The first commercial transactions relating to the development of utility- scale solar power generation capa- city in South Africa’s first designated solar park, near Upington, in the Northern Cape province, could be completed in the first half of 2011, with the first electricity flowing into the grid by 2012, a senior government official said at the launch of the concept last week.
Invitations were sent out in late September to international technology providers, as well as to local and international solar developers, for an investor conference, scheduled for Upington on October 28 and 29. And Department of Energy deputy director- general Ompi Aphane believes that the first deals could be concluded in the first or second quarter of next year.
He has revealed that the solar park, which could involve an investment of some R150-billion over a ten-year horizon, has been factored into the yet-to-be-published integrated resource plan, or IRP2010, which will provide a framework for South Africa’s power generation mix for the coming 20 to 25 years.
But Aphane also stresses that they will not compete with solar energy projects seeking to access South Africa’s renewable-energy feed-in tariffs, or Refits, as it would be unaffordable to extend Refits to solar park investors, owing to the scale of the projects envisaged.
Proposed is a technology-neutral solar zone, operated by a so-called ‘Solar Park Authority’, or SPA, where up to 5 000 MW of peaking and baseload solar electricity will be phased in over a ten-year horizon.
It is estimated that government would need to invest between R70-million and R105-million to set up the basic transport, water and transmission infrastructure to stimulate private investment of around R150-billion in generating assets.
The investor conference itself will showcase the opportunities and help inform a full feasibility study that is being pursued, following the South African government’s recent endorsement of the prefeasibility study conducted by the Clinton Climate Initiative (CCI).
In fact, CCI chairperson Ira Magaziner argues that the Northern Cape’s world- beating solar irradiation levels of greater than 8 kWh/m2 for much of the year, together with the fact that government will facilitate access to land, water and the power grid, could ensure the delivery of peaking and baseload capacity that would be competitive with coal.
The technology mix will hinge on factors such as grid stability and the country’s requirement for baseload, as opposed to peaking power, with the solar thermal solutions providing the former and photovoltaics the latter.
The first phase will target the production of 1 000 MW, built in increments from a range of solutions.
Ministry of Energy special adviser Jonathan de Vries tells Engineering News that work is currently being done to determine the technology mix, with particular emphasis being given to dispatch stability.
“We want to use the first phase to assess the performance of the various solar tech- nologies at the scale we are proposing,” De Vries explains, adding that the projects will be selected through a competitive bidding process.
Energy Minister Dipuo Peters, who unveiled the concept at a function in Johannesburg, indicated that the SPA could either be established as a unit within the State-owned Central Energy Fund, or set up as a provincial or local government agency.
The organisation will act as an investment facilitator, in a role akin to that of a development authority within South Africa’s industrial development zones.
In other words, it will be responsible for the nongenerating infrastructure within the 9 000-ha property, such as roads, water and transmission capacity. The initial site, which is reportedly adjacent to the one where Eskom plans to build a 100-MW power-tower project, will draw water from the Orange river, which flows nearby. It is also close to existing transmission infrastructure and within a corridor that is earmarked for additional transmission investment by Eskom.
The full park could be built in a corridor stretching from Upington to De Aar and involve up to 19 000 ha of land. The sites close to the Orange river will not require additional water infrastructure, but water will have to be piped to the other sites.
The SPA could also facilitate access to government incentives, as well as aid investors, to gain regulatory and environmental approvals for their projects.
But the solar park is also affected by the ongoing uncertainty surrounding the buying entity for power generated by private producers, as well as a lack of clarity on the nature of the power purchase agreements (PPAs). It is not clear, for instance, whether the PPAs will be backed by a government guarantee.
“We hope that, through this process, we will be able to deal with these uncertainties in a way that not only unblocks investment in the park, but also supports other renewable-energy developers, as well as independent power producers, more gene- rally,” De Vries says.
It is likely that Eskom will be the initial purchasing agent, with a growing acceptance that the creation of an independent system and market operator, or ISMO, could still take years.
But Aphane insists that the IRP2010 will be promulgated before the end of the year, despite the fact that it has yet to be released for public comment. He also indicates that a Ministerial determination on new generation capacity is likely before year-end.
De Vries tells Engineering News that site preparation could begin in 2011 and that, should the legislative and regulatory hurdles be cleared, the first power plants could be producing by the second half of 2012.
A number of working groups have been established around the project, including one that will interrogate the potential job creation and industrial development spin-offs.
Peters stressed that government was keen to facilitate the development of industrial capacity to supply into both the solar park and future domestic solar programmes, as well as into the export market.