Giant US utility poised to move on South African renewables, rooftop prospects

22nd June 2015

By: Terence Creamer

Creamer Media Editor

  

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The nascent South African renewable-energy unit of giant US electricity utility, NRG, is preparing to participate in the country’s upcoming ‘expedited’ bid window for the procurement of an additional 1 800 MW of renewables capacity.

NRG Renew Africa CEO Grant Pattison – best known for his previous role as head of retail group Massmart – tells Engineering News Online that the company is preparing to partner with project developers in the process, which will be held under government’s highly regarded Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).

The intention of the bid window is to offer projects that narrowly failed selection as preferred bidders during the first four REIPPPP rounds another opportunity to make the cut. However, given the size of the allocation, it could also include new project proposals.

In total 92 renewables projects, with a combined nameplate capacity of 5 243 MW, have been procured since the announcement of the first REIPPPP preferred bidders in late 2012 and the Department of Energy has reported that the programme has resulted in investment commitments of R193-billion.

The expedited round follows on from a recent decision by government to enlarge the round-four allocation by a further 1 084 MW; the net result being the selection of 13 more wind and solar photovoltaic (PV) projects over-and-above the 13 selected as preferred bids in April.

Pattison is confident that NRG Renew Africa’s balance sheet, operating experience and long-term investment philosophy should bolster the overall competitiveness of the projects in which it participates, noting that NRG has net generating capacity of 51 GW, mostly in the US. South Africa’s coal-heavy State-owned utility Eskom, by contrast, has an installed base of 43.5 GW.

However, NRG Renew Africa, which was established late last year, is not confining its ambitions to South Africa’s “mature” utility market. It is also aiming to build a sizeable “platform” in the commercial and industrial sector, where a number of companies are currently weighing own- and co-generation power prospects.

The company recently acquired energy consulting company Kayema in an effort to position itself to offer “bespoke” solutions to firms in sectors as diverse as mining, property, retail and manufacturing. All the offerings, however, will be premised on NGR Renew Africa owning and operating the actual power facilities with clients entering into long-term power purchase agreements (PPA) for the electricity produced.

An electrical engineer by education, Pattison, whose 1991 honours thesis at the University of Cape Town was based on solar battery-charger solution, stresses that the company will take a “technology agnostic” perspective. It will partner with various contractors and equipment suppliers, but will overlay the facilities with NRG operations software and maintenance procedures, which is likely to result in an eventual investment into a national operations centre to oversee multiple plants across the country.

The prevailing load-shedding has stimulated a surge in enquiries from corporates and Pattison and his 12-employee team (who occupy a few rooms of a Bryanston house converted into offices in a ‘start-up-type’ setting, where the coffee and pinball machines are the main frills) expect as much generation capacity to be derived from a multitude of 1 MW-plus business installations as from its utility-scale investments.

However, Pattison's initial objective is to educate the corporate market of the limitations of clean-energy as a load-shedding remedy, while still convincing them to partner with NRG Renew Africa on investments that will lower their exposure to tariff increases and increase their operational sustainability.

“There are only two options when it comes to load-shedding: either you wait it out; or you invest in diesel generation or a uninterruptible power supply,” he argues, adding that the value proposition of renewables investments lies more in lowering the overall exposure of the business to future price and regulatory risks.

Having started his career on the Free State goldfields before receiving exposure to retail, manufacturing and property development during his stint at Massmart, Pattison is also convinced that there is no one-size-fits-all remedy. “The solutions will all look like solar PV plants with generators, batteries, inverters and a computer system. But the structure of the contract could be very different, because the issues in mining around a PPA are fundamentally different from those in property, retail or manufacturing.”

Edited by Creamer Media Reporter

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