Eskom warns on IPP connections as it defers some transmission capex

State-owned power utility Eskom has made significant changes to its transmission infrastructure expansion plan for the coming ten years, owing to financial constraints that made its previous plan “no longer realistic”.

Group executive for transmission Mongezi Ntsokolo reported on Friday that the latest Transmission Development Plan (TDP), covering the period from 2015 to 2024, had been revised to align with available funding.

The outcome, which would be detailed in a document to be published on Eskom’s website by the end of November, was a reprioritisation and rephrasing of a number of network strengthening and expansion projects.

Eskom also confirmed that the lack of capital posed a risk to the integration of future renewables and baseload independent power producers (IPPs), especially where such projects required “deep” grid strengthening.

However, discussions were under way with the Department of Energy (DoE), National Treasury and the National Energy Regulator of South Africa (Nersa) about alternative funding models, including self-provisioning of both dedicated and shared infrastructure by IPPs on a case-by-case basis.

Ntsokolo also confirmed that the revision would result in a delay to the migration of the network to full redundancy as stipulated by the South African Grid Code.

The compliance schedule had been shifted out from 2016 to 2022, a move that was described as regrettable, but unavoidable.


The overall budget, which was estimated at R163-billion, remained more or less as it was in previous versions of the TDP, with R146-billion required for capacity expansions and the balance split between refurbishments, spares, servitude acquisitions and environmental and corporate costs.

However, the latest version also delayed or deferred much of the actual investment into the fourth multiyear price determination period, or MYPD4.

This was partly attributed to the fact that Eskom had received lower-than-requested tariff increases from Nersa for the MYPD3 period from 2013 to 2018 – it had sought 16%, but was granted 8%.

However, the new TDP also took account of delays associated with securing land, servitudes and environmental approvals for transmission-line and substation projects.

The rephrased plan still envisaged the building of 13 396 km of new transmission lines and the introduction of 81 385 MVA of additional transformation capacity by 2024. But over 8 100 km of new lines and 51 895 MVA of transformer capacity would now only be rolled out after 2020.

Ntsokolo said that plan was focused on ensuring that the network met minimum reliability criteria, while being robust enough to ensure the connection of new generation capacity being developed by both Eskom and IPPs.

He also said the utility was looking for opportunities to “smooth” the awarding of contracts, as it was sensitive to the fact that a “stop-start” approach was disruptive to suppliers and contractors.

Meanwhile, GM grid planning Mbulelo Kibido confirmed that it was becoming increasingly difficult and expensive to integrate IPPs, with the easy-to-connect projects having been selected during the first two bid windows under the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).

Eskom had connected a total of 32 bid window one and two projects with a combined capacity of over 1 600 MW. However, it was concerned about finding a viable financial model to deal with the connection costs of projects arising from bid window three onwards.

The financial close for the third bid window had been delayed largely as a result of connection issues, but the DoE was still hoping that the preferred bidders would be in a position to close before the end of November.

The connection concerns were not confined to the REIPPPP programme with the DoE planning to issue tenders soon for baseload coal, gas and cogeneration IPP programmes. But there was particular concern about connection capacity in the Northern Cape, where many of the current and future REIPPPP projects were located.

Senior manager: infrastructure investment Leslie Naidoo indicated that a budget of higher than R163-billion would probably be required to deal with the integration of new IPPs.

However, he stressed that the figure was based on the best available information as to where future projects could arise and that the figure would be revised as greater certainty emerged.

Call made for commission of inquiry into South Africa’s power crisis

A respected energy-policy academic has called on President Jacob Zuma to appoint a commission of inquiry into South Africa’s worst electricity crisis in 40 years and to offer policy proposals for reforming Eskom and the sector.

Writing in the Business Day, Anton Eberhard, who is professor of management of infrastructure reform and regulation at the University of Cape Town’s Graduate School of Business and a member of the National Planning Commission (NPC), said there was historical precedent for such an inquiry in the form of the 1983 De Villiers Commission.

He argued that the resulting recommendations led to “profound changes in Eskom’s organisational culture and efficiency”.

“A new commission of inquiry will help us understand what has gone wrong. It can build on the restructuring proposals in the 1998 energy policy white paper, which were never implemented, and will provide the basis for opening the sector to investors and operators that can help restore electricity supply security and economic growth.”

Eberhard stressed to Engineering News Online that he had written the article in his own capacity and not as an NPC commissioner.

However, he added that the NPC has discussed the power crisis at its last session and would be embarking on “a number of new initiatives of working with relevant stakeholders, including energy industry and business associations, to move key issues forward”.

