South Africa - GDF Suez pursues wind-energy investments in the country

Global independent energy company GDF Suez, which is pursuing an open-cycle gas-turbine project in South Africa, would now also consider wind-energy investments in the country, following the recent release of a renewable energy feed-in tariff (Refit) framework by South Africa’s energy regulator.

The company, which is active on five continents, already has a substantial renewable-energy fleet, with such sources accounting for more than 20% of the its current production base. Besides cogeneration, hydro and biomass production, GDF Suez also has wind facilities in Canada, France, Portugal, Italy and Belgium, and has set a target of doubling its renewable-energy capacity by 2013.

Speaking at the Power & Electricity World Africa 2009 conference, which kicked off in Johannesburg on Tuesday, business development vice president for Southern Africa Maarten van der Horst said the Refit created a “strong incentive” for renewable investments.

“We are interested mainly in wind power generation,” Van der Horst reported, adding that the tariffs proposed as from 2009 created an environment for investors to “seriously” consider investing in South Africa.

But the company, which is headquartered in France and reported revenues of €83,1-billion in 2008, was keen that a number of loose ends be clarified before it made any firm commitments.

The National Energy Regulator of South Africa’s (Nersa’s) proposal to review the Refit yearly was of particular concern as Van der Horst believed it created some uncertainty about whether the favourable tariffs would be sustained.

It also wanted greater certainty on the governance framework surrounding the power purchase agreements (PPAs), particularly given that Eskom would be the renewable-energy purchasing authority, or Repa.

Nersa unveiled the Refit regime for potential wind, minihydro, landfill-gas and concentrating-solar power investments in March and indicated that it had already received several enquiries from potential investors.

For wind, a tariff of R1,25/kWh was sanctioned, which was a significant improvement on the 65c/kWh initially proposed. Small-scale hydro would receive 94c/kWh, landfill gas 90c/kWh and concentrated solar with a storage capacity of more than six hours would receive R2,10/kWh.

The regulator also insisted that, although the tariffs were significantly higher than the current Eskom tariff of about 22c/kWh, the Refit would add only between 6% and 10% to the average tariff once the full 1 100 MW of capacity, which was being targeted for 2013, was installed and operational.

The new tariff regime would enable PPAs to run for a term of 20 years, rather than the 15 years initially mooted.

“From our perspective, the Refit is a very good start to establish renewable energy generation sources in South Africa,” Van der Horst concluded.

For more information please contact Trevor Sievert at ts@windfair.net