November 19, 2017

No simple solution to de-carbonising South Africa – Minister warns

Minister of Public Enterprise Lynne Brown speaking at the Power-Gen Conference at Sandton Convention Centre

South Africa could worsen the current unemployment crisis, if it hastily jettisons coal-driven power generation for the renewable energy alternative, the Minister of Public Enterprises, Lynn Brown, warned during the Power Generation Conference, a fortnight ago.

While acknowledging the growing competitiveness of solar and wind energy, Brown called for a long-term deal with the renewable-energy sector to avoid catastrophic job losses.

The Minister countered the notion that the deployment of renewable energy provided a “simple” solution to decarbonising the coal-driven power generation.

Eskom, South Africa’s power utility which produces 44 GW from 29 power stations, employs 40 000 employees directly, as well as creates tens of thousands of coal-mining jobs upstream.


Kathu Solar Park Station at the Northern Cape

Earlier this year, Eskom announced that it was closing five coal-fired power stations, partly to accommodate the introduction of new wind and solar plants. However, Brown subsequently instructed the state-owned utility, over which she has oversight as shareholder, to hold back on any closure plan until a thorough economic assessment had been finalised.

Thousands of employees in the mining sector could lose jobs, as mining companies are rightsizing their operations in order to offset effects of weak commodity prices.

South Africa is ranked 10th among G20 countries for renewable energy investment conditions, by Allianz’s Climate and Energy Monitor 2017. In compiling the ranking, Allianz examined the needs and investment climate for all G20 countries on renewable energy.

However the South African government has come to an understanding of the use of renewable energy. On October 6 last year, an ENGIE-led consortium with partners, ACCIONA and SENER, held a ground-breaking ceremony for their Kathu Solar Park in the town of Kathu, in the Northern Cape Province, bringing together local officials, guests and the project’s South African partners.

Construction has begun following the signing of a 20-year Power Purchase Agreement (PPA) between ENGIE and Eskom, South Africa’s state-owned power utility. The 100 MW Kathu Solar Park is expected to be operational in the second half of 2018.

Kathu Solar Park is a Concentrated Solar Power (CSP) project that is being built by Spanish engineering and construction companies ACCIONA and SENER. The plant uses parabolic trough technology specifically designed and patented by the global engineering and construction leader SENER, and is equipped with a molten salt storage system that allows 4.5 hours of thermal energy storage to extend the operational capacity of the plant after sunset. Kathu Solar Park will produce enough power to supply 150,000 homes.

The joint venture between ACCIONA and SENER has been appointed by the ENGIE led consortium to provide engineering, procurement and construction services for the project. Construction started on site in May 2016 and is due for completion in the second half of 2018.

Approximately 1,200 jobs, of which approximately 36% will be local, will be created during the construction phase. It is estimated that the Kathu Solar Park will save six million tons of CO2 over 20 years and will further promote local economic development through various projects such as a local community trust for the benefit of communities in the John Taolo Gaetsewe District Municipality situated in the Northern Cape and sourcing of other services from local entrepreneurs.

The project is funded by a mix of debt and equity. The debt is funded from a club of South African banks, namely Rand Merchant Bank, Nedbank Capital, ABSA Capital, Investec and the Development Bank of South Africa.

Kathu Solar Park has been awarded preferred bidder in the third round of the Renewable Energy Independent Power Producer Procurement Program (REIPPPP) led by the South African Department of Energy (DOE)


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