Broadly, he said the terms of reference for the inquiry should be:

  • To understand the reasons why Eskom has failed to supply enough electricity to power our economy.
  • To draw lessons from these failures.
  • To document the outcomes of private sector investment in power.
  • To consider and make recommendations on the allocation and execution of planning, procurement and contracting functions for new generation and transmission capacity.
  • To consider and make recommendations for power sector reform and restructuring that would facilitate and accelerate investment, construction and commissioning of new generation capacity.

Given the urgency of the matter, Eberhard felt that the commission should be able to complete its work within four months.

“This is also one way to resurrect the restructuring proposals in the Energy Policy White Paper of 1998, which died a quiet death when Eskom was told to build Medupi and Kusile,” he added.

Renewables delay a ‘concern’ as connection risks rise

Some concern has been expressed about recent delays to South Africa’s hitherto successful Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), under which 26 projects have already been connected to the grid following three bid windows during which more than 60 mostly solar and wind projects were selected to proceed.

The anxiety arises primarily from the fact that financial close has been delayed for the third-bid-window projects, owing primarily to “grid connection issues”.

The preferred bidders were identified in October last year and financial close was initially scheduled for July 30, 2014, ahead of the August 18 closing date for submissions under the fourth bid window.

However, the Department of Energy subsequently announced that it was finalising a staggered financial-close protocol, which should be concluded in November.

It appears that the grid implications of the third-window projects had not been fully comprehended, which led to Eskom raising concerns about the cost of connection. It is also understood that, from the fourth bid window onwards, Eskom will provide input prior to the selection of preferred bidders in an effort to mitigate the problem.

In a recent presentation to Parliament, Eskom indicated that the “low-hanging fruit” had been exhausted and that a strengthening of the network was now required to facilitate the introduction of additional independent power producer (IPP) connections.

The utility also warned that the system impact had not been fully factored into plans, flagging in particular the “need for back-up and minimum generation” as renewables began playing a larger role in the mix.

As of September, over 863 MW of renewables capacity had entered into commercial operation. But Eskom also used its presentation to highlight the variable nature of the supply, which it claimed had resulted in it incurring back-up expenses.

It said a Renewable Energy Technical Evaluation Committee, comprising representatives from Eskom, the National Energy Regulator of South Africa and the Association of Municipal Electricity Utilities, had been established to certify future IPPs for grid code compliance.

Without question, therefore, grid connection has emerged as a key immediate risk for REIPPPP bidders, with some discussions now taking place on the future framework for self provisioning, with Eskom currently responsible for the so-called ‘deep connections’ and the IPPs for ‘shallow connections’.

Nevertheless, the appetite for the South African programme remains, with prices, which have fallen materially since the first bid window, having reportedly fallen again during the fourth window.

South African Wind Energy Association CEO Johan van den Berg says the delays were “not totally unexpected” in light of the rapid growth of the industry, which has stimulated private investment of over R120-billion.

“Given that renewable energy is growing faster than perhaps anywhere else in the world, it was always likely we would meet with challenges somewhere,” Van den Berg tells Engineering News Online.

However, he stresses that the wind industry wants predictability to build investor confidence and that the delay, together with concerns about the financial position of Eskom, which could cause delays to work on substations, is concerning.

South African Photovoltaic Industry Association chairperson Davin Chown says its members are confident they will reach financial close, but he admits that they have been “dismayed” at the delays.

“The delays mean more costs incurred by bidders and this is unfortunate as it always has a negative impact on projects. We are confident that the solar projects will close, and will be built and operational on time and on budget as has been the case in other rounds.”

The delays are also “not acceptable” in light of the constrained power network and the fact that only renewables and cogeneration IPPs are realistically in a position to fill the generation supply gap ahead of the introduction of large-scale baseload capacity.

Similarly, Southern Africa Solar Thermal and Electricity Association CEO Ntombikanina Malinga cautions that delays are having financial, social and economic impacts. “We can live with a delay of three months, [but] if we go beyond that, it starts to become a big issue.”

“The bid-window-three bidders are working with Eskom and the IPP office to ensure that any bottlenecks are dealt with and resolved before close,” Malinga adds.

However, Chown believes that the process and methodology behind the cost estimate letters (CELs) relating to grid connection need to be “totally revisited”.

“The variances between CELs and budget quotes also need to be dealt with in order to avoid any negative impacts on projects with respect to the connection timelines.

