The minister of energy announced the awarding of the 5.8MW Adams and 5.8MW Bellatrix solar projects which are the first Independent Power Producer projects in the DoE’s program that will be locally developed, designed, funded, constructed and operated.
The projects are being sponsored by the Aurora Power group, founded in Cape Town in 2009 by engineering brothers Simon and Chris Haw. It has no relationship with the embattled mining company of similar name. SOLA Future Energy, a locally owned solar PV engineering and construction firm, will design, construct and operate the plant. The Industrial Development Corporation of South African (IDC) and local black owned company Mergence Investment Managers have signed a termsheet to provide debt to the project company.
“We’re very excited to finally have a completely locally controlled, financed and constructed project,” says Chris Haw. “Up to now our participation has been limited by the size of the projects and the competition experienced from internationally backed IPP companies. Although we’ve developed 245MW of successful IPP projects with excellent partners over the previous rounds of bidding, we have had to sell or partner with larger international companies to meet the requirements of lenders and the market. Most of the engineering and construction has been done through foreign companies, despite us having the requisite skills and experience. Now everything is being done by local firms, which means all the benefits remain in South Africa”
With the larger projects in the IPP program tending to be controlled or constructed by foreign companies, the Department of Energy has been criticized for designing a program that has not supported the development of small and local South African IPP and EPC businesses up to now.
The implementation of the Small Projects IPP procurement program was meant to address this criticism. Along with a cap on project size of 5MW (roughly R110m in capex), it also requires that 60% of the ownership of the projects be in local hands and 15% owned by small-medium business enterprises. The department announced the preferred bidders on Sunday evening at the SAIREC conference in Cape Town, 11 months after the projects were submitted in November 2014.
“Despite the delay in announcement, we are delighted to have received the formal appointment as a preferred bidder and we are progressing to financial close,” says Simon Haw, Director at Aurora Power Solutions. “Going forward we hope that the process timeframes are adhered to as smaller projects of this nature are sensitive to delays.”
Bidding the project requires years of preparation in order to obtain the necessary land use and environmental approvals. Compiling a bid requires detailed completing and submitting of more than 15,000 pages of relevant material relating to each project.
The projects will each generate approximately 190 million “carbon-free” kWh over the life of the plant, enough to power 1000 middle income households. As well as creating around 50 local jobs the projects will be providing a certain percentage of the revenue towards local community socio-economic benefits.