South African Wind


November 21, 2011

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For a nation that has been blighted by regular power outages and an inconsistent energy supply, cynics would suggest that South Africa’s 3.7GW renewable power tender ensures the rainbow nation continues down a well-trodden path of best intentions, but delayed delivery.

However, the fact remains that South Africa’s traditional energy sources have suffered from substantial under investment over the past five years and now leave the country in a perilous state. Electricity blackouts have become a way of life for many residents – both rural and urban alike – with many citizens taking matters into their own hands.

For the wealthy, this has meant a boom in residential power generation systems, to iron out the power blips, while for those less fortunate it’s become just another part of the daily struggle.

So it’s set within this context – where domestic politics and power supply have fallen short – that there is an urgency to increase the momentum South Africa’s renewable industry. With national utility, Eskom, this week securing a $250million World Bank loan to develop renewable energy sources, there are signs that the country is starting to make some headway.

But as we know, the state can’t always be the sole driver for renewables, so it’s important for the private investment community to be involved, too.

Which is why according to the Department of Energy (DoE), it’s good news that the first round of the bidding process has attracted in excess of fifty qualified bids, totalling over 2,000MW – of which over 50% of projects are wind. What this also means is that there’s almost 1,000MW of wind energy potential, in an emerging market, before the investment has really gotten off the ground.

Naturally, the bidding process is only the first step down the road towards a truly established South African renewables market and the country’s domestic challenges are as complex as they are compelling. Nevertheless, the fact remains that for a nation with an ambitious energy appetite, coupled with a desire to create and encourage fresh corporate investment from overseas, the opportunity is clear.

Indeed, for many European developers and manufacturers – that have started to talk openly about increasing uncertainty within their own domestic markets – perhaps government tenders such as this, will prove to be a bigger olive branch than one would initially think.

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