SA woos investors in solar energy

29 October 2010

The South African government was ready to contribute its share of the costs of building a multi-billion rand solar park in the Northern Cape, Energy Minister Dipuo Peters told investors in Upington on Thursday, urging them to get involved in what she called a “milestone” renewable energy project for the country.

Peters was speaking at a two-day conference aimed at gauging investor interest in the project to build a solar park – a concentrated zone of solar generating plants and solar component manufacturing facilities – in the Northern Cape.

Upington, which is centrally located in the province, is seen as a perfect site for the park, due to abundance of sunshine and and vast tracts of available land in the region.

Public-private split

Peters said that initial estimates put the cost of building the park at around R150-billion, to be split between the government and the private sector.

BuaNews has learned that about R1.8-billion of the R26-billion World Bank loan granted to power utility Eskom earlier this year would go towards the park’s establishment.

However, Peters said that massive private sector funding and contributions from independent power producers would be needed in order to get the project off the ground.

Wide-ranging benefits

A solar park would alleviate the pressure on South Africa’s largely coal-based energy supply while boosting the country’s overall energy capacity and helping the country achieve its target of a 34 percent reduction of carbon emissions by 2020.

It is estimated that a 5 000 MW park constructed over a decade could create about 12 300 construction jobs annually. The project is also expected to create about 3 010 operations and maintenance jobs by the time the last solar plant is constructed.

Besides the jobs that would be created by the park, South Africa would get the opportunity to become a manufacturer of various solar technology materials and products, which could lead to further foreign investment and job creation.

Political backing

Peters told investors that a decision had been taken at Cabinet level to invest more in renewable energy sources as South Africa prepares to shift from conventional energy, such as coal-generated electricity, to nuclear and other sources.

South Africa’s new economic growth path, unveiled in provisional form this week, also envisages up to 300 000 jobs being created in the “green” economy by 2020.

“We believe that both principles of energy security and diversification can only be possible if we bring [independent power producers] on board to contribute to the energy balance,” Peters said.

However, she cautioned that investors who demonstrated a capacity for local component manufacturer would be given preference.

“We want to work with those international players who believe in the future of this country and the continent … We don’t want to see planes suddenly coming in with products from somewhere [else].”

Pre-feasibility study

South Africa is not the only country doing research on the viability of solar energy – a clean alternative to both fossil fuels and nuclear power – with countries like India and Brazil doing the same.

A pre-feasibility study conducted recently by the Clinton Climate Initiative found that solar projects could generate up to 5 gigawatts of cost-effective electricity in South Africa.

The only major challenge to emerge in the Clinton Climate Initiative pre-feasibility study was the grid/transmission line shortage in the Northern Cape. However, both the provincial and national government have committed to addressing this issue.

The Department of Energy has since commissioned US company Fluor Corporation to develop a conceptual study, followed by a more detailed design plan, for the solar park.

Source: BuaNews