The South African wind energy industry has had a few hiccups since the beginning of the independent power producer (IPP) procurement programme; however, on the whole, the industry has excelled, says technical consultancy 3E Renewable Energy.
“Essentially initiated and supported by the Department of Energy's (DoE’s) IPP programme, the wind industry market has progressed into a thriving industry that is showing clear signs of sustainability,” says 3E wind energy consultant Nicola Cencelli.
The IPPs, which form part of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), officially started in August 2011, when the Minister of Energy determined, in terms of Section 34 of the Electricity Regulation Act, that 3 625 MW of electricity was to be generated from renewable-energy technologies such as onshore wind, concentrated solar thermal, solar photovoltaic, biomass solid, biogas, landfill gas and small hydro projects.
The REIPPPP was designed to contribute towards socioeconomic and environmentally sustainable growth, and to start and stimulate the renewable-energy industry in South Africa.
The programme comprises five bid submission phases, with the last one to take place in May next year. The bidders apply for the right to be a renewable-energy provider in the programme.
Each renewable-energy facility is required to achieve commercial operation by not later than the dates set out in the IPP programme.
Cencelli says the main challenge currently in the wind industry is whether the programme can be sustained in its original form.
“The original structure of the REIPPPP allowed for five rounds, with the final round due for submission in May 2015. The question is not whether the REIPPP will continue, but in what format it will continue. There needs to be a change in the bidding requirements, or in the bidding format itself. Project pricing is extremely competitive and grid connections have become more costly,” she says.
Nevertheless, market investment continues with confidence. The competitive pricing of wind farms, and the current successes of installed and operating wind farms, still provide for sufficient confidence in the local wind energy market, Cencelli says.
“With the increased risk appetite of investors and financiers, we are seeing a relaxation of the former stringent contracting structure and, furthermore, the acceptance of a more diverse range of technology suppliers,” she notes.
Cencelli adds that there is an increase in the skills levels of professionals plying their trade in the wind energy sector. “The level of experience of local players, from development through to the operational phases of wind farms, has increased significantly.”
As with any government incentive project, the prime objective of the REIPPPP is to create employ- ment and to uplift commu- nities. “The extent of influence of wind farm projects in these two areas is under heavy examination. Though most projects are fulfilling their obligations, as promised during the bidding process, the impact of their measures is not necessarily being felt in the communities surrounding wind farms,” says Cencelli.