Policy & Market


Developers get building as South Africa PPAs are signed

After months of delay, the South African government has finalised power purchase agreements (PPAs) with the 28 renewables developers granted projects late last year, with several – including Abengoa and Sumitomo – indicating that construction will begin immediately.

In a move designed to revive confidence in South Africa’s nascent renewables industry, the government also revealed plans to add a further 3.2GW of capacity from 2017-2020 – giving developers visibility beyond the initial 3.6GW planned for 2017.

After winning plaudits around the world by backing more than two dozen utility-scale wind, PV and concentrating solar power (CSP) projects last December, Pretoria has faced a growing backlash as its own timelines for developmental milestones have been allowed to slip, and confidence in the government’s commitment towards renewables has at times appeared to wane.

In recent weeks, however, the government has attempted to regain its lost momentum, belatedly signing PPAs for all 28 projects on November 5, and re-emphasising its commitment to the renewables sector as a means of chipping away at the dominance of coal in Africa’s largest economy.

Spain’s Abengoa was among the first “Window One” developers to acknowledge its PPAs, saying that it has immediately commenced construction of its 100MW KaXu Solar One and 50MW Khi Solar One CSP plants in the Northern Cape, in which it holds 51% stakes.

Those projects – the former using parabolic-trough technology and the latter employing a power-tower design – are of immense importance to both Abengoa’s own global solar ambitions and the broader CSP sector.

Abengoa claims to have more than 740MW of installed solar capacity around the world, but Khi Solar One will be just the third power-tower CSP plant it has built – and the first outside of Spain, after the PS10 and PS20 plants near Seville.

Both Khi and KaXu will incorporate energy storage technology – two hours for the former and three for the latter – helping state-owned utility Eskom to ease renewable capacity into the energy system.

After receiving a PPA for its 100MW Dorper wind farm, Japan’s Sumitomo immediately clinched a ¥14bn ($175m) project financing package, set to cover 70% of the project’s estimated price tag. Dorper, slated for the Eastern Cape, will use 40 Nordex turbines and is due for completion by mid-2014.

Not all of the original 28 projects will kick off construction immediately, however.

With a PPA now in hand, French concentrating PV (CPV) specialist Soitec says it will seek to “refinance” its 44MW Tousrivier project in the Western Cape, with an eye towards entering construction by 2014.

Soitec's system is based on CPV technology developed by Concentrix, a spin-off from German solar research institute Fraunhofer ISE, that uses stacked layers of gallium indium phosphide, gallium arsenide and germanium. Together these can boost cell-level efficiency to more than 40%, according to Soitec.

Eskom believes that it will end up paying about R2 ($0.22) per kWh for the renewable electricity set to come on line by 2017, compared to the R0.71 per kWh it pays for its coal-heavy electricity today.

However, renewable-energy advocates point out that while electricity prices are currently rising swiftly in South Africa, the cost of wind and solar generation are moving sharply in the other direction.