Sceptre International Group Limited Sceptre – South Africa unveils low-carbon master plan

South Africa, the continent’s largest carbon emitter, yesterday announced fresh details of its programme to boost renewable energy capacity and decarbonise the nation’s energy supply.

The government said it has already received 384 applications from companies seeking to build a combined 20GW of renewable power projects and 4GW of co-generation supply since requesting tenders two weeks ago.

Ompi Aphane, acting deputy director general for electricity, nuclear and clean energy at the Department of Energy, said he was delighted with the response – particularly given the limited time frame.

“Our objectives for the RFI – namely gaining information to support the development of a comprehensive Request for Proposals for renewable energy IPP projects; including the state of readiness of potential projects and market interest – were met beyond our expectations,” he said.

Wind power projects made up one third of the responses, and accounted for 70 per cent of the total capacity proposed. Solar PV projects accounted for one third of responses and 15 per cent of proposed capacity. Concentrated solar power accounted for five per cent of responses and nearly 10 per cent of proposed capacity.

The government hopes to issue a list of approved projects in the first quarter of 2011.

The bidding process follows the launch last year of feed-in tariffs for wind, solar, biomass, biogas, small hydropower and landfill gas projects, and the unveiling of plans for the world’s largest solar farm in the Northern Cape.

In addition, in April this year state-run utility Eskom was granted a $3.75bn (£2.4bn) World Bank loan for its expansion plans on condition the company introduces renewable energy projects.

But other energy firms complained publicly that Eskom’s dominant position as both developer of its own renewable projects and purchaser of renewable energy from independent projects represented a conflict of interests.

In response to these concerns, a government task team led by the Department of Energy took over the design, management and implementation of the renewables procurement process.

The department conducted a review of the regulatory environment, developed template power purchase agreements for all technologies, and streamlined grid connection processes.

It also worked with banks to ensure financial due diligence is conducted at the bidding phase so funding is ready for deployment after power purchase agreements have been signed.

A readiness index has also been developed to provide an overview of the status of the projects.

Currently fewer than 30 of the 384 projects have received an indicative quote and a preliminary time frame for connection.

The update on the bidding process is the latest in a flurry of announcements from emerging economies designed to demonstrate their commitment to curbing greenhouse gas emissions to the UN’s climate change summit in Cancun. For example, the past few days have also seen China provide fresh details of its plans to develop low-carbon cities, and Mexico City pass wide-reaching environmental legislation.

By Tom Young

Sceptre Group Limited is a specialist investment firm focused on the promotion of green oil, bioenergy, associated green technologies and carbon credits.
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