Emerging Markets

CSP Today speaks to Pancho Ndebele, chairperson of SASTELA and CEO of Emvelo about promoting CSP in the country on administrative and policy levels and the potential for local content development in the SADC region

In August 2011, South Africa’s Department of Energy announced the Renewable Energy Independent Power Producer Procurement Program (REIPPPP) aimed at producing 3,725 MW of renewable energy in order to ensure the country, which depends on an energy-intensive industrial economy, maintains a constant supply of energy despite the current energy crises.

In July 2012, the Energy Minister Dipou Peters announced at the African Business Forum in Sandton that South Africa is in a critical position and new sources of energy need to be explored. She further added that South Africa needs to make itself the preferred place to invest. What does this mean for CSP?

CSP Today:  South Africa has received a lot of positive feedback with regards to the bidding process for CSP allocation. What factors do you think have contributed to this success?

South Africa has come up with its own unique process to introduce renewables into the country’s energy mix and the government must be congratulated for its efforts. The Integrated Resource Plan (IRP) has set the framework to introduce renewables and whilst the initial CSP allocation of 200MW was taken up in round 1 and 2, I am confident that DOE will allocate at least another 200MW for round 3, it would make sense for DOE to allocate similar MW for rounds 4 and 5 as this would provide the market certainty that industry requires.

CSP Today:  One of the major barriers faced by CSP allocation in South Africa is its relatively high cost in comparison to other sources of renewable energy. Does CSP have a competitive edge in South Africa that will encourage investment despite higher costs involved?

The CSP value proposition is not yet understood by policy makers and that is part of SASTELA’s role: to engage policy makers on the value proposition of CSP and that is going to be one of the roles of the new CEO (Jonathan Devries). Costs can be brought down if there was certainty on the MW allocation available for CSP as this would encourage both local and international players to set up manufacturing facilities for CSP components in South Africa and this in turn would drive down costs.

CSP Today:  In terms of the 200MW cap that has been placed on the government allocation to CSP in the REIPPPP process, do you see room for private investment in CSP over and above this allocation?

As indicated earlier, round 3 will see an additional allocation for CSP on top of the 200MW that has already been taken up, if government allocates the remaining 800MW available for CSP  in the IRP for rounds 3, 4 and 5 of REIPPP this will attract private CSP investments and will help South Africa lay the foundations to become a major industrial player in CSP component manufacturing for the domestic, regional and international markets.

CSP Today: As Chairman of Sastela and CEO of Emvelo you are in a relatively unique position in terms of having a dual perspective on the CSP the Industry, both from a lobbying point of view through your role at Sastela and from a developer point of view through your position at Emvelo. What are the major challenges facing CSP in South Africa?

The major challenge is market certainty, large investments have been made by developers, EPCs and others in the development of projects and without any clear picture of how many MW will be available in the 3rd, 4th and 5th rounds makes it difficult for developers, manufacturers, investors, lenders and EPCs to commit more resources in the development of projects.

CSP Today: Do you think further legislative and policy adjustments are needed to foster CSP growth?

Definitely, the IRP needs to be revised and at least a minimum of 300MW must be procured annually.

CSP Today: What is the potential for the development of local content? Does South Africa have the infrastructure to support an emerging CSP market?

With a procurement process that has a set number of MW that will be procured on an annual basis for CSP, like Spain South Africa could easily achieve 80% local content. 

To respond to this article, email the editor Jennifer Muirhead

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