Eskom needs to be a lot clearer when it issues CELs whether these are in congested areas so as to deal with this and not end up in a situation where projects may end up being preferred bidders yet unable to connect without significant additional connection costs.”

Chown is also concerned that the fourth bid window may confront similar problems as the evaluation criteria remain weighted towards price, which could mean that the lowest-tariff project wins even when the project faces significant connection constraints.

“This is not a desirable situation for the REIPPPP or the bidders, or in fact the economy,” he says, arguing that projects facing severe connection concerns should not be awarded preferred-bidder status.

“The procurement process should ensure that Eskom is mandated and incentivised to ensure connections are available and made in time. Eskom must allow bidders to go the self-build or own-build routes as a matter of course, not as a matter of exception to the current rule.”

Headwind hits renewable energy

Green power is coming on stream, but it is not without quite a few teething problems.

Driving north on the N10 past what once was elephant territory of the Eastern Cape, vervet monkeys forage alongside the road, monitor lizards sun themselves. Curiously, the further away you get from the windy city of Port Elizabeth – moving closer to the small town of Cookhouse – the more rapidly the steel blades on the wind pumps along the road spin.

It certainly is a good day to visit a wind farm, especially Africa’s largest wind farm, with an installed capacity of 138.6 megawatts. Up high on a hilly area of the farmlands known as Patryshoogte, where Merino sheep are bred for their award-winning wool, 66 gentle giants hum as the icy wind courses through the terrain.

These wind turbines, at 80m high, are almost as tall as a rugby field and each propeller is 44m long. The foundations alone required 60 to 70 cement trucks and 26 tonnes of steel each as they stretch two metres deep and up to 22m wide.

Independent power producers
Inside each turbine a computer reads information from a wind vane, which discerns the wind direction, and an anemometer, which measures the wind speed, and adjusts the blades accordingly to run perpendicular to the wind.

Each turbine can produce a maximum of 2.1 megawatts and should the wind be strong enough to turn the enormous propellers faster than 15 revolutions per minute – which would be a rare occurrence – the system automatically shuts itself down.

Cookhouse Wind Farm is one of the first independent power producers (IPPs) selected to produce power for the national grid as part of the department of energy’s Renewable Energy Independent Power Producer Procurement (REIPPP) programme, designed to contribute to a target of 3?725MW, which the minister has determined is required to ensure the continued and uninterrupted supply of electricity.

Eskom currently has an installed capacity of 41?900MW, Medupi will have one of 4?788MW, and the nuclear build is expected to bring double that at 9?600MW.

The competitive bidding programme was launched in August 2011; Cookhouse was selected as a preferred bidder in the first round. The procurement programme opened the fourth bidding window in mid-2014.

The robust winds have caused Cookhouse to feed a full 110 gigawatt hours to date into the national electricity grid through the nearby Eskom substation (strangely named Poseidon, though it is located some 130km from the ocean).

The project is, however, yet to receive the full tariff as determined in the first bidding window – the power it supplies is still to reach full grid code compliance.

“Reaching [that] code compliance has been a challenge for most of the first round renewable projects,” says Cookhouse chief executive Jannie Retief. “We had to make a number of significant changes.”

Until the project complies with the rules, it cannot reach full commercial operation and cannot receive the full tariff for the energy it produces.

As determined in the first bidding window, the tariff ceiling for wind bids in the REIPPP is R1.14 a kilowatt-hour, although it has come down dramatically in the two subsequent windows and was at 74 cents a kilowatt-hour in the third window.

According to a May 2014 report by the Public-Private Infrastructure Advisory Facility, “prices have dropped over the three bidding phases, with average solar photovoltaic tariffs decreasing by 68% and wind dropping by 42%, in nominal terms”.

Eskom says changes to the code had been approved by the National Energy Regulator of South Africa, and proposed through a process that the industry forms part of. Various challenges that IPPs have encountered relate to technology, and various developers have run into some challenges along the way.

Nonetheless bid round one and two have been successful: 26 and seven projects have been connected to the grid respectively, with a combined capacity of 1?670MW and 22 projects being in full operation and four being in early operation.

But in round three, pricing has become immensely competitive, while the cost of connecting to the grid has unexpectedly arisen as a prominent concern.

On a “perfect solar day” at the SlimSun Swartland Solar Park near Malmesbury in the Western Cape, the sun shines unhindered by clouds or haze, but the ambient temperature remains relatively cool. The solar photovoltaic (solar-PV) plant was one of the first, if not the first, independent power projects to be selected under the first round of the REIPPP, according to entrepreneur and developer Anthony Corin. It is also one of the smallest, according to Corin, whose farm is home to the 5MW array.

