the Free State to produce green hydrogen.
Sasol CEO Simon Baloyi says Msenge Emoyeni is part of 750MW of green energy agreements that Sasol has already secured to achieve its target of 1 200MW of green energy by 2030.
“These developments are a major milestone in our commitment to sustainable energy. We want to build on this success and explore opportunities to establish ourselves as leaders in renewable energy projects. This helps us reduce our carbon footprint and supports South Africa on its energy journey.”
ALSO READ: Grid storage is the missing link in SA’s electricity crisis
Consortium
The wind farm was developed by a consortium led by African Clean Energy Developments (Aced), which already has several renewable projects in operation and is developing more.
The wind farm consists of 16 turbines with a generation capacity of 4.5MW each and has a 20-year power purchase agreement with Sasol.
Aced GM James Cumming says the company and its parent company and funder, African Infrastructure Investment Managers (AIIM), are participating in the government’s Renewable Energy Independent Power Producer Programme (Reippp) and already have about 1 000MW of projects in operation.
“The programme is very important and necessary, but it is complex, and the competition is tough,” he says.
Aced therefore targeted the private sector early on, and has already developed and built a 30MW solar farm cluster near Odendaalsrus in the Free State, with Harmony Gold as the offtaker.
Its early entry ensured that Aced obtained network connections, and the group built on its experience with the solar farm to put all the necessary approvals and agreements in place for the wheeling of the power.
Sasol is directly connected to the Eskom network, so there was no need to work with the local municipality, but “is still very complex to arrange wheeling through municipal networks”, says Cumming
Aced is currently building three more wind farms, all in the Northern Cape – two near Murraysburg in the Karoo and one between De Aar and Philipstown. One will supply power to Richards Bay Minerals and two will supply Sibanye-Stillwater.
ALSO READ: Eskom caught in ‘serious loot’ trap with IPP contracts
Grid access
It is important for investors that the rules for access to Eskom’s transmission network are clarified as soon as possible, says Cumming.
He says the network is under pressure, especially in the Eastern, Western, and Northern Cape, but also in other parts of the country, and it is crucial for the market to know who will receive priority for network connections.
Eskom caused significant consternation last year when it suddenly changed the rules for access to the grid. Until that point, projects whose applications were submitted first were given priority. However, the power giant wanted to change this so that projects that are shovel-ready would be prioritised – meaning delayed projects could lose their allocations.
This came after the failure of the government’s sixth Reippp bid round when no wind farms were approved due to a lack of network connections. A total of 23 projects were stranded as a result.
After major opposition from the industry, Eskom introduced interim rules and applied to energy regulator Nersa to reserve network connections for projects in the government’s procurement programme, at the expense of those with private-sector power purchase agreements, like Msenge Emoyeni. In this way, Eskom hoped to ensure the success of the government’s bid window.
However, Nersa rejected this in July because Eskom is compelled to manage the grid in a non-discriminatory manner.
Eskom has not yet replaced the interim rules with a permanent framework. “The uncertainty is the big problem,” says Cumming.
He says the framework currently awaiting approval by Nersa, which would allow renewable IPPs to have their output curtailed under certain conditions, will provide relief as it will make extra grid capacity available.
Isabel Fick, head of Eskom’s system operations office, which manages the network, previously said the network is full during peak times, but there is still capacity available when consumption is lower. By limiting the output of generators during peak times, more can be accommodated on the network.
IPPs are receptive to curtailment, and Nersa must now decide on a tariff at which they will be compensated for this.
ALSO READ: Government and private sector announce R790bn in capital expenditure projects
Network expansion
Cumming says Aced is also excited about the prospect of being involved in the expansion of the transmission network.
Eskom previously indicated that it would go to the market early next year to involve the private sector in projects where they can build specific transmission lines, operate them for a number of years, and then transfer them to the National Transmission Company of South Africa (NTCSA).
“It will just depend on how these projects are structured,” says Cumming.
He adds that such projects will be simpler than the development and construction of renewable generation projects, and Aced has experience in this field since the construction of wind and solar farms generally involves limited construction of transmission lines, substations and related infrastructure.
AIIM is already involved in toll roads, which are built on a similar model, says Cumming.
This article was republished from Moneyweb. Read the original here.
