S Africa a key energy market

24th March 2023 By: Cameron Mackay - Creamer Media Senior Online Writer

S Africa a key energy market

COMPTON SAUNDERS In anticipation of the high demand, Nordex decided last year to introduce newer-generation technology and standardise this technology across its new wind farms

Despite the disappointment for the local wind industry over the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) Bid Window 6 – which did not approve any new wind generation capacity – wind turbine designer and manufacturer Nordex Energy South Africa regards the country as a key market.

The company is committed to South Africa, with “great potential in both public and private procurement”.

“Nordex’s market share remains at 32% of installed wind capacity in South Africa. As the leading wind turbine original-equipment manufacturer (OEM) in South Africa, Nordex is witnessing a continued commitment towards the energy transition and anticipates that this market will deliver ongoing growth,” explains Nordex Energy South Africa MD Compton Saunders.

He points out that this optimistic outlook for the local industry is owing to the growth of the private procurement market – specifically private off-takers – where a “new” market is resulting from the removal of licence requirements to build private power plants.

Therefore, electricity generated by private companies can be used for private consumption to contribute to the national grid.

Privately generated power is also contributing to diversifying South Africa’s energy transition, as opposed to the historical single buyer market.

Saunders states that the country’s Energy Action Plan – initiated under President Cyril Ramaphosa last July – is aimed at ensuring energy security, reducing loadshedding and transforming the energy framework.

“This will be done through the lifting of the embedded generation licensing thresholds to position the sector for future sustainability. “We have scope for the public and private off-taker market and believe that both have a key role to play in the country’s transition,” says Saunders.

OEMs and Procurement

Saunders highlights that OEMs, such as Nordex, play a vital role in stimulating jobs and skills locally.

Nordex contributes to driving the local value chain, which stimulates the local job market by delivering the market’s only certified concrete tower solution to date.

The components for these towers boast close to 100% local content, including raw materials, such as concrete and rebar steel, aggregates and labour, he adds.

Saunders does, however, note that Nordex is “tower technology agnostic”, and that the company has adopted a flexible approach for public and private procurement.

Tower technology selection is managed on a project-by-project and client-by-client basis.

It is expected that, in the private sector, there will be a difference between the way in which developers and sponsors balance speed and cost of deployment with transformation and localisation goals, and that of REIPPPP bidders, for which these have been key considerations.

Nordex expects that the latest draft South African Renewable Energy Masterplan –expected to be released by mid-year – will provide more clarity on local content.

While the market has achieved high local content levels through the REIPPPP, it is unknown how consistent the local-content requirements will be in the private procurement market, he stresses.

“Consistent procurement is more attractive than bursts of high levels of procurement rounds, followed by projects. To remain invested, the company needs to justify the risk, and looks to policy to provide clarity and certainty. Inconsistent procurement, failed bid windows and unclear energy policy remain some of our greatest challenges.”