Renewables programme
The solar project began life as a “naive” plan to help Eskom address the reliability of the local distribution network, Corin says.

The preparation on this pet project, which was done before a request for proposals under the REIPPP had even gone out, ultimately gave SlimSun a headstart in developing what would eventually become the array of solar panels that sit carefully fenced off on Corin’s farm.

But Corin believes that a project of SlimSun’s size and make-up is unlikely to be seen again as the second and third bidding rounds of the renewables programme have grown increasingly competitive and steadily consolidated around fewer and larger multinational companies.

“In the first round there were a multitude of developers and potential investors. They were chiefly local, small and many had joined forces to develop projects, reflecting, in part, what the department of energy had set out to achieve with the programme,” Corin says.

“Although this added complexity to the landscape, there was more scope for commercial banks and private equity investors. By the second round however – after the credibility of the programme had been well established – larger conglomerates got involved and the industry has consolidated quickly.”

As the tariffs being bid have rapidly reduced – to the extent that a difference of one cent can mean a project is taken “out of the game” entirely – the development risks have increased, says Corin, notably when it comes to the capital smaller developers need to raise to develop a renewables project with no guarantee that it will be selected to supply to the grid.

Larger corporates are now able to cut the costs through funding directly off their balance sheets and although some industry players applaud the resulting competitive pricing, others have concerns.

“We have a programme geared to get the best price of the system, not necessarily the best value,” says Davin Chown, chairperson of the South African Photovoltaic Industry Association. “People see these as the same thing, but they are not.”

Dhesen Moodley – an investment professional on the Ideas (Infrastructural, Developmental and Environmental Assets) Managed Fund at Old Mutual Investment Group, which provides equity funding for such projects – says tariff had dropped to become more competitive and so returns have also become “less robust”.

“In round three we saw some nontraditional financing structures, and more competitive financing, driving lower tariffs,” says Moodley.

“What has changed is that the financing of the projects has become more aggressive – if things go wrong there is less cash available, compared to round one and round two, to restructure the project – so the margin for error is much smaller.”

Moodley says Ideas had participated in round four on a limited basis and would consider participating in future rounds on a limited basis, unless the risk-adjusted return improves.

However, the department of energy’s deputy director general, Ompi Aphane, says the competitive nature of the programme is good for the country and electricity consumers. “It is not necessarily true that big companies are getting a competitive advantage, but projects with innovative funding structures are benefiting from the programme,” he says.

“Bigger companies with strong balance sheets can raise capital at competitive rates compared with smaller companies. However, the procurement rules require every project to have at least 40% South African participation.”

This, Aphane says, presents some opportunity for the small companies to partner with big foreign companies for the development of the project and thereby capitalise on their strength for purposes of raising capital at comparative rates.

De Aar Solar Power Farm
The De Aar Solar Power Farm is part of the renewable energy programme.
(Madelene Cronjé)

He says the department is also implementing another programme targeting small projects with a maximum installed capacity of not more than 5MW, which provides an opportunity for small South African companies to participate. The department is working with developmental institutions to set up a fund for these.

“But there is also no point having [the] best price when you can’t connect,” says Chown.

Closure of projects
Grid access for projects under the REIPPP has hit the headlines recently as media reports have suggested Eskom’s inability to connect independent power producers to the grid has affected the (financial) closure of projects in the third round.

SlimSun has not been left unscathed by grid connectivity issues. Despite construction being complete, the plant is still unable to supply electricity to the grid. However, Corin believes this is no one’s fault, including Eskom’s, but that it is rather a “cumulative issue”.

Under the first round, the current distribution and transmission network could absorb projects with relative ease. But this spare capacity has filled up relatively quickly.

The importance of resource quality has also meant that solar projects have been concentrated in places such as the Northern Cape: here the solar irradiance levels are best, but it is not necessarily what suits the current load profile of the country, given that it is far from large metropolitan and industrially intensive areas.

This has created challenges for the utility, Corin says: it is now required to provide grid access in areas that would not have initially required additional transmission and distribution infrastructure; which, due to their distance from large centres, increase the difficulty of managing electricity losses through transmission.

As a result Eskom has become far more conservative in its estimation of the costs and timelines for providing grid access to IPPs, Corin says, noting that the utility has also warned renewable energy developers not to bid projects that rely on upstream works or future capital investment that cannot at this stage be guaranteed by Eskom.

