In a major coup for the Eastern Cape a tract of rural land is being transformed into the site of one South Africa’s first large-scale renewable energy wind farm projects.
The Dorper Wind Farm, between the towns of Molteno and Sterkstroom in the Inkwanca Local Municipality, is a pioneering project that will see 100 megawatts (MW) of energy harnessed from the wind pumping through the region. Today [SUBS: 19 Feb] marked the sod-turning at the site of the farm.
The area, situated in the northern Eastern Cape, is characterised by excellent wind conditions, particularly during winter months.
“This marks the onset of a definitive new era for both South Africa and the Eastern Cape, and we are immensely excited to be at the forefront,” said Gavin James, Executive Director of Rainmaker Energy, one of the companies involved in the joint project, which has seen South African business linking with Japanese counterparts to develop a partnership that embraces both local economic development and foreign direct investment.
“Power and access to this incredible resource will define the growth path of South Africa for years to come. The significance of government’s focus on diversifying the power base through moving from a reliance on traditional power sources to emergent and renewable energy will ensure that the power grid is supplemented by solar and wind energy, which will in turn cut costs and enables our country’s socio-economic and industrial development,” added Rainmaker Energy Executive Director, Luke Callcott-Stevens.
A high level delegation from Japan and Germany as well as national, provincial and local government were in attendance. Community members and local farmers also joined in the celebrations.
The sod-turning ceremony comes off the back of two major achievements for the consortium led by Rainmaker Energy (through its subsidiary Dorper Wind Development (Pty) Ltd) and Sumitomo Corporation of Japan. The first was its triumph of selection when it gained preferred bidder status as one of eight Wind Energy Independent Power Producers (IPPs) in the first round of the Department of Energy’s Renewable Energy Independent Power Producers Procurement Programme (REIPPPP) in December 2011.
The Dorper project was also, just last week in London, named Project Finance Magazine’s African Wind Deal of the Year 2012, “an incredible accolade” says Doug Jenman, Rainmaker Energy Executive Director.
The Dorper Wind Farm is an onshore wind energy facility that will consist of 40 wind turbines, each with a generating capacity of 2.5MW. The turbines will be supplied by Nordex Energy South Africa (Pty) Ltd which is a wholly-owned subsidiary of the German manufacturer, Nordex SE.
Late last year, in November 2012, the Dorper project company entered into a 20 year Power Purchase Agreement (PPA) with state-owned energy provider Eskom and associated Implementation Agreement with the Department of Energy, enabling it to break ground. Construction on this project commences today, with completion and commercial operation expected in July 2014.
A total of approximately R2,2-billion will be collectively invested to construct the Dorper wind farm.
“Sumitomo Corporation regards renewable energy as one of core business area and is proactively fostering its wind, biomass, and solar photovoltaic power generation businesses both within and outside Japan,” said Hideki Yamano, General Manager of Wind Power and Water Infrastructure Business Department from Sumitomo Corporation. The Japanese firm is in line to claim itself as a strategic investor in several wind projects in the United States, China and Japan. These include the 845MW Caithness Shepherds Flat wind farm project in the United States, which is one of the world’s largest wind farms.
“We will see our entrenchment in the African market through Dorper and plan to make a high impact in an area beset with power problems which hamper development,” said Kyo Onojima, General Manager of Sumitomo Corporation Johannesburg Branch.
The Dorper wind project therefore represents a melding of Sumitomo Corporation’s strategies for its wind power generation business with those targeting sub-Saharan Africa, said Onojima, adding that Sumitomo Corporation’s sub-Saharan office in Johannesburg will continue to actively promote the development of new business in the region.
Debt financing for the project, totalling approximately R1.6-billion, was arranged through ABSA Capital, Nedbank Capital, and Sumitomo Mitsui Banking Corporation Europe. A portion of the debt, used to fund the German and European-based components, is being guaranteed by German export credit agency, Euler Hermes.
The project is housed in a ring-fenced special purpose vehicle, the Dorper Wind Farm (RF) (Pty) Ltd, whose ownership structure is as follows:
- 60% Summit Wind Power South Africa (Pty) Ltd (Sumitomo Corporation’s wholly-owned local subsidiary)
- 15% Dorper Wind Development (Pty) Ltd (Rainmaker Energy’s subsidiary)
- 12,8% Dorper Wind Farm BBBEE Holdings (Pty) Ltd (housing the broad-based BEE participants)
- 12,2% Dorper Wind Farm BEE Holdings (Pty) Ltd (housing the narrow-based BEE participants)
Rainmaker Energy has environmental approval for over 500MW of wind power, and the Dorper Wind Farm shall constitute the first 100MW phase of this greater ‘Stormberg’ wind project.
“Dorper shall provide a much needed boost to the region, and the development has a number of interventions planned to promote local employment, local content, skills development and sustainable job-creation. We are working with the surrounding communities to ensure the benefits roll into their lives,” said Jenman.
Local communities in the vicinity of the wind farm will gain advantage through the Molteno and Sterkstroom Community Development Trust which was set up by the Dorper Wind Farm. The Trust holds a 10,2% equity stake in the project via its 80% equity stake in Dorper Wind Farm BBBEE Holdings (Pty) Ltd. The Trust aims to address social, enterprise and economic development through a variety of initiatives which will be funded by income derived from its ownership stake in the project, added Callcott-Stevens.
The mayor of the Inkwanca Municipality, Mtandazo Qamngwana, said this project will play an important role in dealing with the triple challenges of South Africa. “Dorper will have a huge impact in terms of social and economic development,” said Qamngwana, who emphasised the role that the wind project could play in education, infrastructure upgrade and small, micro and medium enterprise development in the municipality and district.
Dr Wolsey Barnard, the Deputy Director General for Energy: Programme and Projects, who was responsible for drafting the country’s energy policy 15 years ago and was representing the Minister of Energy Dipuo Peters, said there were many spinoffs of government’s renewable energy programme including secondary economic development in the logistics, manufacturing and construction industries.
Of Dorper he said: “We in government are as excited as the locals about what is happening in their back yard and are committed to broad-based economic development. Renewable energy projects are focused in 28, mostly rural areas, throughout the Eastern Cape, Northern Cape and Western Cape, where previously there has been very little industrial development.”
The Japanese Minister from the Embassy of Japan in Pretoria, Ken Okaniwa, commended South Africa for implementing its renewable energy programme, adding that he hoped that Dorper, which is the name of a type of sheep, would be come as renowned for its wind power generation as it is for its sheep.
The Eastern Cape is set to become a leading wind and renewable energy hub in an effort to help the Department of Energy meet its procurement objectives of 3 725 MW of renewable energy. Major wind farm developments in the province include, amongst others, the Jeffrey’s Bay Wind Farm which also recently launched construction and three major projects planned for the Coega Industrial Development Zone.
