There have been significant changes in the South African energy sector with regards to the regulatory and policy framework. Recent developments include the establishment of the second Integrated Resource Plan (IRP), the Medium Term Risk Mitigation Project (MTRMP), revision of the Renewable Energy Feed-In Tariffs (REFIT), proposed Independent System and Market Operator (ISMO) Bill, Electricity Regulations on New Generation Capacity and other relevant policies such as the New Growth Path which places an emphasis on the green economy. The IRP 2010 was approved by Cabinet in March 2011 and is a 20 year electricity plan which forecast the long-term electricity demand and detail how this demand should be met in terms of generating capacity, technology, timing and cost. The IRP focuses on the diversification of energy resources by 2030 whereby the total energy share of coal power will be reduced from the current 90% to 65%, nuclear will increase from 5% to 20%, imported hydro remains at 5%, CCGT from 0% to 1%, OCGT also remains at < 0.1% and renewables increase from 0% to 9%. National government has embarked on increasing the countries electricity supply from 40000MW to 85000 MW by 2030, including Eskom’s new build programme. The Coega IDZ has also built momentum on energy projects in both conventional energy (CE) and renewable energy (RE) so as to attract and sustain catalyst investment projects.

CONVENTIONAL ENERGY

ESKOM has a number of conventional energy projects underway, two new coal power stations (9000MW), Medupi and Kusile, proposed nuclear power stations (9600MW) and return to service of three decommissioned coal power stations (1500 MW). Construction for the coal power stations has started and the nuclear project is in its development stages, currently ESKOM is carrying out an Environmental Impact Assessment (EIA) for three different sites. One of the proposed nuclear power station locations identified in the EIA is Thyspunt, which is 80 km away from the Coega IDZ. The first power station to be brought back to service was Camden and work on the other two in still ongoing. In addition, the Department of Energy (DoE) has two planned Open Cycle Gas Turbines (OCGT) fuelled by diesel with a total capacity of 1020 MW, which will be operated as peaking power stations. One OCGT plant (330MW) will be based within the Coega IDZ, adjacent to ESKOM’s Dedisa sub-station. The OCGT power station will be the first of its kind to be operated by an Independent Power Producer (IPP), through the DoE’s initiative of introducing IPP’s into the countries electricity supply industry. The Coega Development Corporation (CDC) has a Combined Cycle Gas Turbine (CCGT) power station in the pipeline. The planned CCGT plant has a capacity of 1600 MW - 2400 MW and can be operated as a base load or mid merit power station. The plant will use liquefied natural gas (LNG) as a fuel source; hence it will be coupled with an LNG terminal.

RENEWABLE ENERGY

In 2003 South Africa set a target of 10 000 GWh (˜1667 MW) in the SA Renewable Energy (RE) White paper which is the Government’s medium-term (10 year) target. This is to be the RE contribution to the final energy consumption by 2013 mainly from biomass, wind, solar and small-scale hydro. Furthermore the IRP 2010 has allocated 42% of new energy generating capacity from renewables over the next two decades, translating to a RE share from 0% to 9% by 2030. ESKOM currently has the Klipheuwel pilot wind farm of 3.2 MW and planned wind farm of 200 MW in the Eastern Cape. In addition, there is a committed build of a 100 MW sere wind farm and 100 MW CSP solar farm planned in the Western and Northern Cape Provinces, respectively. The Department of energy has initiated a 5000MW solar park in Upington-Northern province that will incorporate the different kinds of solar technologies.

The DoE, ESKOM, National Energy Regulator of South Africa (NERSA) and National Treasury are working on the implementation of RE in South Africa, through foreign investments using the Renewable Energy Feed in Tariff (REFIT). A procurement process to roll out the first 1 025 MW of RE power for Independent Power Producers (IPPs) by 2013 is scheduled for finalisation by the end of 2011. The DoE will be the procurer and ESKOM being the buyer (Single Buyer Office) in the interim whilst awaiting the establishment of ISMO.

The CDC has a developing RE sector with a 10% target as a contribution to the National government RE target and seeks to be the Province’s RE hub. Coega has 3wind farm projects investments in the EIA stage with a planned generation capacity of 183 MW. Project 1, Electrawinds from Belgium already has a 1.8MW operational Vestas wind turbine in Zone 9 of the Coega IDZ, but in total it will have 25 Turbines (3 MW). Project 2 from France is implementing development of 15 Turbines (3 MW) whilst Project 3 from Sweden is developing 20 Turbines (3 MW). Other RE projects include a 12 MW Photovoltaic (PV) farm with Biomass to electricity projects in the pipeline and these investments are REFIT dependant. The Coega RE sector also entails component manufacturing that includes Solar Water Heaters, wind turbine and solar components, distribution and assembly investments for the future to establish technology localisation.

For investors who wish to take advantage of opportunities in the renewable energy sector, please contact Mr Luvuyo Mkontwana on.

E-mail: luvuyo.mkontwana@coega.co.za
Telephone: +27 41 403 0590
Fax: +27 41 403 0401