  Intense programme
As a result grid access, which in the early days of REIPPP was not a crucial factor in the success of a project, has become a key criteria. In SlimSun’s case it is waiting on the connection of a 66-kilovolt line to connect one local substation to another before it can begin to provide power to the grid and it is set to wait for between three to six months before it gets grid access, according to Corin.

“Generally from our point of view we think South Africa has a great success story, it’s one of the best programmes in the world. It’s an intense programme, competitive and well structured,” Chown says. But he notes that now grid infrastructure constraints – for them to meet financial closure – have become a problem for round three projects in particular.

The cost of connection has come as a surprise as Eskom’s initial cost-estimate letters have varied from subsequent budget quotes provided to preferred bidders by the utility. This could cause delays.

“There can be quite a big gap so it has a capacity to catch people off guard, it can throw off the financial model,” Chown says.

“It’s not a problem for all preferred bidders in round three, but in some instances it’s almost twice the amount of the cost estimate. We certainly think Eskom needs to involve the private sector and allow parties to do self-build or own build.”

Moodley says: “Grid-connection costs are not a factor preventing us from investing in further bidding windows … We expected at some point all the easy grid projects would be off the table – although we thought it would be closer to round five that we would see deep grid connection costs.

Project risk
“The fact it has happened so quickly was a surprise.”

Eskom says connection costs, in general, have increased for bid round three projects as existing grid access capacity for IPPs is being taken up quickly, and viable projects were connected earlier in the process.

“As more successful bidders are being announced, subsequent projects become dependent on earlier projects, and also on other grid strengthening and refurbishment projects.

“This causes more project risk, and simple connections may become more expensive,” Eskom says, adding that it is in the process of engaging the energy department and the regulator to ensure that the process remains efficient, and that grid access capacity remains fair and transparent.

The utility says it and the IPPs agree on the most appropriate connection process, which may include the self-build option.

“In that process, which is now available for both the distribution network and transmission grid connections, Eskom and the bidder agree on the project scope and the respective accountabilities. Depending on the various project scope details, this ensures that an optimal solution is achieved at all times.”

Aphane says Eskom’s detailed studies on the preferred bidders in round four may increase or decrease the connection costs, with changes on the connection time lines.

“The department will continue to engage Eskom on this matter for better understanding of the challenges associated with grid connection.”

The utility says for all bid round three projects, and specifically for those where all the budget quote conditions have been met, “Eskom will make those connections available, and these are fully funded”.

Eskom says the raising of capital (through a support package issued by the treasury two weeks ago) will also be used for grid expansion and will assist all network customers, including the load customers.

Wind Power Can Improve The Resiliency Of Electric Grids

A study has found that wind can be more effective than thermal generation in controlling frequency on the grid.

The challenges of integrating a high proportion of intermittent wind power to the grid are well known, but now a recent study has found that when the system is equipped with the appropriate modern plant controls, wind applications can substantially enhance grid resiliency due to their quick response ability.

The study from GE Energy and the US National Renewable Energy Laboratory (NREL) modeled the country's Eastern Interconnection – an AC power grid reaching from Central Canada eastward to the Atlantic coast (excluding Québec), south to Florida and west to the foot of the Rockies (excluding most of Texas), and one of the largest electrical systems in the world.

25% wind penetration

For modelling purposes, 68GW of wind production was added across the Interconnection, except the Southeast Electric Reliability Corporation (SERC) and the Florida Reliability Coordinating Council (FRCC) regions. This represents an instantaneous penetration of about 40% where the wind was added, and of 25% for the Interconnection as a whole.

Among the results, the study found the overall frequency response of the Eastern Interconnection to a large system event is above the current frequency response obligation. None of the conditions examined, including cases with up to 40% wind generation, resulted in underfrequency load shedding or other stability problems. However, the study did not verify performance of individual regions or balancing authorities.

Other key findings:

●The fraction of generation providing governor control must be maintained above a minimum level, of the order of 30% – consistent with other findings

● Governor withdrawal on thermal plants causes a degradation in frequency response – roughly 44% degradation for the case with about 30% of the generation participating in governor control

● Governor response from wind plants can provide a significant primary frequency response, with a systemic benefit up to several times greater, per megawatt, than that in the synchronous fleet

● Inertial controls on wind plants can improve the frequency nadir

● Damping of inter-area oscillations in the Interconnection tended to improve with wind penetration. However, further analysis is necessary to determine whether this is due to the increasing wind penetration, the associated decommitment of thermal generation, or modeling inaccuracies.

