ENGIE in South Africa
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ENGIE RÉFÉRENCES COULEUR brandblock_gradient_WHITE 04/05/2015 24, rue Salomon de Rothschild - 92288 Suresnes - FRANCE Tél. : +33 (0)1 57 32 87 00 / Fax : +33 (0)1 57 32 87 87 Zone de protection 1 Web : www.carrenoir.com WHITE Zone de protection 2 Our Activities, OurZone de protection Commitment 3 South Africa Group profile ENGIE develops its businesses (power, natural gas and services) around a model of responsible growth to take on the major challenges of the transition to a low-carbon €75bn economy: access to sustainable energy, in 2014 revenues climate-change mitigation, security of supply and the rational use of resources. Operations in The Group provides communities, governments, cities and businesses with 70 highly efficient and innovative solutions countries based on its expertise in four key sectors: independent power production, natural gas, renewable energy and energy efficiency No.1 services. independent power producer (IPP) in the world ENGIE employs 153,000 people worldwide and achieved revenues of €75 billion 3rd in 2014. largest LNG supply The Group is listed on the Paris and Brussels portfolio in the world stock exchanges and is represented in the main international indices. 2 | ENGIE | South Africa ENGIE in South Africa A long-term partnership South Africa has a power reserve margin of less than 5% and has daily load-shedding, which is particularly harmful for industrial customers and the economy as a whole. The country is looking at a balanced mix of solutions to help solve the energy crisis and to bring electricity to the 20 25% of the population that is still without access to power. years presence in the country The South African authorities have recognized the role that private producers like ENGIE (formerly GDF SUEZ) can play in securing the country’s energy supply in the future, and production is to be shared between the state-owned No.1 operator Eskom (70%) and private producers (30%). To IPP in the country increase capacity, they are encouraging the development of solar, wind, nuclear, small-scale hydroelectric, and biomass energy sources, along with a program for coal-based generation. A five-stage plan was set up to reach 17 GW of 7Mio renewables by 2030 – compared with 3 GW currently. man-hours employment created to date* in construction South Africa is a valued partner for ENGIE. Our Group *Q1 2015 originally entered the South African market through its environmental services activities in 1994. We developed the country’s first IPP (Peakers) and have been an enthusiastic supporter of its ambitious and now highly successful renewable energy program focused on wind and solar projects. ENGIE will continue to make investments in the country and will actively support the government’s efforts to increase the share of gas in South Africa’s energy mix, leveraging its global expertise and technical capabilities that span the entire value chain. South Africa | ENGIE | 3 Our Presence Pretoria Johannesburg 2 4 Durban ENGIE Ofces 1 Johannesburg 3 Port Elizabeth Cape Town 1 2 3 4 West Coast 1 Kathu Solar Park Dedisa Peaking Power Avon Peaking Power Wind Farm Parabolic trough Open Cycle Gas Turbine Open Cycle Gas Turbine Installed Capacity: Installed Capacity: Installed Capacity: Installed Capacity: 94 MW 100 MW 335MW 670 MW In Operation Under Development Under Construction Under Construction 4 | ENGIE | South Africa Power West Coast 1 West Coast One is a 94 MW wind project, which is located 130 km north of Cape Town. It was developed under the world-class renewable energy IPP procurement program run by the South African Government. The joint venture company for this project, Aurora Wind 94MW Power, is owned by ENGIE, Investec Bank and Kagiso Tiso of installed capacity Holdings. 2.5% has been allocated to a Community Trust, with the purpose of developing and sustaining the surrounding communities. €160Mio Construction started in mid-2013 and the wind farm of investment is expected to reach commercial operation on schedule in June 2015. The power generated by the wind farm will be contracted to Eskom Holdings under a 20-year Power Purchase Agreement. Vestas supplied the forty-seven 2 MW 47 wind turbines, and will also provide a long-term service contract. wind turbines West Coast 1 directly supports South Africa’s objective of increasing the contribution from renewable power in its generation mix, and specifically the Government’s 20-year 5.6Mio plan to generate 8 GW from onshore wind. The wind farm will tonnes estimated reduction allow to offset an estimated 5.6 million tonnes of CO2 over the of CO over 20 years 2 20-year duration of its Power Purchase Agreement. 