June 2014

Winds of change blowing for SA energy

A report in today’s issue of Legalbrief Environmental notes that SA had much to celebrate on Global Wind Day, 15 June.

SA Wind Energy Association (Sawea) chair Dipolelo Elford said: ‘… there is no better time to highlight our ongoing efforts towards bettering communities.

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Wind energy powering ahead

Cape Town – South Africa’s new wind power industry is booming, courtesy of government support through its renewable energy procurement programme.

And while communities living alongside wind farms stand to benefit hugely, getting the right mechanisms in place to ensure that mandatory benefits accrue to affected communities is the “Holy Grail” of the burgeoning industry.

This was the word from the SA Wind Energy Association (Sawea), to coincide with Global Energy Day that was celebrated on Sunday.

Global Wind Day, inaugurated in 2007 under the name Wind Day, is organised by the European Wind Energy Association and the Global Wind Energy Council and aims to coordinate events and information-sharing by national wind energy associations and companies.

In its assessment, Sawea said South Africa had an “impressive” wind energy development programme, thanks to the government’s renewable energy independent power producers’ procurement programme that involved private investors bidding competitively to build wind farms and sell the power to Eskom.

In 2011 there were eight wind turbines in the country but today five wind farms were in full operation, 15 more were under construction and a further seven were about to reach financial closure. Together, these would provide 1 983 megawatts of power to the national grid.

The industry could also “proudly highlight” the billions in benefits that would accrue to neighbouring communities from wind farms, Sawea said.

The procurement system was designed to ensure that each utility-scale wind farm invested a percentage of its revenue in socio-economic development – and in some cases enterprise development – in the surrounding area. Collectively, wind farms already built or in the pipeline would invest over R5 billion from their revenue into socio-economic and enterprise development over the next 20 years.

In addition, a shareholding of 5 percent to 40 percent in each wind farm had to be allocated to an entity representing local residents within a 50km radius, and the revenue percentage and dividends from the shares in the farm would benefit the local economies and residents over the 20-year life of the wind farms.

In a blog headed “The search for the Holy Grail: Getting community development right,” Sawea chief executive Johan van den Berg said the issue of exactly how community-accrued funds would be managed by an independent entity represented by respected community members had been a recurring theme at the recent inaugural “Getting Community Development Right” workshop.

“There was a recognition that the challenge is multi-faceted and daunting… The best and perhaps only opportunity to get it generally right is the first one.”

Two post-graduate students were researching commitments by wind farm developers to communities and the implementation of these commitments, and they had reported their initial findings to the workshop.

“This will be the first of many ongoing discussions on how to ensure communities get the most out of the funds available to them.”

Sawea chairwoman Dipolelo Elford said South Africa had “every reason to be proud of its burgeoning wind industry”.

“Not only has it embraced an impressive procurement system which has ensured highly competitive energy prices, but the contribution these developments will make to community development and socio-economic improvements is rivalled by none.”

l On the web: https://www.sawea.org.za/

Turbines given a green light

In environmental terms, nothing is free, not even the wind – but the green cost of harnessing this essentially pollution-free energy source can be paid back quickly.

This is what US researchers found when doing an environmental life-cycle assessment of 2MW wind turbines with a 20-year lifespan, proposed for a large wind farm in the US Pacific Northwest.

They reported in the International Journal of Sustainable Manufacturing that the net environmental benefit would materialise within five to eight months of the turbines’ installation.

Even the “worst-case” scenario would see the turbines’ environmental cost paid off after just one year, meaning that they would then each generate essentially pollution-free energy, enough to power more than 500 households for 19 years.

Although wind as a power source produces essentially zero carbon emissions, energy is consumed in manufacturing, installing, maintaining and – ultimately – decommissioning wind turbines, so there is a carbon cost involved, say authors Karl Haapala and Preedanood Prempreeda of Oregon State University in a media summary of their paper.

Their life-cycle assessment looked at the sourcing of key raw materials used in turbine construction – steel, copper, fibreglass, plastics, concrete and other materials – and at transport, manufacturing, installation, ongoing maintenance through the anticipated two decades of useful life, and the impacts of final recycling and disposal.

They found that most of the environmental impacts would be caused by materials production and manufacturing.

