Special Supplement 31 October 2016 Five years of renewable energy The remarkable story of South Africa’s power transformation At almost the height of Johannesburg's Carlton Centre, the Khi Solar One tower outside Upington captures the sun's energy to produce electricity. Photo: Christy Strever Major Sponsors Additional Sponsors In Association with Independent Power Producers Office 16468 COMMITTED TO FUNDING RENEWABLE ENERGY FOR A SUSTAINABLE FUTURE 30 PROJECTS R88 BILLION IN VALUE 13 AWARDS For your energy funding solutions contact Sakkie Leimecke at [email protected] or Mike Peo at [email protected]. nedbank.co.za Nedbank Corporate and Investment Banking is a division of Nedbank Ltd Reg No 1951/000009/06. Authorised fi nancial services and registered credit provider (NCRCP16). 16468 COMMITTED TO FUNDING RENEWABLE ENERGY FOR A SUSTAINABLE FUTURE 30 PROJECTS R88 BILLION IN VALUE 13 AWARDS For your energy funding solutions contact Sakkie Leimecke at [email protected] or Mike Peo at [email protected]. nedbank.co.za Nedbank Corporate and Investment Banking is a division of Nedbank Ltd Reg No 1951/000009/06. Authorised fi nancial services and registered credit provider (NCRCP16). ➲4 OCTOBER 2016 Special Supplement to Business Day CONTENTS 14 16 08 26 NEWS AND VIEWS 24 Solar Capital De Aar ABOUT THIS PUBLICATION A carpet of solar has enveloped De This special supplement was produced to 6 Introduction mark five years since the renewable energy Aar. Its two plants make up the programme was introduced in South Africa. The creation of the renewable largest photovoltaic operation in It was produced by independent research energy industry is a remarkable Africa house Intellidex, working in conjunction with success story for South Africa, Business Day. one that is already being emulated 26 The entrepreneurs Our effort has been supported by various within SA and globally sponsors and advertisers who provided A key objective of the IPP funding for the publication. However, the programme was to stimulate new editorial was developed independently by the 8 A gradual, sudden miracle businesses in SA. We look at two Intellidex team, working with Business Day The story of how South which held final editorial control. The opinions companies that have sprung onto expressed are therefore theirs and not any of Africa produced an entirely the global stage on the back of the the sponsors’. new industry out of nothing, programme Please let us know any comments by emailing establishing itself as a world [email protected]. leader in renewable energy 28 The technology behind the renewable energy 9 Creating the IPP Office THE TEAM Steven Hawes explains the science Editor: Stuart Theobald Operating initially from a and workings of some the key Managing editor: Colin Anthony small, temporary structure in renewable energies Consultant: Steven Hawes the parking lot of Gallagher Graphic design, layout: Eleonora Del Grosso Proof reader: Nonhlanhla Kunene Estate, the IPP Office has quickly 31 The true benefits Advertising sales: Nigel Twidale established itself as global leader Socioeconomic development Administration: Tina Shika in renewable energy procurement iniatives have seen R19.3bn Photographer: Christy Strever allocated for spending on 10 The hard task of building communities over 20 years with ACKNOwledgements a further R29.2bn earmarked to This project would not have been possible The independent power producers without the assistance of many people. The have an impressive record of flow into community trusts team would like to thank in particular: constructing plants on time and Karén Breytenbach, Desireë Otto, Moloko on budget 32 Funders and shareholders Masenya, Maduna Ngobeni, Gary lloyd Banks and equity funders put and Beverley Roos of the IPP Office; Sizile Mabaso, Elton Gordon, Veronique Isaacs and 11 Small IPP Programme up an unprecedented amount of Clive Elliott of Cookhouse wind Farm; José Achieving the goal of investment capital to make the David Cayuela Olivencia of Abengoa; Paschal enabling small South African IPP procurement programme Phelan, Janice Finlay and Kate Finlay of Solar Capital; Mark Pickering of Globeleq; Nandu manufacturers to access the work. We look at how it was done Bhula of ACwA Power; Johan van den Berg renewable energy industry of the SA wind Energy Association; Obakeng 34 The future Moloabi of Pele Green Energy; Ramón Marcet of Rioglass; Stephen Forder of The Energy The IPP procurement programme 12 Khi Solar One Blog; Theuns Ehlers, Absa’s Head of Resource The collection of units atop the faces challenges but the logic is and Project Finance; Pippa Reyburn, director, unassailable Edward Nathan Sonnenbergs; Michael Meeser, Khi Solar One tower can be seen Investec head of project finance; Michael from 30km away, hanging like Fitzpatrick, J Maynard project consultants; a second sun in the sky outside Mark van wyk and