Wind energy outperforms expectations says Eskom
Keith Bowen, Eskom’s Chief Adviser of Power System Economics explained that the data he used for a cost comparison with other technologies came from a model that did not anticipate the actual performance of operating wind farms. This is because the wind map had not been calibrated at the time and further because wind farm developers search out optimum sites within generally windy areas. These sites show wind speeds exceeding the surrounding average.
This news is significant for the industry as it means that running an updated model with the new inputs would lead to a much higher allocation of wind power in the country’s long term energy master plan. Such an increased ambition would allow the industry to attract equipment manufacturers to South Africa and raise the percentage of project funds spent locally (“local content”) level of wind farms from the present 46%, towards the long term target of 70%.
“It’s pleasing to note general acceptance of our long held belief that wind farms benefit from an extremely good resource in our country” commented SAWEA CEO Johan Van den Berg. “Running the IRP model again will see us upscaling the industry to levels where industrialisation becomes very exciting. The country is in dire need of more electricity and will continue to be until perhaps 2020. Wind power can deliver this very quickly and at lower cost than any other bulk source. Wind energy is the cheapest, fastest way to get electricity to our stressed grid. We have 100s of wind turbines already providing energy to the grid, with thousands more in development and dozens of projects in various stages of planning. If the government just says the word, we can break ground.”
As an example cost comparison, wind energy now is one eighth of the price of the peaking plants that Eskom currently calls upon during times when electricity supply is tight.
Acting Director General of the Department of Energy Dr Wolesy Barnard told conference attendees that Eskom is already reliant on the contribution of renewable energy to the grid. The amount of energy available from renewable sources is increasing all the time as more plants are built and connected to the grid.
Delegates also heard that wind energy is now set to make a contribution of more than ZAR 7 Billion to communities and socio-economic development over the next 20 years in South Africa. With five wind farms in full operation, 22 large-scale wind farms currently under construction and another 700 MW expected to be awarded imminently, the total capacity amounts to 2684MW set to be installed. Each of these developments has committed significant financial investment to nearby communities. Further wind energy development would result in more investment in communities.
SAWEA considers delivery on its socio economic compact with government as core to its mandate. “The theme of our conference ‘Power2thePeople: changing lives through wind energy’ has provided valuable ongoing debate and discussions as well as the benefit of shared experiences on the subject of working with communities and how funds can be most effectively invested,” said SAWEA Chairperson Dipolelo Elford. “The industry is fully committed to working with communities that are hosting its wind farms to offer direct, sustainable, long-term benefits and rural development”.
Direct, indirect and induced employment opportunities are created during all stages of the development, implementation and operations and maintenance (O&M) of the wind farms, yet only a fraction of direct jobs are accounted for in the REIPPPP. With the current awarded installed capacity and future IRP2010 allocation, a conservative figure of 77,700 cumulative jobs (person-years) may be created by 2030, 54,400 in the 20 year O&M period. This results in a minimum of 3,600 direct long-term and sustainable jobs, predominantly for semi-skilled and skilled individuals in local communities.
• Energy comparisons above are based on levelised cost of energy (LCOE) which refers to the price at which electricity must be generated from a specific source to break even over the lifetime of the project. It is an economic assessment of the cost of the energy-generating system including all the costs over its lifetime: initial investment, operations and maintenance, cost of fuel and cost of capital.
On the low-resolution wind map, not all wind masts predicted annual wind farm outputs exceeding 30% of installed capacity - while actual wind farms are in cases showing outputs exceeding 40% of installed capacity.
As per the design of the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP), each utility-scale wind farm invests a percentage of its revenue towards socio-economic development (and in some cases enterprise development) in the areas surrounding the farm. Additionally, shares in the wind farm project company are allocated to an entity representing local residents within a 50km radius.
• The revenue percentage and dividends from the shares in the farm will benefit the local economies and residents over the full lifetime of the wind farms: 20 years. The amounts invested will be substantial - more than ZAR 7 Billion based just on current allocations, with more large scale development expected through to 2030. This figure compares favourably to that of direct investments made into communities in more mature wind energy markets in Europe and the United States.