But in terms of “cumulative energy pay-back”, or the time to produce the amount of energy required of production and installation, a wind turbine with a working life of 20 years would offer a net benefit within about six months, or one year at worst. – Cape Argus

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Energy constraints more troublesome than platinum strike – FMF Back (5)

The impact of South Africa’s ongoing strained energy supply has been more devastating than the effects of the protracted strike in the platinum belt, the Free Market Foundation (FMF) said on Thursday.

South Africa’s economy was 13%, or R366-billion, smaller than it would have been had energy supply been stable, and loadshedding and forced lower energy use by industry did not occur, said FMF executive director Leon Louw during a media briefing at the group’s offices in Bryanston.

The loss to the economy – which was estimated at the “lower end of the scale” – was a result of a failed energy policy, he noted, adding that: “No energy means no growth, and energy insecurity is actually an energy catastrophe.”

“[The energy crisis is] devastating on a scale that makes the [ongoing five-month strike in the platinum sector] trivial [by comparison],” Louw said, adding that the lack of sufficient energy supply dwarfed anything else challenging the economy.

The ongoing Association of Mineworkers and Construction Union- (AMCU-) led strike at South Africa’s top three platinum producers was reported to be causing an economic slowdown, with speculation emerging that the country could head into a recession.

The strike had also cost the producers about R22-billion in lost revenue and the workers nearly R10-billion in lost wages.

“We have recurrent [electricity] surpluses and shortages,” Louw commented, as Eskom on Thursday declared its fourth power emergency this year on the back of a severely constrained national power system, which could lead to loadshedding.

The power utility resorted to loadshedding on Wednesday night after warning of a supply shortage.

Two emergencies were announced on February 20 and 21, which were lifted fairly quickly without load shedding being implemented.

This was followed by a nationwide blackout on March 6 – the first time that the utility had resorted to rotational loadshedding since the country’s power crisis of 2008.

“Keeping the lights on is keeping us in the dark,” said Louw, pointing out that Eskom’s demand-side management energy restrictions on industry were stifling economic growth further and had been damaging to foreign and domestic industrial and other investment opportunities.

Following the 2008 blackouts and imposed loadshedding, Eskom moved to buy back energy from companies and in some cases, forced a 10% energy use cutback for South Africa’s largest energy consumers during “emergencies”.

But he pointed out that Eskom needed to shift the electricity cuts to the more flexible consumers – South Africa’s households.

“The [consumers] with flexibility in [electricity demand] are households and that’s where we should have the cuts – not production,” Louw stated, noting a need to reverse an “anti-industry, pro-household” discrimination when it came to energy supply.

Further, he suggested implementing a price increase mechanism, particularly for households, to limit use in the interim as energy capacity was built up, and allowing immediate feed-in tariffs.

“We have a failed monopoly, but its not Eskom’s fault,” Louw said, explaining that the parastatal had been a “victim” of government’s failure to implement strategic policies aimed at introducing competition and dividing Eskom’s assets.

South Africa was failing to implement a 1998 White Paper on Energy Policy that would enable new entrants and stimulate competition, as well as the more recent National Development Plan (NDP), which comprised many of the same provisions as the White Paper, with both setting the standard for the creation of an “electricity market”.

To get back on track to a stable energy environment, a competitive electricity market needed to be established, along with the establishment of an independent electricity grid and independent power producers (IPPs).

Further, the resurrection of the Independent Systems and Market Operator, or ISMO, Bill, which had been shelved by Parliament, was critical to take control of planning, procurement, contracting and systems operations.

“We are one of the few [countries] left in the world to have an [energy] monopoly,” Louw said, adding that electricity generation, transmission, distribution and control should be separated and independently operated.

A radical policy was needed – an investor-friendly framework that instilled competition and good governance, removed distortions, enabled a choice of suppliers, allowed open access to the grid and encouraged private-sector and IPP contributions.

The single-buyer model should be abandoned and the entry of competing independent generating companies to sell to willing buyers across the grid should be introduced.

This is a policy that South Africa already had in the unimplemented 1998 White Paper and the NDP, reiterated FMF chairperson Terry Markman.

