Wind farms will generate over R 7 billion of revenue for local economic development over next 20 years
Delegates on day one of the South African Wind Energy Association 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.
“Utility scale wind energy is already boosting economic development in South Africa. Industry and government are committed to ensuring that these benefits are realised by small business and local communities across the country,” explains Dipolelo Elford, Chairperson of the South African Wind Energy Association (SAWEA).
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.
SAWEA considers delivery on its socio economic compact with government as core to its mandate. ‘Power2thePeople: changing lives through wind energy’ is the theme for its annual conference Windaba, which will be held in Cape Town from 3-5 November. Ongoing discussions and experience sharing will take place on the subject of working with communities and how funds can be most effectively invested. A workshop running alongside Windaba, hosted by SAWEA’s Wind for Communities working group will focus entirely on SED and how the full potential of community benefits can be realised.
Post graduate students Sarah Stands and Holle Wlokas are researching the economic development commitments and practical outcomes of the REIPPPP and will be participating in both the conference and workshop to share their findings to date. Part of this research involves analysing procurement documents and ongoing implementation of projects in relation to the effects on long-term local economic development and employment. Both women are also members of the South African Wind Energy Association’s ‘Wind for Communities’ working group, hosts to the SED workshop.
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.
In today’s terms (no time value allocated to funds flowing), wind farms in the four bid windows to date, will invest R 5 635 625 655 in socio-economic development over the next 20 years. Enterprise development, which is a voluntary criterion projects can chose to contribute towards, amounts to R1 689 475 883. Combined this investment into socio-economic and enterprise development equals R 7 325 101 538.
Local residents will benefit from projects through a percentage of shareholding. Wind energy developments allocate between 2.5% and 40% of shareholding to legal entities representing local communities. The dividends of such are to be invested into local economic development projects and programs. These funds will be released once the wind farm starts to generate profit, which can take up to 10 years, depending on energy generated and the initial cost of development.