RENEWABLE ENERGY SECTOR ATTRACTS FOREIGN INVESTORS TO AFRICA
This week saw the inauguration of two solar power projects, De Aar Solar Power and Droogfontein Solar Power. Constructed at a combined cost of R3 billion the plants are contributing 100 megawatts into Eskom’s power grid as part of government’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). This programme has attracted investments of over R120 billion to date, much of which is direct foreign investment. “Considering that South Africa has been rated as the 12th most attractive global investment destination for renewable energy, it is understandable that foreign investors are eager to help satisfy the country’s power needs, particularly in the renewable sector,” commented Mark Pickering, Managing Director of Globeleq South Africa, the lead investor in the two plants.
The African continent holds enormous opportunity for investors and developers. It includes some of the world’s fastest growing economies and holds abundant natural resources. South Africa is one of the most important markets on the continent with a pent up demand for energy generation. “Renewable-energy projects are being developed elsewhere in Africa, such as in Namibia and Kenya, whilst policymakers regard the South African REIPPPP as a benchmark. This is an exciting opportunity for the continent with its abundance of renewable-energy resources and need for electricity,” explained Pickering.
Pickering added, “What made South Africa particularly attractive to Globeleq as a foreign investor, was the well managed nature of the REIPPPP process, which has been lauded around the world. The programme has benefitted from Government’s explicit support, as well as the use of a transparent selection process implemented by some of the best technical, legal and project finance advisors in the world.”
The Department of Energy welcomes foreign investment to help ensure that the country can meet its target of generating 6 925 megawatts from Renewable Energy source to help move towards a low carbon economy, as well as contributing to socio-economic development and environmentally sustainable growth.
Speaking at an industry event in Pretoria last month, Deputy Minister of Energy, Ms Barbara Thomson said “To date, the programme has attracted over R150 billion in foreign direct investment with about 7500 jobs having been created during the construction phase of Windows 1 and 2. We are encouraged by the enthusiasm with which foreign companies have embraced the opening up of our renewable energy space and we thank them for the money they are investing in this.”
Government has had multiple objectives for the programme, including the localisation of component manufacturing, the creation of jobs, skills-transfer and socio economic development. The projects have created jobs for hundreds of workers from surrounding communities during construction. They have also created spin-offs for local service providers, manufacturers and suppliers.
“Strong Treasury support, which effectively guarantees Eskom’s payment obligations, gives lenders and investors the necessary confidence to invest,” added Pickering. “Furthermore, the competitive bid process helps ensure that the resulting power supply is cost-competitive, affordable and sustainable,” concluded Pickering.
FURTHER INFORMATION ON GLOBELEQ:
Globeleq is an experienced developer, owner and operator of independent power projects in the emerging markets, with a specific focus on Africa and the Americas. The company develops economically sustainable businesses that support the continued development of the electric power generation sector in these regions. With assets currently in excess of US$1.3 billion, Globeleq is an independent power industry leader in the emerging markets and since 2002, has participated in nearly 14,000 MW of generation capacity in 26 countries.