South Africa shows Australia how to do green energy

South Africa is pushing forward with its ambitious renewable energy rollout, announcing overnight it has awarded contracts for another $3.4 billion of renewable energy developments, with 19 wind, solar and hydropower projects totaling 1,043MW getting the nod.

South Africa has much in common with Australia. It relies heavily on coal for its electricity (85 per cent) and has a similar sized grid (41GW). But it has chosen to kick-start its target of sourcing at least 30 per cent of its electricity requirement from renewables by 2030 with a series of competitive tenders that will allocate contracts for a total of 3,725MW of capacity. It reasons that once this is built, the rest of the 17,000MW of renewable energy required to meet the target will flow.

The second round, which attracted 79 proposals, was announced last night and produced a significant reduction in technology costs over the first round in December – with the average bid for solar PV projects down 40 per cent to 164.5c/kWh ($A0.199/kWh) from 275c/kW ($A0.33/kW). A total of 9 solar PV projects totaling 417MW got the nod.

Only one solar thermal project was awarded, a 50MW parabolic trough facility known as Bokpoort CSP that will produce energy at 251c/kW ($A0.29c/kWh). This compares to two solar thermal projects in the first round – a 50MW solar tower plant with dry cooling and 2 hours storage, and a 100MW parabolic trough plant with three hours storage, both owned by Spain’s Abengoa – which bid an average 268c/kWh ($A0.325/kWh).

In the wind section, the average price fell to 89c/kW ($A0.107c/kWh) from 114c/kWh in the first round, with 7 projects totaling 562.6 MW getting the nod. Two small hydropower projects were also awarded, while a tender for 100MW of small projects (5MW and less) will be held in coming months.

The contrast with the Australian situation could not be any more stark. While Australia has a mandated renewable energy target, large scale developments have been at a standstill for much of the last few years. And on emerging technologies such as solar, little has happened. It is interesting to note that two of the most progressive international solar companies, Abengoa and Acciona from Spain, will be building their latest technologies in South Africa.

For Abengoa, which walked away from the Australian flagships process in frustration over delays and process, it will be their first development of its solar tower technology outside of Spain and it will test the very latest developments in dry cooling and solar storage, and will deliver dispatchable solar power. It says it will invest $1.4 billion in the newest, most efficient solar technologies.”

Under different circumstances, that development might have occurred in Australia. South Africa’s Department of Energy, however, has identified solar thermal as a potential strategic advantage for its country.

Acciona, which recently scaled down its offices in Australia, will build a 135MW wind farm, and also a 74MW solar PV facility. It is teaming up with the biggest infrastructure group in Africa, Aveng, to build the projects.

Australia has so far eschewed the competitive tender process – now popular in Europe, China, the US, and Latin America, with the exception of the ACT Government, which has just begun the process of allocating bids for 40MW of solar PV under tender. By the time South Africa installs the bulk of the 1,194MW of large scale solar PV from its first two tenders by 2014, the sum total of Australia’s rollout is unlikely to be much more than 50MW.

The other notable achievement from the South African tender was that the amount of local content in the projects jumped significantly to 41 per cent in the second round from 28 per cent in round 1. And the government expects even better pricing and economic development terms in the next three rounds.