The future of Africa’s mining industry depends largely on the ability to secure sufficient power. The construction of the first renewable energy projects is a major milestone, providing long-term sustainability to the country’s smallest and largest energy consumers, writes Laura Cornish.

While security of energy supply is one of the mining’s industry’s major development concerns, so is the need to reduce its carbon footprint.

 A changing landscape

The country’s landscape is on the brink of changing, however, as the Department of Energy’s (DOE) first round of renewable energy projects – part of the Renewable Energy Independent Power Producer Procurement (REIPPP) programme – moves into construction, bringing with it a new business sector. The programme sees 28 projects move into construction phase for Round 1. Additional rounds will follow, which in total must deliver 3 725 MW of additional power to the country’s national grid. The DOE has further announced an additional 3 200 MW of power will be made available as well.

One of the first projects changing the Eastern Cape’s terrain is the R550 million MetroWind Van Stadens 27 MW wind farm. It achieved financial close on 7November 2012 and issued the ‘Notice to Proceed’ to Basil Read Matomo, Basil Read Group’s EPC company, on 16 November 2012. Construction commenced soon after. The project, scheduled to be ready for operation in February 2014, will generate approximately 80 000 MWh per year of electricity for a contract period of 20 years and offset the equivalent of 80 000 t of CO2 greenhouse gas emissions every year as well.

“This is a major milestone for us and marks our intention and capability to become a fully established player in the alternate energy space,” says Basil Read Energy (BR Energy) director, Ian Curry. The energy-focused company is a subsidiary of major engineering and construction firm Basil Read.

BR Energy’s focus is to develop, own and operate clean energy power generation assets over the long term, and is assured success thanks to its ability to leverage off its parent company’s balance sheet. The company owns a 33% stake in 3Energy, a facilities management company which specialises in managing plants on behalf of owners.

The company owns a 23% stake in the MetroWind project. Founding developers, Afri-Coast Engineers, a South African Consulting engineering firm, owns a 13% stake alongside Old Mutual Life Assurance Company with a 34% stake.

 A project for the community

“We have made significant effort to ensure the project truly benefits surrounding communities, from a financial and sustainability point of view,” Curry continues. Black economic empowered (BEE) MetroWind Community Trust (MCT), which holds a 5% stake in the project, will act as the vehicle through which all social and economic development funds will be channelled.

Spilled Water Renewable Energy (SWRE), a 25% stakeholder, is a newly formed renewable BEE energy company focused on establishing a diversified portfolio of renewable energy projects for the South Africa and sub-Saharan regions. SWRE has experience in consulting on, and securing and executing climate change (carbon credits) projects and renewable energy projects. It has strategic relationships with numerous utilities and independent power producers internationally. MetroWind has further committed 1.5% of its annual revenue to socio-economic and enterprise development.

 A world-class leading example

The total project cost of R550 million has been financed on a non-recourse basis, with Standard Bank of South Africa providing all the debt.

“Our ownership and South African project contractors makes us a truly and proudly 100% South African operation, capable of delivering projects to world-class standards. The DOE is doing an extremely good job ensuring its REIPP programme is delivered to the benefit of all South Africans. These projects have been awarded based on a competitive bidding scheme, which is quite unique compared to other countries and continents. The consumer is protected and the renewable energy sector is forced to deliver competitive tariff rates that are rapidly approaching Eskom tariffs,” Curry explains.

The future for BR Energy and the potential for industry growth

“While we were not successful in securing any projects in the REIPP’s Round 2, we have re-engineered and are resubmitting a substantially larger solar PV project in Round 3,” Curry mentions. Submissions for the last round close in May 2013. “We are looking at building a R1.2 billion, 75 MW solar PV plant in the Beaufort West region. The company currently owns 26% stake in the project.

“Ultimately, we want to provide cost-effective power to the consumer and not overexpose ourselves to government-funded initiatives. We are also looking beyond South Africa, where diesel-generated power remains one of Africa’s largest costs, particularly in the mining industry.”

 The challenges

No industry – new or old – is without challenges. Curry explains that every individual solar panel comprising a solar park needs to be maintained on a regular basis to ensure it runs optimally.

Power storage is also not being considered sufficiently in the country, but Curry believes there will be a natural progression towards technologies already in existence. This not only addresses the problem, but will provide cost-effective solutions, particularly to large-scale industrial users.

Curry explains: “The industrial gas industry’s technology, used in the production of bulk industrial gases such as nitrogen, oxygen or argon, can be used to create energy by converting the natural state of air to liquid.” In this state, it can be stored in special storage tanks at approximately -196°C. When power is required, liquid air is drawn from the tank and pumped to high pressure. Ambient heat is applied to the liquid air via heat exchangers, resulting in a phase change from liquid air to a high-pressure gas that is used to drive a turbine and generator. During the power recovery, very cold gas is exhausted, which is then recycled back into the liquefaction process, reducing the energy demands for producing liquid air and thereby increasing the overall round-trip efficiency during any period of the day. In essence, it is very similar to a normal pump storage scheme.

BR Energy has entered into a joint venture partnership with UK-based Highview Power, a developer of utility-scale energy storage and power systems to optimise energy resources. The company is known for its proprietary process uses cryogenic (liquefied) air or its principal component, liquid nitrogen, as the working fluid and the media for storing and/or transporting energy. “Our partnership gives BR Energy the exclusive distribution rights to this technology in Africa,” Curry notes.

Sidebar: Did you know?

South Africa has to reduce its carbon footprint – 1 litre of water is consumed for every 1 kWh of electrical power produced from coal. Because the MetroWind project will deliver 80 million kWh of power a year, it is effectively saving 80 Mℓ of water per annum. Renewable energy will alleviate some of the burden on water supply issues. The projects will further displace 1 t of greenhouse gas emissions for every 1 MWh of power produced (in the South African context).

The fast solution, however, to South Africa’s growing energy crisis is energy efficiency. This is a changing mindset that can make a big difference.

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