The basic design work for Eskom’s 100 MW concentrating solar power (CSP) demonstration project, earmarked for development in the Northern Cape town of Upington, is nearing completion and the prequalification of potential contractors should begin within months.
Proposed is the development of a central-receiver CSP plant, where molten salt is used as a storage and heat-transfer medium. The so-called power tower will be surrounded by an array for heliostats, or mirrors, which continuously reflect sunlight on to the tower’s central receiver.
Tractebel Engineering has been appointed the owner’s engineer on what has been provisionally set down as a R9-billion project, with a more precise capital estimate to emerge only once a tender process has been concluded.
Eskom group executive for sustainability Dr Steve Lennon tells Engineering News Online that a two-stage bidding process is envisaged, with the first request for unpriced technical proposals likely to be launched in the second half of 2013.
The tender seeking price bids is expected to close during 2014 and the engineering, procurement and construction (EPC) contractor should be appointed in the second half of next year.
A three-year construction phase is anticipated to follow, beginning at the end of 2014 and continuing through to the end of 2017. The commissioning phase is likely to continue into the first half of 2018.
An oversized site has been secured in anticipation of Eskom pursuing a 500 MW to 1 000 MW fleet of solar projects in the coming years. In addition, a new substation will be developed in Upington to service both the Eskom CSP plant, as well as solar facilities being built in the area by independent power producers (IPPs).
Sun-drenched Upington has also been identified as a key location in the eventual realisation of the Department of Energy’s larger solar park, or corridor, concept, which is currently being investigated by the Central Energy Fund (CEF).
In fact, the CEF has issued a new request for proposals for the appointment of a feasibility study consultant for a 1 000 MW solar park on a site in the //Khara Hais municipality, which governs the town of Upington.
Spain’s Abengoa has already started construction on two CSP projects, including the 50 MW Khi Solar One power-tower CSP project, near Upington. The group is also developing a 100 MW parabolic trough CSP plant, dubbed KaXu Solar One, near Pofadder, also in the Northern Cape province.
Lennon reports that environmental authorisations, including the water licence, have been secured along with part of the funding for what Eskom still considers to be a research and development (R&D) programme.
To date, about 50% of the funding has been secured through development financial institutions (DFIs) such as the African Development Bank, the Clean Technology Fund, Agence Française de Développement, German development bank KfW, and the World Bank, which is acting as funding coordinator.
“We don’t anticipate that it will be a problem securing the balance of the funding,” Lennon says.
However, he acknowledges that all Eskom R&D and capital projects are currently the subject of a review designed to recalibrate the utility’s expenditure profile with the stipulations of the National Energy Regulator of South Africa (Nersa).
On February 28, Nersa granted Eskom yearly increases of 8% for the period from 2013/14 to 2017/18, instead of the 16% it had requested. This translated into allowable revenue for the period of R862-billion, rather than the nearly R1.1-trillion sought.
The R&D review forms part of a larger ‘integrated delivery programme’, designed to close the R225-billion financial gap arising from the lower-than-requested tariff determination.
“In the short term, we need to take out some major operating costs, with the real bite on the capital programmes to come in two years time. But decisions need to be made; probably in the coming six months.”
Lennon believes there is still capacity to draw in additional DFI finance and reports that other commercial sources are being considered. “The project will have to be fully funded at the point when contracts were placed,” he stresses.
Eskom has not yet calculated the CSP demonstration plant’s likely production costs. These are likely to be relatively high, owing, Eskom says, to the integration on a number of innovations, such as dry cooling and a capacity factor of above 60%.
“This is a demonstration plant. This is not being set up, initially, as a commercial plant.”
Hybridisation has also been considered, but has been shelved for the time being in a bid to simplify the already “complex” design, as well as the lack of available gas in the area.
Localisation is also on the agenda, with any material industrialisation spin-offs likely to flow only if IPPs and Eskom pursue future CSP projects, based on the power-tower concept.
For the initial project, the civil engineering package will be localised, while Eskom is keen to source the heat exchanges, the structures that hold the heliostats, and possibly even the heliostats themselves, domestically.
Between 1 000 and 1 500 construction jobs are likely to be created, with 70 permanent employees required to operate the facility.