Peta Chenells of Mergence Investment Managers; Mike Peo, Nedbank Upington Capital’s head of Infrastructure, Energy and Telecommunications; and Hugh Hawarden, 16 Cookhouse Wind Farm RMB’s Power and Renewables Contractor. On the hills above Cookhouse the enormous wind turbines make Published by Intellidex (Pty) ltd for Times Media Group limited. a muted drone as the 40-metre blades slice through the air Intellidex (Pty) ltd 1st Floor, Building 3, Inanda Greens Office Park, 54 weirda Road west, Sandton, 2194 16 Across the country Tel: 010 072 0472 www.intellidex.co.za A double-page map marks the Times Media Group Limited locations of 92 projects using six 4 Biermann Avenue, Rosebank, 2196 different renewable technologies Tel: 011 280 3000 www.timesmedia.co.za © Copyright Intellidex (Pty) ltd. All rights reserved. 20 Bokpoort Concentrated Solar Plant A melting pot of energy far from anywhere incorporating leading- edge technology that enables ADDITIONAL COPIES the plant to continue producing Additional copies of this publication can be 24 electricity through the night 31 purchased by emailing [email protected] ➲6 OCTOBER 2016 Introduction THE STORY OF SOUTH AFRICA’S GLOBAL ENERGY COUP Photo: Christy Strever Stuart Theobald magine 200 hectares covered in into gyrocopters and other light them into 20-year contracts. an objection that has introduced photovoltaic solar panels. That’s aircraft to get decent camera angles The results have been dramatic. damaging uncertainty into the Iabout 400 football fields, or 20 and driven thousands of kilometres The government has conducted four programme. The key roleplayers, times the size of Zoo Lake park in to see projects first-hand. It has not main bidding rounds and in each however, are optimistic that the Johannesburg. There’s now not just been easy, but we wanted to bring the one prices have plummeted. The first success that has been demonstrated a few, but 25 projects of that size magnitude of what has been achieved round in 2011 received an average by the programme means it will be or bigger already built or being to Business Day’s readership. It is a price of R2.52/kWh, but by the fourth impossible to quash. built across South Africa, and many story of a remarkable infrastructure round that had fallen to just 82 cents. Another noteworthy feature of smaller ones. achievement of the government. Using an approach inspired by the programme is the economic Then there are the wind energy I first took note of the renewable South Africa’s, last month Abu Dhabi development aspects of it. Firms farms. Most wind turbines are energy independent power producer announced a new world record low bid to direct between 1% and 3% of around 100m high, the same height procurement programme (REIPPP, price for a photovoltaic solar plant their total top-line turnover towards as London’s Big Ben, with blades usually pronounced “reep”) last year of 2.42 US cents/kWh, equivalent at community development projects. that each span more than 40m. There at a development finance conference the time to 34 South African cents. The result of this is going to be are more than 1,500 such windmills in Luxembourg. A speaker from a The new Medupi and Kusile coal- massive in those areas where there are already erected or being erected European utility was gushing about powered stations, when they come projects. We expand on that on page 31. across the country. what South Africa had achieved, calling fully online, are forecast by various Putting together this publication Then there are the spectacular it “the most successful green energy experts to cost between 100 and has been a matter of pride for the concentrated solar plants that direct procurement programme ever”. 120c/kWh.So successful has the Intellidex team and our colleagues the sun’s rays either on to a tube in a The global excitement at what South approach been it is now being used at Business Day. We have focused curved mirror, or towards a tall tower Africa had done was palpable. This for non-renewable IPPs too, with two on telling the story of the REIPPP in the centre of a field of mirrors. One was something different. Here was a coal projects recently announced and programme, both through the planned project, Redstone, will have well thought through plan to deliver a process now being developed for narrative and visually. We wanted a tower over 250m high – higher than on the renewable energy objectives of gas-fired IPPs. to bring the scale of the programme the Carlton Centre in Johannesburg. the National Development Plan and The world’s development directly to the public so we’ve relied There are also hydroelectric, South Africa’s commitments to help thinkers were eager to learn about extensively on photography. Had biomass and landfill projects being fight climate change. And while so the renewables programme, but it we had more time and resources we constructed.