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Renewable-energy projects have potential to create nuclear equivalent power

28th June 2013

By: Ilan Solomons

Creamer Media Staff Writer

  

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International technical advisory company 3E says that South Africa is making tremendous progress towards achieving the goals of South Africa’s National Energy Regulator’s national integrated resource plan through the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP).

“The projects from the first three bid rounds of the REIPPPP will generate power equivalent to two new 1 800 MW Koeberg nuclear power stations,” says 3E MD Richard Doyle.

The company has been appointed as independent engineer on five solar photo- voltaic (PV) power projects, in the Northern Cape and one wind power project in the Eastern Cape, all of which were preferred bidders in bid window one and two of the REIPPPP. It has also been appointed as the owner’s engineer for the PV component of a large solar power project in the Northern Cape, which was awarded as a preferred bidder in the first bid window, highlights Doyle.

He points out that the projects that 3E is working on are largely on schedule and have, to date, experienced only a few small setbacks owing to minor logistical challenges.

3E renewable energy and grid engineer Dylan Theunissen says as construction started on some of these projects, 3E is already playing a significant role in ensuring that they run on schedule, according to specification and within budget.

Further, 3E is fulfilling a technical advisory role, mostly for the banking institutions and development finance institution, the Industrial Development Corporation (IDC), on about 50 REIPPPP projects, from the first three bidding rounds.

“These projects have the potential to produce more than 2.5 GW of wind power and 1 GW of solar power, although of course, not all will be selected,” notes Doyle.

Theunissen tells Engineering News that the scale of the renewable-energy projects being undertaken in bid windows one to three are significant when compared to the baseload challenges South Africa faces.

He emphasises that projects of this scale are regularly built elsewhere in the world using a modular approach.

“It is important to have a mix of both international and local expertise when working on these types of projects, and a local understanding of the national electricity grid is essential to ensure power from the projects is efficiently transferred to the grid,” states Theunissen.

Doyle says 3E offers its clients the best blend of local and international skills and knowledge as its South African team comprises both local and international engineers. 3E offers its experience of many years of working on renewable-energy projects around the world together with local engineering, construction and related knowledge.

The company is contracted to train State-owned power utility Eskom’s renewable- energy team on various aspects of efficiently managing a renewable-energy project.

“We are excited that the solar power plants and wind farms are now in the construction and commissioning phases” says Doyle, adding that the local learning experience is now in the realisation phase and is no longer a theoretical one.

He adds that the skills that are being developed locally in the REIPPPP process are already diffusing to the mass rooftop PV market, which is showing evidence of mushrooming across the country and will, in his view, will create many more job opportunities than the REIPPPP.

Doyle reflects that the competitive bidding has largely achieved the Department of Energy’s (DoE’s) ambitions of price reduction and associated competitive electricity prices.

Simultaneously, he adds, there has to be a balance between low cost and cheap power plants. Doyle says if the REIPPPP criteria were used to award contracts for the construction and maintenance of a nuclear power plant, whereby the cheapest bid was awarded the contract, there may be considerable cause for concern.

“Projects are a risky business as companies do not want to spend too much money before they have been awarded as the preferred bidder. So, unlike other countries where feed-in-tariffs are used, there is sometimes less commitment to undertake detailed analysis such as expensive geotechnical surveys and detailed logistics studies, before bidding in South Africa,” says Doyle.

“The company has already seen some cases in South Africa where work needs to be redone and budgets recalculated after construction of projects has started,” states Doyle.

However, he points out that the quality of the projects are not in jeopardy as the checks and balances that have been put in place by the DoE, as well as the use of advisory services by the projects will ensure projects are of a high standard.

Theunissen says the increasing requirements by government for local content on the projects continues to be a challenge for some of the REIPPPP projects, as in many cases the materials or skills required for the projects are either locally scarce or expensive, thus increasing the costs and price pressure on the projects.

There are also some concerns about quality owing to new local manufacturing facilities, which have not had sufficient time to develop records, says Theunissen.

“Project preferred bidders have to walk a fine line between meeting local content requirements, while still remaining finan- cially viable,” cautions Doyle.