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SA to have 400 wind turbines spinning by year-end

Driving along the West Coast road not far from Cape Town, it is hard to miss the 37 turbines reaching into the sky at the Hopefield wind farm. It may seem an unusual sight in South Africa for now, but not for too long. There are likely to be 400 turbines spinning by the time we wave 2014 goodbye – a clear indication that wind power is taking off in the country.

Across South Africa, five wind farms are in full production, 15 large-scale wind farms are under construction and another seven are approaching financial close. Once all of them are up and running and their proposed 700 turbines installed, they will generate 1 983 MW of power.

Most of the wind farms are finding homes in the windswept provinces of the Eastern Cape, the Western Cape and the Northern Cape.

“Wind energy is certainly here, and there is plenty more in development and ready and waiting to be given the go-ahead,” says Johan van den Berg, CEO of the South African Wind Energy Association (Sawea).

Three utility-scale wind farms have begun exporting electricity to the grid for the first time. Three of them – the Hopefield wind farm, the Van Stadens wind farm, outside Port Elizabeth, and the Klipheuwel Dassiefontein wind farm, near Caledon, in the wheatlands of the Western Cape – are now providing 120 MW of capacity.

The 138 MW Jeffreys Bay wind farm, in the Eastern Cape, where 60 wind turbines have been commissioned, came to Eskom’s rescue recently when supply was critical. The farm, which spans 3 700 ha, will supply 460 000 MWh/y, enough clean renewable electrical energy to power 100 000 average South African households. The project is expected to cut annual carbon emissions by 420 000 t.

Other wind energy projects, approved under bid window one of government’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), are slated to reach commercial operation within the next few months, while wind farms already being developed in bid window two and three will add another 1 421 MW to the grid.

Judging by the huge oversubscription in round three, it has been a popular industry to pursue. “The huge oversubscription demonstrates that there are more private investors and developers just waiting to build more wind farms,” says Van den Berg.

Denmark, which has been involved in the South African wind industry for years, having financed the first wind park in South Africa, the Darling wind park, through its Danida cooperation more than ten years ago, is buoyant about investor interest in the industry.

“In the beginning, our work in the wind sector was often met with sceptical questions on how wind energy could be a suitable energy source for South Africa. “Today, it is clear that there is great potential. The first wind parks are already on the grid and contribute to South Africa’s energy supply,” says Danish Ambassador to South Africa Rene Dinesen.

He says it is also encouraging that manufacturing of components for the wind industry is under way in South Africa. This includes factories being set up to produce towers for the wind turbines.

Dinesen says he hopes South Africa could be a frontrunner in Africa, as Denmark has been in Europe. Today, a third of Denmark’s energy supply comes from wind, with goals to boost wind energy so that it makes up half of the country’s energy mix by 2020.

In Germany, on good days, the country has the ability to generate all energy from renew- ables, while on Christmas Day last year Denmark produced 112% of its energy through wind energy, says Van den Berg.

In South Africa, the goal is for wind and solar energy to make up at least 20% of supply to the national grid by 2030, according to the government’s Integrated Resource Plan for Electricity 2010–2030.

Fierce Competition
The fierce competition in the wind industry in South Africa has also meant that prices have dropped dramatically. Sawea says the price of wind energy has fallen by 42%. In round three of the REIPPPP, wind energy averaged 74 c a kilowatt-hour (kWh) – 30% cheaper than the predicted cost of new coal at the Medupi power station.

“This is really good news for wind energy and for the country. South Africa is the only place where we produce renewables below the cost of fossil fuel energy, with socioeconomic development thrown into the mix,” says Van den Berg.

While growth has been swift, there has been a downside in that the burgeoning industry has made it harder for smaller players to compete.

Van den Berg says it would be good to bring smaller players into the mix. At this stage the industry has mainly attracted “big, experienced and strong players with big projects”. This has caused a certain amount of consolidation in the industry. Some of the smaller players, who have battled to stay afloat, have been incorporated into larger entities.

A visit to the Hopefield wind farm in the first chill of winter was a sign of things to come. The turbines were spinning steadily at a 95-m-high hub height.

The farm has been developed by Umoya Energy, one of the successful bidders in the first round of the REIPPPP. Construction was completed in January this year, with operations taking off in February. The farm is now selling electricity to the grid.

Umoya Energy technical manager Sam Cook says there is much variability in the wind speed, but they are able to work around this. “The blades are ‘feathered’ so that, at low wind speeds, more blade is exposed to the wind. As the speed picks up, less torque is required,” says Cook.

