Wednesday, January 23, 2013

Local content is key for South African IPPs

South Africa’s Integrated Resource Plan (IRP2010) places specific emphasis on broadening electricity supply technologies to include gas, imports, nuclear, biomass and renewables (wind, solar and hydro), in response to both the country’s future electricity needs as well as to reduce its CO2 emissions. This plan, which is a 20-year projection on electricity supply and demand, aims for about 42 percent of electricity generated to come from renewable resources.

The Independent Power Producer (IPP) Procurement Programme has been designed so as to contribute towards the goals of the IRP2010, as well as to start and stimulate socio-economic and environmentally sustainable growth through the renewable energy industry in South Africa. As part of this stimulus, it requires that all participants in the programme ensure that a certain percentage of all points of contact have a local element to them.

“The programme is an opportunity to grow the economy as well to alleviate energy constraints. Through the stipulation for local content in the provision of alternative energy sources, the government is helping to enable a more competitive marketplace, and a more competitive country,” says Trevor de Vries, MD of AEG Power Solutions South Africa. “The programme, while modest relative to capacity deployed in other countries, represents one of the largest single renewable procurement initiatives under way globally.”

Both the New Growth Path and the Industrial Policy Action Plan have placed so-called green industries at the very centre of South Africa’s plans to grow employment and to stimulate manufacturing investments and activities. The New Growth Path, alone, seeks to deliver five-million new jobs by 2020. Investment into the renewable energy sector is one viable way the government is looking to meet this goal.

“All IPP projects must meet the economic development criteria related to job creation, the involvement of historically disadvantaged individuals, community development and economic spinoffs, such as the localisation of components and solutions. That means all proposed projects will be assessed in terms of their contribution to employment and local development. A measurement of the impact of the technology on the employment will be the job creations per MW of installed capacity created by the facility after commissioning or plant operational employment, and this metric will be applied in terms of the maintenance and operation of the facility post commissioning,” explains de Vries.

As the only local producer of solar inverters, AEG Power Solutions is uniquely positioned to help all the IPPs involved in solar projects meet these requirements. In addition, through the building of a manufacturing facility in the Western Cape, the company is contributing to job creation in its own right.

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