2.5Mio man-hours employment created during construction South Africa | ENGIE | 5 Power Peakers: Dedisa & Avon Peakers is the first large Independent Power Project tendered by the Department of Energy and ENGIE’s first power generation project in the Republic of South Africa. The Dedisa and Avon diesel-fired OCGT Peaking units will have a combined capacity of more than 1,000 MW, which is 1,000MW a significant contribution to the country’s constrained grid. of combined installed Dedisa capacity Dedisa is a 335 MW greenfield open-cycle turbine power plant, which is located in the Eastern Cape Province. The construction phase is nearly complete and Dedisa is expected 335MW to start producing power in the second half of 2015. in 2015 (Dedisa) Avon Avon is the larger of the two peaking units with a capacity of 670 MW. This power plant, which is expected to start producing power in 2016, is located in the KwaZulu-Natal 670MW Province, near Durban. in 2016 (Avon) Project structure The Project Companies that own the two open-cycle plants are each owned 38% by ENGIE, 27% by Legend Power Solutions (Pty) Ltd, 25% by Mitsui & Co and 10% by The Peaker Trust. The two plants will be contracted to supply electricity to Eskom Holdings, the Republic’s state- owned utility, under 15-year Power Purchase Agreements. ENGIE will establish the Operations & Maintenance (O&M) company that will operate and maintain the two power plants once they are commercially operational. The cost of building both plants represents an investment in the South African energy sector of approximately €780 million. 6 | ENGIE | South Africa Key projects for socio-economic development Avon and Dedisa Peaking Power are important projects for the socio-economic development in the areas where they are situated. The COEGA Development Corporation that develops and operates the 11,500 ha industrial development zone (IDZ) €780Mio in Port Elizabeth, in which Dedisa Peaking Power is situated, of investment underlines that the energy provided by the plant is a key enabler for major investments in the zone, such as smelters and aquaculture. The plant facilitates the strengthening of the grid in the Eastern Cape thereby contributing to the 15-year industrialization of a province that is challenged by poverty Power Purchase Agreement and unemployment. Dedisa is the largest investments in the IDZ and has provided (to date) more than 1,500 jobs during construction and more opportunities will be created during the operation of the plant. Beyond the direct jobs, COEGA 4.5Mio also noted a significant impact on job creation from small and medium businesses. man-hours of employment during construction to date In Shakaskraal, Avon is working with the local municipalities to maximize the socio-economic benefits of the project. To date, more than 1,000 jobs have been created by the construction and around 450 workers have been recruited from local areas. Peaker Trust The Peaker Trust, which has a 10% share in the Project companies, was established to ensure that local broad-based black organizations and communities can benefit from the projects. All the dividends the Trust will get out of the plant operations will go to local socio-economic development initiatives for at least 15 years, i.e. for the duration of the Power Purchase Agreements and beyond. Next steps … Avon & Dedisa Peaking Power are diesel-fired OCGT projects because natural gas is not available in Durban and Port Elizabeth. There are plans however to convert the projects into gas-fired combined-cycle base-load plants as soon as gas can be made available. That makes Peakers a good illustration of the possibilities that are open for ENGIE in South Africa. Leveraging on its global skills and expertise in both gas and power, ENGIE will indeed also be able to contribute to South Africa’s objective of increasing the share of gas in its energy mix. South Africa | ENGIE | 7 Power Kathu Solar Park The Kathu Solar Park is a 100 MW greenfield Concentrated Solar Power (CSP) project situated in the Northern Cape Province, 600 km south-west of the capital Pretoria. This large CSP project has parabolic trough technology and is equipped with a molten salt storage system that allows 100MW 4.5 hours of thermal energy storage. of installed capacity The Kathu Solar Park was nominated preferred bidder in the third (CSP) round of the Renewable Energy Independent Power Procurement Programme (REIPPP) led by the Department of Energy and will enter into a 20-year 4.5 Power Purchase Agreement (PPA) with Eskom. Financial hours of thermal Close and start of construction are expected in the third energy storage quarter of 2015. The project is owned by an ENGIE-led consortium which also includes a group of South African investors comprising 6Mio SIOC Community Development Trust, Investec Bank, Lereko Metier and Public Investment Corporation. Kathu Solar Park tonnes estimated reduction strengthens ENGIE’s contribution to South Africa’s objective of CO2 over 20 years of establishing sustainable energy generation as well as promoting local economic development.