A flagship renewable energy project, commissioned by Amazon and to be rolled out by SOLA Group, is set to demonstrate the flexibility and convenience of procuring independent power through the electricity grid.
The project will see 28 GWh of solar energy wheeled via State-owned power utility Eskom’s grid from a solar farm in the Northern Cape to Amazon’s facilities each year.
Energy wheeling holds] value in that it enables the supply of energy to urban areas, which has been generated from energy projects in outlying areas, such as a solar farm located in an area where the sun is most powerful and consistent. This is done through the transfer of electrical power using a utility’s transmission or distribution system between different grid or network service areas.
SOLA Group executive director Chris Haw explains that, although the concept of wheeling energy using Eskom’s existing infrastructure has been in place since 2008, certain administrative barriers have hindered the uptake of such services.
“This project, which comprises a 10 MW solar photovoltaic (PV) farm, has also received a sought-after generation licence from National Energy Regulator of South Africa (Nersa), a milestone that other similar projects have struggled to achieve.”
The SOLA Group, a vertically integrated renewable energy company, will be responsible for developing the project and will build, own and operate the solar facility.
Haw says the Nersa process requires a signed power purchase agreement (PPA) and fully developed project in order to obtain approval.
“This creates contractual challenges because many inputs, such as the foreign exchange rate, are still fluctuating while the application process is under way. The high standard of development required for submission means that Nersa is not handing out licences to projects that won’t proceed, which is a very good thing,” he notes.
The project aligns with the South African government’s intent to open up the electricity grid, allowing independent generators of electricity and consumers to enter into bilateral agreements to optimise the cost and sustainability of energy, which has previously been difficult to achieve.
The generation licence received from Nersa is one of the first granted as part of the recent allocation made for distributed electricity generation in order to plug the short-term capacity gap.
SOLA will deliver the energy via the transmission network though a wheeling use-of-system agreement, the first of its kind.
The project will be majority black South African-owned, demonstrating a pivotal dedication to transformation in South Africa’s energy sector.
Black women-owned and operated energy and infrastructure investment holding company Mahlako a Phahla Investments will own 45% of the project.
Mahlako’s executive team has led the company’s participation in South Africa’s renewable energy sector, and the company has been at the forefront of various infrastructure and energy sector projects in South Africa, having advised and invested in several energy projects across various technologies.
Mahlako’s vision is to see more projects, with similar participation from underrepresented population groups, brought to fruition in South Africa going forward.
Other investors into the project include African Infrastructure Investment Managers, through the Ideas Fund, one of South Africa's largest domestic infrastructure equity funds and one of the largest investors in the country’s renewable energy landscape, with a total of R10-billion invested into projects producing 2.5 GW of power.
The project’s success could mean that more companies like Amazon will look to procure cleaner independent power through the grid.
“This project is the tip of the iceberg in terms of what the electricity picture in South Africa could look like,” says Haw.
Construction will begin in early 2021.
Further, the project in South Africa forms of Amazon's 26 new utility-scale wind and solar energy projects totaling 3.4 gigawatts (GW) of electricity production capacity, bringing its total investment in renewable energy in 2020 to 35 projects and more than 4 GW of capacity — the largest corporate investment in renewable energy in a single year. These new projects are said to make Amazon "the largest-ever corporate purchaser of renewable energy".
Amazon has now invested in 6.5 GW of wind and solar projects that will enable the company to supply its operations with more than 18 million megawatt hours (MWh) of renewable energy yearly, amount to enough to power 1.7-million U.S. homes for one year. These projects will supply renewable energy for Amazon’s corporate offices, fulfillment centers, and Amazon Web Services (AWS) data centers that support millions of customers globally. They will also help advance Amazon’s goal to reach net-zero carbon emissions across its business by 2040. Part of that commitment is powering Amazon’s infrastructure with 100% renewable energy, and the company is now on a path to achieve this milestone by 2025, five years ahead of the initial 2030 target.
The 26 new wind and solar projects are located in Australia, France, Germany, Italy, South Africa, Sweden, the U.K., and the US. The new projects are Amazon’s first in France, Germany, Italy, and South Africa. In the US, Amazon has now enabled wind and solar projects in California, Delaware, Illinois, Indiana, Kansas, Kentucky, Nebraska, North Carolina, Ohio, Texas, and Virginia.
Amazon now has a total of 127 renewable energy projects globally, including 59 utility-scale wind and solar renewable energy projects and 68 solar rooftops on fulfillment centers and sort centers around the globe.
“Amazon is helping fight climate change by moving quickly to power our businesses with renewable energy,” said Amazon founder and CEO Jeff Bezos, who added that "with a total of 127 solar and wind projects, Amazon is now the biggest corporate buyer of renewable energy ever. We are on a path to running 100% of our business on renewable energy by 2025 — five years ahead of our original target of 2030. This is just one of the many steps we’re taking that will help us meet our Climate Pledge. I couldn’t be more proud of all the teams across Amazon that continue to work hard, smart, and fast to get these projects up and running.”
Last year, Amazon and Global Optimism co-founded The Climate Pledge, a commitment to reach the Paris Agreement 10 years early and be net-zero carbon by 2040. The pledge now has 31 signatories, including Unilever, Verizon, Siemens, Microsoft, and Best Buy. To reach its goal, Amazon said that it would continue to reduce emissions across its operations by establishing a path to power its operations with 100% renewable energy, five years ahead of the company’s initial target of 2030; delivering its Shipment Zero vision to make all shipments net-zero carbon, with 50% net-zero carbon by 2030; and purchasing 100,000 electric delivery vehicles, the largest order ever of electric delivery vehicles