South African construction major Aveng has established a new renewable energy unit within its Engineering & Projects Company (E+PC) and has invested R20-million to position the business for the private-power workflow that is expected to emerge later this year, or during the first half of 2011.
The company will also consider facilitative finance prospects in the power sector on a case-by-case basis.
South Africa's renewable energy programme has been in a period of hiatus while the authorities have deliberated on ways to overcome policy and regulatory hurdles that persisted despite the publication of renewable energy feed-in tariffs.
However, 1 025 MW of renewable energy capacity has been earmarked for development under the second multiyear tariff determination period, which will endure until the end of March 2013 - in fact, some R12-billion has been set aside for independent power producer capacity over the period.
A bidding process is expected to ensue once the buying entity has been established and a standardised power purchase agreement and selection criteria have been clarified.
Eskom is currently the designated single buyer and is likely to obtain a Ministerial directive to continue with that role ahead of the establishment of an independent system and market operator.
Should such authority be obtained, Eskom's Single Buyer office could initiate a procurement process before year-end.
Investec Capital has estimated that up to R30-billion of debt and equity finance will be required to fund the first 1 000 MW of renewable energy by 2013.
Aveng CEO Roger Jardine says that the company would focus on wind and solar technologies and tells Engineering News that it is ready and willing to bring its balance sheet to bear to facilitate power projects.
He also indicated that, notwithstanding a R1-billion share buy-back programme, which would be implemented immediately, the group would also seek to pursue acquisitive growth in the power sector. The company ended its 2010 financial year on June 30, 2010, with cash and cash equivalents of more than R7,8-billion
"We have kept our powder dry," Jardine says, indicating that the balance of the cash would be use for bonding large projects, particularly in Australasia, to pursue acquisitions and to extend facilitative finance to public-private partnership projects, as well as other projects in the water and power environments.
Officially, the JSE-listed company is prioritising increasing its footprint in both the power and water sectors, but Jardine says that it will also pursue bolt-on opportunities for its existing units.
Currently, power-related projects comprise about 21% of its two-year order book, which stands at R31,1-billion. Water, meanwhile, makes up 10% of that backlog.
The group already has conventional and renewable power capacity, having participated in power construction projects in South Africa and Australasia.
In renewables, it has participated in the Te Apiti wind energy project in New Zealand, as well as the Adelaide Showground Solar project in Australia.
In water, meanwhile, Jardine foresees R3-billion worth of water-related project opportunity emerging over the next 18 to 24 months and is keen to position the company to offer a solution to South Africa's worrying acid mine drainage (AMD) problem.
An inter-Ministerial Committee has appointed a team of experts to compile a report on the extent of the problem within six weeks, as well as consider available solutions and technology.
Jardine notes that that its HiPRO process has already been deployed by its Keyplan business, also a unit within E+PC, at two mining-related sites in Southern Africa.
Sipping from a bottle containing previously contaminated water, which has since been treated at the eMalahleni plant for mining companies Anglo American and BHP Billiton, Jardine argues that Aveng has already proved its AMD-treatment capacity.
Keyplan also participated in the development of Southern Africa's largest desalination plant at the Trekkopje uranium mine, in Namibia, where it has since received a ten-year operations and maintenance contract from Areva.
"Over the short term, we have a serious strategy to increase our footprint in the water and power sectors," Jardine says, adding that over the medium term, it will also seek to "substantially" increase its water and power offering.