Danish firms consider wind power projects in South Africa
Feed-in tariffs required to woo investment
January 25, 2009
By INGI SALGADO
Johannesburg - Several Danish companies are eyeing investments in South African wind power but have cautioned that the fledgling industry needs to operate with the certainty of a renewable energy policy and a feed-in tariff.
Suzlon Wind Energy, among the world's five biggest suppliers, said on Friday it had identified "many projects" in South Africa, without elaborating.
Danish gas producer Dong Energy said it would make direct investments in wind power here, as well as in China, Vietnam, and Chile, in order to secure carbon credits to reduce the group's emissions by a mandatory 43 percent by 2012.
It was cheaper for Dong to buy carbon credits than reduce internal emissions, said Cilla Clausen, the firm's head of carbon funds and purchases. "It would be very good to get three to four [wind] projects running in South Africa over the next one to one and a half years."
Jorn Hammer, the managing director of wind turbine supplier Vestas Wind Systems, said the Danish group had "plenty of projects" on the go locally, without giving details.
He cautioned that a feed-in tariff was "extremely important" for the market's long-term sustainability. "We, like the rest of the industry, are keen to see what happens on that front."
The National Energy Regulator of SA said last year it planned to release details of its proposed feed-in tariff by the end of next month.
Feed-in tariffs, usually implemented on a sliding scale, allow renewable-energy generation technologies to compete financially with fuel-based sources, whose external pollution costs are not reflected in the price.
Claus Andersen, Suzlon's chief sales officer, said no energy technology had ever been developed without economic support, including oil, gas, nuclear, hydroelectric and coal.
The companies were speaking at a wind energy conference on Friday after Denmark and South Africa signed an energy co-operation agreement, which will transfer Danish help to South Africa for wind mapping and capacity building.
Minerals and energy minister Buyelwa Sonjica said South Africa had implemented a technical assistance project to stimulate wind power development beyond the sole facility in operation - a 5.2 megawatt (MW) plant in Darling. She said projects generating a further 45MW of wind power were already being prepared for development.
South Africa had to develop and successfully promote large, commercially viable renewable energy projects to convince others that renewables could make a difference to the country's power supply, Sonjica said. She called for an exchange of skills to allow for local production of wind technology equipment.
Mo Siddiqui, Suzlon's sales manager, said there were possibilities for manufacturing local components along the same lines as the automotive sector, as wind generators could easily be replicated and assembled.
He believed South Africans were "starting to cotton on" that there was a feasible wind energy market in the country.
Andre Otto, the project manager of the SA Wind Energy Programme, said a new South African wind resource atlas was required as current data was unhelpful in determining if projects were commercially bankable.
The new atlas project is due to kick off tomorrow.
It would be produced after one year of measurements had been recorded, but would be further researched, refined and checked thereafter, said Jens Hansen, the manager of Denmark's National Laboratory for Sustainable Energy, which is updating the map in collaboration with local institutions.
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