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Saudi power group aiming for 4 000 MW Southern African portfolio by 2020

ACWA's Southern Africa business director Chris Ehlers

ACWA's Southern Africa business director Chris Ehlers

9th October 2013

By: Terence Creamer

Creamer Media Editor

  

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Independent power producer ACWA Power is pursuing several electricity investments in Southern Africa over and above the 50 MW Bokpoort concentrated solar power (CSP) project being developed in the Northern Cape and has set a goal of building a regional portfolio with a capacity of 4 000 MW by 2020.

Southern Africa business director Chris Ehlers tells Engineering News Online that both renewable-energy and conventional power projects are being evaluated, including a 300 MW coal-fired power station to supply electricity primarily to mining clients in the Moatize area, in the Tete province of Mozambique.

The group, which is incorporated in Saudi Arabia and is also a leader in the deployment of desalination technology, currently has a generation fleet either in operation or under construction, across the Middle East and Africa, with a capacity of more than 15 000 MW.

The R5-billion Bokpoort project adds to its growing portfolio of CSP investments, one that also includes the 160 MW Noor 1 project, which is being progressed in Morocco.

Construction on Bokpoort began in August at a site near Groblershoop, which is in close proximity to both the Orange river from which it will source 820-million cubic meters of water yearly, as well as the electrical sub-station infrastructure associated with the Sishen-Saldahna iron-ore railway export corridor.

ACWA Power has a 40% interest in the project, which reached financial close in June and incorporates CSP trough technology, as well as more than nine hours of molten-salt storage.

The large-scale storage capacity will enable the plant to operate for about 19 hours a day and dispatch power to Eskom during the peak demand period between 17:00 and 21:00, at a tariff of R2.51/kWh. This peaking ability due to its large storage capacity is making CSP increasingly attractive, particularly given that, the technology becomes more and more competitive with diesel-fuelled open cycle gas turbines, which have become increasingly expensive to operate.

The other equity partners include the Public Investment Corporation (25%), several funds falling under Lereko Metier (25%), Kurisani Solafrica Investments (5%) and the Solafrica Community Investment Company (5%), while Investec, Absa and Old Mutual Specialised Finance have provided debt funding.

Construction is being undertaken by an engineering, procurement and construction consortium comprising Spanish companies TSK Electrónica y Electricidad, Acciona Infrastructuras, Acciona Ingeniería, and Sener Ingeniería y Sistemas together with Crowie Concessions, of South Africa.

A 30-month construction period is scheduled and the plant should become operational by the end of 2015, with the site expected to host up to 900 workers during the peak of building activities – the facility will be operated by 50 permanent staff.

Ehlers reports that local-content levels will be around 40%, but that these levels could rise considerably in future should the Department of Energy (DoE) proceed with plans for higher allocations to CSP, which allow to establish economies of scale – a decision that is likely to be premised on the ability of the technology to dispatch power, which distinguishes it from other renewables technologies such as wind and solar photovoltaic.

The DoE has already approved a two-tier tariff structure for CSP projects participating the in third bidding round under the Renewable Energy Independent Power Producer Programme, thereby offering CSP plants the option to receive a peak tariff that is 2.4 times that of the off-peak price.

ACWA Power has decided not to participate in the third round, but Ehlers says the company is planning to participate in subsequent competitive bidding processes.

“I believe that if there is a consistent commitment to procuring between 200 MW and 300 MW a year of CSP over the medium term, there could be a material increase in local-content levels from around 40% today to 60%,” Ehlers argued. “This is due to economies of scale, which would allow foreign CSP component suppliers to justify investment into manufacturing facilities in South Africa”.

He is also convinced that there is scope to lower the cost of production from CSP facilities by between 30% and 40% as improvements are made and as the tower and Fresnel collector technologies mature.

But ACWA also has non-renewables ambitions and is pursuing coal-fired project opportunities in Mozambique and South Africa, with financial close for the Mozambique project anticipated in the coming months. It also has its eye on a few hydropower projects that could be developed in the region.

The group is also gearing up to participate in South Africa’s independent power producer base-load tender, which Ehlers is hopeful will be released by the DoE during the course of 2014. A Ministerial determination published in December 2012 indicated that South Africa could procure 2 500 MW of coal-fired capacity from IPP projects, 2 652 MW from baseload or mid-merit capacity from natural-gas plants and 2 609 MW of imported hydroelectricity over the coming few years.

“We are optimistic that, given the demand growth across Southern Africa, we will be in a position to grow our footprint considerably across South Africa, Botswana, Namibia and Mozambique over the coming few years,” Ehlers concludes.

Edited by Creamer Media Reporter

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