However, he states that many projects in round one and two of the REIPPPP have met and even exceeded their target for local content requirements, which include complying with black economic-empowerment policies, employing local labour and using locally sourced materials.

Unfortunately South Africa does not manufacture solar silicon locally, Theunissen points out, therefore, the best companies can do to ensure some parts of the solar PV panels have local content, is to assemble them locally.

Doyle says project challenges unique to the South African context compared with European renewable-energy projects relate to the increased distances of transporting workers and materials to project sites. The size of the projects being undertaken in South Africa, on average, are significantly larger than those being built in Europe.

“The sector has responded well but there is a general concern that there will be critical pressure for access to limited port, storage and transport facilities for large wind components if these are all required simultaneously,” he warns.

“Some of the REIPPPP project sites are in remote locations, which increases the logistical difficulties of these operations,” he emphasises.

Theunissen points out that at present there are still legislative challenges relating to the rooftop solar industry, as feed-in tariffs do not exist in South Africa, therefore, suppliers in most regions can only supply as much power as the consumer can use.

A new challenge that is appearing for developers is the idea of Renewable Energy Development Zones (REDZs).

“Environmental complications are a potential challenge for projects, as the development of projects should not be allowed to take place at the expense of South Africa’s biodiversity,” stresses Doyle.

He adds that the Department of Environmental Affairs is starting to look at pre-approved REDZs for wind power projects and this could frustrate devel- opers who are developing sites outside these zones.

According to the South African Wind Energy Association’s (SAWEA’s) website, it is projected that by the first quarter of 2014, the REDZs will be submitted for Cabinet approval for the rollout of wind power projects in the Northern Cape, Eastern Cape and Western Cape, with similar plans for solar energy plants.

SAWEA explains that the REDZs will allow for wind and solar PV energy projects and the associated grid infrastructure to be developed in these preferred areas without requiring environmental authori- sation, subject to certain conditions and development protocols.

However, SAWEA states that it supports the general aim of easing the consenting process required for the establishment of renewable-energy projects. What is of concern to SAWEA is the unintended consequences that may result.

“Broadly, SAWEA has flagged that delisting may not be the best solution. One alternative would be a strategic environmental assessment (SEA) that lists and publishes environmental sensitivities. “This would guide developers away from high sensitivity areas. This approach would be appropriate to the level of uncertainty inherent in such a study. Perhaps the most pressing broad concern is that geographically defined REDZs may distort the playing field in a competitive procurement market. The investor confidence that underpins the participation of the private sector in developing power production capacity in South Africa could be jeopardised by this,” states SAWEA.

In addition, SAWEA has several specific concerns relating to matters like the validity of the assumptions used in the SEA process, the accuracy of data, the appropriateness of major exclusion criteria used, and the question of whether the residual permitting requirements in the REDZ might not constitute a hurdle as formidable and time consuming as the environmental authorisation process itself.

Moreover, SAWEA notes that there is concern that land grabs could occur within REDZs, once it is known where they are and especially if they are insufficiently numerous and/or large, as this would increase land values, increase the possibility of corrupt practices and may lead to an anticompetitive situation in programmes such as the REIPPPP.

“Indeed, care has to be taken that the SEA and REDZ do not become effectively a prebid selection process, compromising the REIPPPP tender integrity,” cautions SAWEA.

Another challenge, Doyle notes, is that wind and solar power projects supply intermittent energy as they are reliant on climate conditions, which means they will not always operate at full capacity like coal-power stations.

“However, skilled engineers are already working on South Africa’s smart power grid, which will allow operators to balance these sources of intermittent electricity. This will ensure that the national grid is always balanced,” says Doyle.

Theunissen points out that there are also existing challenges regarding South Africa’s transmission network.

He states that, historically, most of South Africa’s coal mines are located in Mpumalanga and the baseload power stations are located in the surrounding areas. Most of the load is being transferred to Gauteng, with scattered load centres throughout the rest of country.

“Essentially, the country’s grid is designed to run from the north to the south of the country. With the development of the renewable-energy projects in the Northern and Western Cape, the electricity will be flowing in the opposite direction,” Theunissen stresses.

He says Eskom will have to look closely at the shift in power generation and load centres, and accordingly reconfigure the grid to deal with these new directional flows of electricity.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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