Tuesday, September 28, 2010

SA solar park moving forward quickly


First solar park deals possible in early 2011, first power by end 2012

By: Terence Creamer
28th September 2010

The first commercial transactions relating to the development of
utility-scale solar power generation capacity in South Africa's first
designated solar park near Upington, in the Northern Cape province,
could be completed in the first half of 2011, with the first
electricity flowing into the grid by 2012, a senior government
official said on Tuesday.
Invitations were sent out this week to international technology
providers, as well as to local and international solar developers for
an investor conference, scheduled for Upington on October 28 and 29.
And, Department of Energy deputy director-general Ompi Aphane believes
that the first deals could be concluded in the first or second quarter
of next year.

He revealed that the solar park, which could involve an investment of
some R150-billion over a ten-year horizon, had been factored into the
yet-to-be-published integrated resource plan, or IRP2010, which would
provide a framework for South Africa's power generation mix for the
coming 20 to 25 years.

But Aphane also stressed that they would not compete with solar energy
projects seeking to access South Africa's renewable-energy feed-in
tariffs, or Refit, as it would be unaffordable to extend the Refit to
solar park investors, owing to the scale of the projects envisaged.

Proposed is a technology-neutral solar zone, operated by a so-called
�Solar Park Authority', or SPA, where up to 5 000 MW of peaking and
base-load solar electricity will be phased in over a ten-year horizon.

It is estimated that government would need to invest between R70-
million and R105-million to set up the basic transport, water and
transmission infrastructure to stimulate private investment of around
R150-billion in generating assets.

The investor conference itself will showcase the opportunities and
help inform a full feasibility study that is being pursued, following
the South African government's recent endorsement of the
prefeasibility study conducted by the Clinton Climate Initiative (CCI).

In fact, CCI chairperson Ira Magaziner argued that the Northern Cape's
world-beating solar irradiation levels of greater than 8 kWh/m2 for
much of the year, together with the fact that the government would
facilitate access to land, water and the power grid, could ensure the
delivery of peaking and base-load capacity that would be competitive
with coal.

The technology mix would hinge on factors such as grid stability and
the country's requirement for base-load as opposed to peaking power,
with the solar thermal solutions providing the former and
photovoltaics the latter.

The first phase would target the production of 1 000 MW built in
increments from a range of solutions.

Ministry of Energy special adviser Jonathan de Vries tells Engineering
News that work is currently being done to determine the technology
mix, with particular emphasis being given to dispatch stability.

"We want to use the first phase to assess the performance of the
various solar technologies at the scale we are proposing," De Vries
explained, adding that the projects would be selected through a
competitive bidding process.

Energy Minister Dipuo Peters, who unveiled the concept at a function
in Johannesburg, indicated that the SPA could be either be established
as a unit within the State-owned Central Energy Fund, or set up as a
provincial or local government agency.

The organisation would act as an investment facilitator, in a role
akin to that of a development authority within South Africa's
industrial development zones.

In other words, it will be responsible for the nongenerating
infrastructure within the 9 000-ha property, such as roads, water and
transmission capacity. The initial site, which is reportedly adjacent
to the one where Eskom plans to build a 100-MW power-tower project,
will draw water from the Orange River, which flows nearby. It is also
close to existing transmission infrastructure and within a corridor
that is earmarked for additional transmission investment by Eskom.

The full park could be built in a corridor spanning from Upington to
De Aar and involve up to 19 000 ha of land. The sites close to the
Orange River would not require additional water infrastructure, but
water would have to be piped to the other sites.

The SPA could also facilitate access to government incentives, as well
as aid investors in gaining regulatory and environmental approvals for
their projects.

But the solar park was also affected by the ongoing uncertainty
surrounding the buying entity for power generated by private
producers, as well as a lack of clarity on the nature of the power
purchase agreements (PPAs). It was not clear, for instance, whether
the PPAs would be backed by a government guarantee.

"We hope that, through this process, we will be able to deal with
these uncertainties in a way that not only unblocks investment in the
park, but is also supportive of other renewable energy developers, as
well as independent power producers more generally," De Vries said.

It was likely that Eskom would be the initial purchasing agent, with a
growing acceptance that creation of an independent system and market
operator, or ISMO, could still take years.

But Aphane insisted that the IRP2010 would be promulgated before the
end of the year, despite that fact that it has yet to be released for
public comment. He also indicated that a Ministerial determination on
new generation capacity was likely before year-end.

De Vries told Engineering News that site preparation could begin in
2011 and that, should the legislative and regulatory hurdles be
cleared, the first power plants could be producing by the second half
of 2012.

A number of working groups have been established around the project,
including one that will interrogate the potential job creation and
industrial development spin-offs.

Peters stressed that government was keen to facilitate the development
of industrial capacity to supply both into the solar park and future
domestic solar programmes, as well as into the export market.

Edited by: Creamer Media Reporter

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