Each turbine operates independently and has its own sensors, which detect wind direction and wind speed. Surveillance of the Vestas turbines is done remotely from Europe. Cook says errors are often related to software, while the sensors sometimes require recalibration.

The mesmerising whirring of the blades is quieter than expected. Operating wind farms have to meet strict noise guidelines so that they do not disturb nearby residents.

In rural areas, wind farms need to meet the guidelines of 35 dB. The comparative sound is that of a quiet bedroom at night. This rises to 45 dB in urban areas – about the same level of sound as the background noise of an average sitting room.
Normal conversation is around 60 dB, while street traffic in a large city is 80 dB.

About 300 people were employed during the construction of the Hopefield wind farm.

South African factories have produced the massive towers for the wind turbines on Hopefield farm, while Danish company Vestas has supplied the turbines. Vestas Southern Africa is responsible for the farm construction, as well as ope- ration and maintenance for the first 15 years. Full-time local staff have been trained and employed to maintain the Hopefield farm and others in the region.

As with all similar farms around the country, it is very important to get the buy-in of the community.

The Hopefield wind farm local community company owns a 5% share in the programme and will get a percentage of the revenue of the project, and later dividends from shareholders. This will be ploughed into projects in the community, the first one being to improve homes with solar geysers and insulation.

Sawea forecasts that wind energy projects could generate over R5-billion of revenue for local economic development over the next 20 years.

A study by postgraduate students Sarah Stands and Holle Wlokas on the commitments and practical outcomes of the REIPPPP has shown how revenue percentage and dividends from shares in the farms will benefit the surrounding local economies and residents over the full lifetime of the wind farms, which is expected to be 20 years.

Socioeconomic Spin-Offs
The procurement system is designed in such a way that each utility-scale wind farm has to invest a percentage of its revenue towards socioeconomic development and, in some cases, enterprise development in the areas surrounding the farm. Shares in the wind farm project company are allocated to an entity representing local residents within a 50-km radius.

The benefits for the community can be very generous, depending on the project. Wind energy developments allocate between 2.5% and 40% of shareholding to legal entities representing local communities. The dividends generated from each development need to be invested into local economic development projects and programmes.

The funds will be released once the wind farms start to generate profit, which can take up to ten years. It may take a while to reap the returns, but it could be very worthwhile for people living in the reach of wind farms.

In part to help potential investors seek out good opportunities, South Africa’s first ever Wind Atlas has been developed.

The Wind Atlas, developed in conjunction with the Danish government and the United Nations Development Programme, as well as several other partners, will help industry and government identify excellent wind development zones. It has been mapping the Western Cape, parts of the Northern Cape, and the Eastern Cape. More funding from the Danish government will see the Wind Atlas being expanded into the remaining areas of the Eastern Cape, KwaZulu-Natal and parts of the Free State.

Wind, topography and land cover have been measured, while an Extreme Wind Atlas has also been launched. Ten 60-m-high wind masts have been installed at various sites. Graphs are available to the public online, while data from each wind station is regularly updated.

Government has welcomed the Wind Atlas as a way of boosting the industry.

“We need good and reliable tools such as the Wind Atlas for long-term strategic planning. It will help developers to prepare for wind farms and diversify our energy mix,” Mokgadi Modise, chief director of clean energy in the Department of Energy, told a recent seminar on the Wind Atlas in Cape Town.

African Pioneer
South Africa is increasingly seen as a pioneer in the wind field on the continent.

“As the market grows in the coming years, many companies in the Danish wind industry will be looking at South Africa. We believe it can be a springboard for companies interested in other African markets as they mature in the future,” Danish Wind Association CEO Jan Hylleberg told Engineering News.

As bid window three has reached completion, many are eagerly awaiting the start of round four bidding, which is expected in August.

“The wind industry is able to rapidly build much more than we are currently doing. Dozens of prospective wind farms have permits and approvals in place and could go into construction within six months if government gives the go-ahead today,” says Sawea chairperson Dipolelo Elford.

As winter bites, the threat of load shedding is palpable. While wind energy may not be able to make a big dent in the short term, it could increasingly become a solution to South Africa’s energy demands in the years to come.

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