Name and Location
Sere wind power project, Western Cape, South Africa.

Client
Eskom.

Project Description
The project will involve the development of a wind farm, with an initial capacity of 100 MW, at Sere, near Koekenaap, in the Western Cape. It will comprise 46 turbines of 2.3 MW each, which will be positioned over a 16 km² area. The area will accommodate a 200 MW facility in the future.

Eskom modelling expects that the project will be able to produce 225 000 MWh a year from 2014, of which 202 500 MWh will be fed into the grid. The balance will be used internally.

The project will be connected to the grid through the Skaapvlei substation at a voltage of 132 kV and into the existing Juno–Koekenaap distribution line.

The project is being developed under Eskom’s Renewable Energy Investment Project, through which it is hoped that similar projects will be undertaken by the utility and other independent power producers throughout sub-Saharan Africa.

The initial phase of the project is forecast to reduce carbon dioxide emissions by about five-million tons over the projected 20-year life of the plant.

Value
R3.3-billion.

Duration
According to Eskom, the construction schedule of the power line and substation will be parallel to the installation of the wind turbines and the rest of the works.

The current forecast date is for a reliability test to be conducted on the first turbine by April 2014 and on the last turbine by September, when the "collective performance trial" should also be completed.

Latest Developments
Construction on the Sere project is scheduled to begin in April this year, with project funding now fully in place and with a preferred bidder having been identified for the supply and installation of the wind turbines.

However, Eskom is not yet in a position to identify the wind-turbine contractor, as that announcement is planned to be made after a World Bank review. The project is being managed in line with the World Bank’s procurement guidelines, because it is partly being funded by the development finance institution.

The wind farm is receiving some of its funding from the $3.75-billion Eskom Investment Support Project, approved by the bank in 2010, primarily to support the Medupi coal-fired power station. The package also provides loan funding for Eskom's proposed concentrated solar project (CSP) and several energy-efficiency programmes.

Funding has also been secured from the Clean Technology Fund (CTF), which is overseen by the World Bank. Funds secured from this source have tenors of up to 40 years at an interest rate of 0.25%.

The South African CTF Investment Plan submission for $500-million included a $350-million request for the Sere wind farm and Eskom’s proposed 100 MW CSP project. The CTF Trust Fund Committee approved the funding during October 2009 and the investment plan contained a funding allocation of $100-million for Sere and a further $250-million for the CSP project.

In total, the World Bank funding component comprises 32.4% of the overall funding plan for the project.

Meanwhile, an Agence Française de Développement (AFD) component, comprises 36.7%, while an African Development Bank (AfDB) component comprises 26.8%. The development costs are being carried by Eskom.

The wind turbine-generator contract comprises about 65% of the total capital expenditure and will involve the installation of 46 turbines of 2.3 MW each.

The contract for the supply, installation and commissioning of a 132 kV line and a substation that will be sited on the Skaapvlei farm, which is within a 16 km radius of Koekenaap, is still outstanding.

Bidding documents for this aspect of the project, which comprises about 8% of the project’s overall value, were released in mid-January and the tender will close on February 22. Eskom expects to award the contract in April.

Eskom expects Sere to have a capacity factor of 34% once fully operational and says its cost of operations will be very competitive when compared with the tariffs published by the Department of Energy, following the first two bid windows for the Renewable Energy Independent Power Producer Programme.

Once the contracts have been announced, Eskom will engage the preferred bidders to negotiate “acceptable levels of localisation”.

Eskom forecasts that 200 direct jobs will be created during construction and up to 2 100 indirect and/or induced jobs.

It also expects that the facility will lead to the creation of about ten permanent jobs once the plant is fully operational and reports that training has been incorporated as a major feature of the project.

Key Contracts and Suppliers
AfDB, World Bank, AFD, International Bank for Reconstruction and Development, European Investment Bank and the CTF (loan finance).

On Budget and on Time?
The construction of the Sere wind farm is expected to be completed by the end of 2013, but Eskom aspires to have the project completed much earlier than indicated.

Contact Details for Project Information
AFD South Africa, tel +27 11 540 7100, fax +27 11 540 7117 or email AFDJohannesburg@afd.fr.
AfDB, Kurt Lonsway, tel +216 7 110 3313 or email k.lonsway@afdb.org.
Eskom media desk, tel +27 11 800 3304/3309/3343/3378, fax +27 86 664 7699 or email mediadesk@eskom.co.za.
Eskom investor relations manager Khanyi Makhaya, tel +27 11 800 2277, fax +27 11 800 2043 or email investor.relations@eskom.co.za.
KfW project coordinator Stefanie Peters, tel +27 12 423 6357, fax +27 12 42 423 6360 or email kfw.pretoria@kfw.de.