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Tuesday, January 29, 2013

SunEdison breaks ground on first SA project, eyes yet more

Global solar power plant developer SunEdison has broken ground at the site of its first project in South Africa – a solar-resource-rich country where it is hoping to develop a sizeable operating base and create the platform for further expansions into Africa.

The group, which has about 1 000 solar plants in more than 20 countries, started construction on Tuesday at its R1.2-billion, 28 MW Soutpan photovoltaic (PV) project in the Blouberg municipal area, of Limpopo.

The project, which should begin producing in early 2014, will incorporate about 100 000, 280 W imported crystalline-silicon PV panels, as well as locally manufactured tracking technology to improve the facility’s production potential. A capacity factor of around 21% is currently being forecast.

South Asia and sub-Saharan Africa VP Pashupathy Gopalan tells Engineering News Online that work will also begin imminently on the group’s second project: the 30 MW, R1.4-billion Witkop project, situated near Polokwane, also in Limpopo.

As with Soutpan, the Witkop solar park is expected to begin producing electricity early next year to be sold to Eskom in line with a recently concluded 20-year power purchase agreement.

Both projects were selected following the first bid window under South Africa’s Renewable Energy Independent Power Producer Programme (REIPPP), during which a total of 18 PV projects advanced to the preferred-bidder stage.

During the second bid window, the Department of Energy (DoE) named another nine PV projects as preferred bids, including SunEdison’s 60 MW Boshoff solar park, which will be developed in the Free State province and should reach financial closure during March.

Following the first two bidding rounds, a total of 1 049 MW was allocated across 27 projects and the DoE also reported that the PV tariffs fell from R2.76/kWh to R1.65/kWh.

The Soutpan development is being pursued together with Chint Solar, of China, which produces the PV panels, South Africa’s Government Employees Pension Fund (GEPF), and the Kurisani Youth Development Trust. The debt funding, meanwhile, has been facilitated by Standard Bank and Old Mutual’s Futuregrowth Asset Management.

Government Employees Fund Board deputy chairperson Prabir Badal says the GEPF has invested R325-million into Soutpan and Witkop solar parks in line with its mandate to back infrastructure projects that promote economic growth and job creation.

Gopalan reports that local content of 40% has achieved at Soutpan and Witkop, but that this level will rise to 50% for the Boshoff project.

SunEdison and its partners are awaiting details of the local-content thresholds to be applied during the REIPPP’s third bid window, which the department has postponed from May 7 to August 19.

The postponement, announced in December, is reportedly necessary to enable the DoE to incorporate lessons from the first two bid windows, as well as to align the next round to the Ministerial determinations published on December 19. The new approach will be presented in the form of a new request for proposals to be published in February.

Gopalan says the group’s strategy and intention is to increase local content levels further, but says the benefits associated with falling PV costs could be eroded by any steep increase in the localisation stipulation.

A balance will have to be struck between the desire to raise local content and the benefits associated with securing lower tariffs on the back of falling international PV costs.

“The costs have come down and South Africa has a fantastic solar resource . . . so additional solar PV make perfect sense. It’s the right place, the right time and the right economics,” he enthuses.

For this reason, SunEdison is developing a portfolio of possible future solar sites in Limpopo, the Northern Cape and the Free State and Gopalan believes the growth of its portfolio is limited only by the programme size of the future allocation under the REIPPP.

Initially, the South African government planned to procure 3 725 MW of renewable capacity by 2016, but following the recent government determination an additional 3 200 MW has been allocated to the REIPPP and the schedule extended to 2020.

However, the allocation between various renewables technologies has not yet been announced.

“Our aspiration will be to do as much as we can in South Africa. But how much we do will be dictated by external factors, such as the allocation to PV from government.

“We will gear ourselves up to be a significant participant and we intend to use South Africa as a springboard into the rest of the Africa,” Gopalan concludes.

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