Lessons for renewable integration in Europe

Although the study focused on one region, GE believes the findings are more widely applicable.

“While GE's study considered the impact of wind power on the Eastern Interconnection of the US, the lessons we've learned can be applied in Europe and around the globe,” said Nicholas Miller, lead author of the study and senior technical director for GE's Energy Consulting business. “The conclusions demonstrate that wind power can be more effective in maintaining frequency than thermal generation when wind farms are equipped with grid friendly controls. These findings should show that the future of wind energy is bright and it will continue to play a larger role in the power we consume.”

Renewables repositioning to meet mining industry’s energy needs

WASHINGTON – It is increasingly clear that mining and renewable energy are two businesses that belong together and, yet, figuring out the nuts and bolts of getting projects off the ground is not always easy.

For many renewable-energy companies, the slow pace of approving projects poses an ongoing challenge. “We have the skills the mining sector needs. The issue is getting momentum behind the mining sector to believe in these projects,” RES Canada microgrids manager Douglas McAlpine said.

Mark Bongiovanni, mining and metals sales manager for Schneider Electric, in Canada, pointed out that generalisations were difficult to make owing to each mining company and even each individual mining site, operating under its own unique set of considerations.

He noted that the diversity of the cost of energy in each country was what was driving development. In companies where it was difficult to get energy to the mine site, whether it was diesel, gas or the electrical grid, there was increased interest in looking at how to generate power locally.

“Ultimately, it’s a value proposition that each company – and, in some cases, each site – needs to evaluate for its own needs,” Bongiovanni said.


McAlpine emphasised the importance of continuing to clear up misconceptions around renewables.

One key message that still needed to be fully addressed was stability. “We need to overcome the perception that renewables are unreliable,” says McAlpine.

As renewables companies became better able to explain how intermittency could be managed, mining companies were growing more confident in the potential of wind and solar energy. “The most important message is that renewables can be a stable source of power,” he said.

Other important messages to convey were economic. McAlpine believed that renewables companies excelled at illustrating the benefits of solar plants or wind farms in terms of carbon savings and emissions reductions, but they needed to do an equally compelling job of explaining the dollars-and-cents equation for mining companies.

“Renewables are price competitive in a number of areas, particularly in the mining sector, in which you have isolated and remote mines,” he said. 

Bongiovanni agreed: “Mines want to reduce the cost of energy and they want reliability. If they can reduce the cost of energy and improve the reliability of their operations, it’s a very simple decision.” 


Oleg Popovsky, global business development director for SunEdison and board member at American Vanadium, noted that renewable energy went through an identity crisis in its very earliest days.

“Renewable energy is this big, interesting animal. Is it going to be part of the technology sector? Or the clean-tech sector? Or part of the traditional energy sector? What is it?” he asked. “Well, it’s all of the above.”

Renewable-energy providers were less fragmented now than they were in the recent past, and Popovsky believed that the industry had evolved in other ways, as well, so that renewable energy “looks more and more like the mining industry”.

He explained that renewables companies operated within three main business stages, each of which corresponded to a stage in the mining industry. He likened development in renewable energy to the exploration stage of mining, and this was followed by an implementation stage in both industries.

As renewable-energy concerns increasingly turned to independent power producers (IPPs) to sell energy into the marketplace, what they were doing corresponded to the final stage in mining in which ore or minerals were sold to different industry players.

Popovsky believed that these business-cycle parallels “should make the renewables industry more digestible, or understandable, for the mining sector.” At SunEdison, for instance, “we have created a financial product to make renewable-energy projects align with the problems that mining companies are looking to solve.”

Specifically, he said, SunEdison built solar power plants on mining sites and then sold all the renewable power to the mining companies just as they would have sold any other type of electricity.

Practically speaking, renewables companies were broadening the scope of their businesses to perform energy management functions – everything from energy storage to the control systems that regulated renewable energy and fossil fuel sources.

McAlpine emphasized that these new areas were applicable to mining. “We’ve been evolving into those areas because we thought they’d be globally significant, not just significant for the mining industry, and it just so happens that these are some of the key things in the mining sector, too.”

Mining companies were undergoing a transformation of their own. Schneider Electric’s Bongiovanni pointed out that ten years ago, the largest mining companies dominated the industry out of a prevailing belief that “bigger was better.” Today, he said, “better is better,” meaning that those mining companies able to innovate and produce at a lower cost were going to wind up being winners. Given this new dynamic, the mining industry was now far more ready to listen to how renewable-energy companies could help lower energy costs and solve other problems that mines might be facing.

