Scatec Solar, a privately held Norwegian firm partly owned by Itochu (NASDAQOTH:ITOCY), has built the first utility-scale renewable energy source to supply Eskom, the South African state-owned electric utility. The 75 MW Kalkbult solar photovoltaic fixed-angle plant near Petrusville, North Cape, will generate 135 million kilowatt hours a year, equivalent to the annual electricity consumption of 33,000 households.
A certain part of the revenue from the Kalkbult facility and a portion of dividends has been earmarked to support social and economic development initiatives in communities within a 50 kilometer radius.
The plant is among 47 solar, wind and mini-hydro projects awarded 20-year contracts to generate electricity under the South African government's Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). Total investment is estimated at 74 billion South African rand.
More projects planned
Two other projects being developed by Scatec Solar and its South African partners will improve on the Kalkbult plant's electricity generation performance. A 40MW plant near Hannover, also in the Northern Cape, and a 75MW plant near Burgersdorp in the Eastern Cape will track the sun to optimize electricity generation. Variable-angle tracking panels can generate about 20% more electricity than fixed-panel plants. Of the 47 renewable energy facilities contracted during the first two phases of the REIPPPP, 27 are solar PV plants that will have combined installed capacity of about 1GW.
The Renewable Energy Power Purchase Agreement aims to procure 3.725GW of electricity from renewable energy by 2020. The program is also supporting the first concentrating solar power (CSP) plants in Sub-Saharan Africa, which are under construction. Renewable energy is the preferred choice in South Africa because of water scarcity, rising coal prices, and its rank as the twelfth highest carbon-emitting nation.
Building power plants ultimately depends on a very close working relationship with local government, local people, and their specific issues, in this case sheep. The Kalkbult plant covers 105 hectares of a working sheep farm and includes 312,000 solar panels mounted on 156 kilometers of substructure linked to inverters, transformers and a high voltage sub-station. Land for the project has been leased from a sheep farmer who will continue to run his business alongside the solar PV facility.
The Kalkbult plant will avoid annual greenhouse gas emissions of 115,000 tons that would have been emitted by a fossil fuel plant, such as a coal-fired power station. The project also gives momentum to the Green Economy Accord signed three years ago by government, business, and labor with a goal to create 300,000 new jobs based on renewable energy generation and energy efficiency
Scatec Solar and Itochu
Dr. Alf Bjorseth is chairman and founder of Scatec Solar, a privately held company to watch for a public offering. He also founded REC AS and stepped down as its CEO in 2005 to found Scatec. Scatec Solar has installed about 300MW of solar PV capacity worldwide. Itochu owns 37.5% of Scatec and is its partner for trade finance and logistics.
REC just restructured itself into two independent companies. REC Solar AS, headquartered in Singapore, will manufacture and install solar panels. The company has about 800MW of PV capacity per year. REC Silicon ASA, headquartered in Moses Lake, WA produces advanced silicon materials, delivering polysilicon and silane gas to the solar and electronics industry.
Standard Bank, headquartered in Johannesburg, South Africa, was the lead arranger and underwriter on Kalkbult and the Herbert 20MW variable-angle photovoltaic project located in the Northern Cape Province of South Africa. Herbert is owned by AE-AMD Renewable Energy (Pty) Ltd., Old Mutual Ideas Fund, and Tenesa. The power plant was constructed and will be operated by Tenesol, a photovoltaic module manufacturing company based in Cape Town with its head office in France and now owned by SunPower (NASDAQ:SPWR). Herbert has just begun to supply Eskom and will be fully online by April 2014.
Standard is a market leader in the origination of carbon credits and climate finance and specializes in Clean Development Mechanism. The CDM under the Kyoto Protocol is one of the biggest markets for carbon credits and is overseen by the United Nations. Companies in carbon-heavy regions can invest in sustainable development projects that reduce greenhouse gas emissions in developing countries. Approved CDM projects can generate Certified Emission Reduction units (CERs) traded as carbon credits.
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