24 June 2015
South Africa is to get its first wind farm built through a not-for-profit organisation in partnership with land owners and farmers in Wesley, a rural area of the Eastern Cape.
The project will be jointly developed by Just Energy, the NPO, and InnoWind, a subsidiary of EDF Energies Nouvelles. Just Energy’s unique business model enables it to re-invest a substantial portion of the revenues it earns from developing the project back into equity for the local community to own.
The partnership was selected as a preferred bidder by the Department of Energy under the fourth round of its highly regarded Renewable Energy Independent Power Producers Procurement Programme (REIPPPP).
“We started Just Energy with the belief that if clean energy projects were to be distributed around the country, then there was a fantastic opportunity for low income communities to be involved in the ownership of those projects, so that some of the income created would stay in the local economy and help to build those communities,” said Neil Townsend, the chief executive of the NPO.
“We are really excited to have the opportunity to take this approach forward on the project we started in Wesley in a rural part of the former Ciskei homeland area.”
It is the first renewable energy project to be selected in either the Transkei or Ciskei of the former homelands areas.
“This is an important first step in a multibillion-rand procurement programme that has so far seen no renewable energy projects developed on community land in the former homelands,” said Martin Webb, chief executive of InnoWind, “and one which we believe will open the door to more renewable energy projects in some of the less economically developed rural areas of our country.”
The other partner in the project is a community of small-holder land owners and farmers on whose lands the wind farm will be built. They will receive long-term financial returns from the project.
“We wanted to use a model of ‘real ownership’ for this project for the participating community,” said Townsend. “What sets this project apart is it sits on land owned by local community landowners and farmers. This is a unique approach for the sector but we hope the social benefit that flows from it will pave the way for others to follow, particularly in rural areas such as in the former homelands, one of the few areas in South Africa where local communities hold land.”
Just Energy was initially established through charitable investments by the Bank of America Foundation and Oxfam.
“We are pleased that Just Energy’s innovative model for delivering clean energy projects has been recognised and accepted by the South African government,” said Purna Saggurti, the chairman of global corporate and investment banking at Bank of America Merrill Lynch.
“While this investment preceded our new Catalytic Finance Initiative, our partnership with Just Energy is a terrific example of how that initiative can leverage philanthropic dollars to mobilise capital from other sources to deliver both financial returns for investors and strong sustainable development benefits for the local communities.”
The project is 33 megawatts (MW) in size and when built will feature 10 of the tallest wind turbines in Africa. It is expected to be operational towards the end of 2017.
In early June, the Department of Energy extended the REIPPPP allocation a further 13 solar photovoltaic and wind projects with a collective capacity of 1 084MW. This was additional to the 13 round four projects selected in April with a combined capacity of 1 121MW.