Along similar lines, Till Krumbholz, sales manager for the energy sector’s smart generation solutions at Siemens AG, had found it helpful to delve into the financial situation of the mining industry, in order to provide solutions that were mutually beneficial. Specifically, he noted that mining companies were keen to reduce their project risk, and therefore were highly appreciative of the performance guarantee solution that Siemens offered.

Chris Matthews, new business manager at Mainstream Renewable Power, noted that the business model set forth by purveyors of renewable energy had changed because mining companies had baulked at investing in generation equipment.

The solution? Instead of selling mines a wind farm, companies like Mainstream realised that it was far more appealing to sell them a power purchase agreement, or PPA. “Nowadays,” explained Matthews, “developers are approaching mining companies and saying, ‘We’ll build it for you, and we’ll finance it. But you have to agree to buy the power.’” He continues: “That’s a much more appealing prospect for a mining company, particularly nowadays when mining companies want to keep things off the balance sheet.” 

Matthews also saw renewable providers changing to adapt to a behavioural issue characteristic of many mining companies. Because most mining companies made decisions slowly, Mainstream had found that for renewables projects, especially hybrid projects in Africa, it often made sense to wait for the mines to come to the renewables company, rather than the other way around.

David Willick, commercial director in North America for GE Mining, was seeing “a risk-sharing appetite” from mines uneasy with the idea of assuming the full capital expenditure burden of installing and commissioning a renewable-energy solution. “They’re looking for a third party to put up a power generation system – so they can essentially buy power by the hour.”

This desire for partnerships came out of the fact that mines were, by definition, temporary ventures that would eventually be depleted. Given this central fact, it was no wonder that mines were concerned about investing in renewable energy when they might not be working at a given site long enough to reap the full return on investment. Willick, therefore, saw potential in partnering with local communities: “If we start working together and there’s some type of cost- and risk-sharing, the neighbouring communities can benefit longer term. And that could make it more attractive for the projects to proceed in the shorter term.”


Many experts were convinced that energy storage was a critical component for improving renewables penetration at a mine site. Willick noted that GE had an energy storage solution that allowed mines to put power into a storage facility when the wind was blowing or the sun was shining, but the mine was consuming less energy than the power system was generating – and then drew from that power later, when energy was needed again.

He also pointed out that technological innovations would help make the renewables equation even more attractive for mines. “Mines operate in challenging geographical locations with significant obstacles to overcome, whether it’s extremely high rock-face temperatures or extremely cold ambient temperatures,” Willick said. He pointed out that technology advances would prevail to increase the renewables penetration rate and drive down costs for mines.

That renewable-energy companies had been able to quickly evolve to meet the needs of mining companies suggested that larger renewable-energy projects within the mining industry would come to pass in the not-too-distant future.

McAlpine, for instance, was sanguine about the prospects of larger-scale projects being commissioned in the next two to three years. “Mines looking at these types of projects want to install larger projects. The desire is there,” he said.

He, therefore, believed that 10 MW projects would start to be built soon instead of the one- or two-megawatt pilots generally seen today, although he expected the initial rate of uptake for these sizable projects would be moderate.

This positive momentum would also help with the chicken-and-egg situation that had delayed progress for quite some time: mining companies were reluctant to invest in renewable-energy projects without a proven track record, and renewable-energy providers could not demonstrate success until mining companies started to take the plunge and try their solutions.

“One of the big problems has been how the mines perceive renewable energy,” McAlpine concluded. “Once they can visit and take a look at these plants operationally, they’ll be a lot more confident proposing them for their mine sites. They’ll start to understand the risks and won’t be so concerned.” 

Meet the mines seeking renewable partnerships and the energy providers providing solutions at the Renewables and Mining Summit and Exhibition, October 15 to 16, Toronto.

New Study Reveals the Truth About Wind Turbines and Bird Deaths

Naysayers like to point to wind turbines as brutal bird-killing machines, wiping out huge populations of birds, but new research sheds some new light on the controversy.

According to a massive study supported by the American Wind Wildlife Institute, wind turbines account for around 214,000 – 368,000 deaths each year. While any death is something to be avoided, that number is tiny compared to the fatalities from collisions with radio and cell towers, which kill 6.8 million birds every year.

The study focused on small passerines in North America and the evidence shows that just .01% of those birds collide with wind turbines. The neighborhood cat causes far more damage to bird populations, with cats killing 1.4 to 3.7 billion birds each year. At the same time, the National Audubon Society released findings showing that over half of all bird species in America are threatened by climate change, which makes alternative energies like wind even more important for preserving overall bird populations.

Related: Utility Company Pays $1 Million in First Fine for Wind Farm-Related Bird Deaths

The AWWI will sponsor another study, this time to examine the impact that wind turbines have on larger birds, like hawks and eagles, and prairie birds. But one thing is already certain: of all the many threats facing birds today, wind turbines are not high on the list. Climate change, on the other hand? That’s something to worry about.


THE Jeffreys Bay Wind Farm donated R254300, including a car, to the On Eagles Wings Multi-Purpose Centre in Pellsrus, Jeffreys Bay.

Founded by pastor Mercy Cwayi in 2005 who experienced a traumatic childhood, and supported by the Department of Social Development, the centre offers counselling, education and life skills to women and children experiencing domestic violence and rape. This is by no means a simple undertaking considering that the community lacks sufficient support structures and is plagued by drug and alcohol abuse.

“We are grateful to women like Cwayi who take care of the many vulnerable women and children in our communities. Their compassion and strength help lift up those who are in need of care,” says Marion Green-Thompson, Economic Development Manager for Jeffreys Bay Wind Farm.

“Our development programme aims to positively impact the communities in Jeffreys Bay, Humansdorp, Hankey and Patensie areas, with a particular focus on education and health.”

Cwayi says: “We now have extra “legs” to reach community members and offer support to domestic violence victims.”

According to her there are exciting plans in the pipeline for the centre. “We hope to establish satellite branches in Patensie, Thornhill and Blomplaas, as well as to enable our social worker and trauma counsellor to visit community members in those areas.

“We further dream of opening a house for young unwed pregnant mothers who have been cast off by their families – offering a safe place and caring environment, while teaching them valuable skills to become independent.”

According to Social Development District Manager Zandisile Tafeni, Government cannot deal with social ills on its own. “We have limited resources, and are therefore grateful to see companies like the Jeffreys Bay Wind Farm giving back to the community.”

PE manufactured wind tower transported to wind farm

DCD Wind Towers has officially completed its first in-house manufactured wind tower at its R300m facility at the Coega Industrial Development  Zone.

The massive tower was transported on Thusday to the Grassridge Wind Energy Facility on the outskirts of Nelson Mandela Bay.

The DCD Wind Towers manufacturing facility is a joint initiative between the DCD Group, the Industrial Development Corporation and the Coega Development Corporation.

The facility was specifically established in the Coega IDZ to support the localisation of wind tower manufacturing in South Africa, which essentially ensures the long-term and sustainable creation of an estimated 150 to 200 operational positions and 628 construction jobs.

DCD Wind Towers general manager Gerrit Viviers notes that the direct operational jobs created through the establishment of the DCD Wind Towers factory include; boilermakers, shot-blasting operators, cutting operators, chamfering operators, roller operators, coded welders and fitters.

"What's more, a number of unskilled and semi-skilled individuals have been employed for sand blasting, painting and oxy-fuel cutting. The benefits to the local economy will penetrate beyond local skilled jobs and training to include logistics opportunities and additional value chain opportunities, thus creating a new industry in the Eastern Cape, Western Cape and Northern Cape too," he explains.

DCD Wind Towers is also contributing positively to sustainable and renewable power generation, as set out by the Department of Energy's Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). DCD Wind Towers has already signed co-operation agreements with the turbine manufacturers that have been successful in Round 2 of the REIPPPP.

The DCD Wind Towers factory is expected to manufacture between 120 and 150 towers per year for the successful bidders in the REIPPPP programme. These towers will be manufactured to the highest international standards of quality and to exact OEM specifications, while remaining uniquely local.

CDC head of marketing and communications Ayanda Vilakazi, notes that the DCD Wind Towers manufacturing facility will diversify the traditionally automotive sector reliant Nelson Mandela Bay industrial base. "We want to attract investors to the Coega IDZ who are able to add value to the supply chain and align with national government's drive for localisation of manufacturing, especially in the renewables sector where there are many gaps for high-tech innovation and manufacture. A prime example of the success of this approach is DCD Wind Towers."

IDC senior account manager for the metal, transport and machinery products unit, Joseph Sithole, believes that the manufacturing sector is of tremendous importance to South Africa's long-term economic prospects, and suggests that the establishment of the DCD Wind Towers manufacturing facility is the first step in boosting investor confidence within the renewables sector.