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South Africa: Major Renewable Energy Investment in Nelson Mandela Bay

In a major bid, potentially worth billions of Rands, the Nelson Mandela Bay Municipality took the lead in providing alternative energy sources in South Africa, by initiating an innovative process to provide Renewable Energy for its residents.
Nelson Mandela Bay’s Executive Mayor Nondumiso Maphazi said this initiative is indicative of the institution’s goals and measurable objectives to truly become a leader in the provision of Renewable Energy Sources.

"Global Warming is a concern to all of us and we must therefore do everything in our power to ensure that we become much more environmentally friendly. This initiative will do exactly that and will set a standard for all the other local authorities, the five other Metropolitan Municipalities included, to follow. We are well on our way to provide sustainable energy resources and the main beneficiaries will be our shareholders … the residents of Nelson Mandela Bay," she said.

The three bidders that were accepted by the NMBM are: Lereko Energy Consortium (wind turbines, solar heating, electricity generation from waste), Thermo-Rec (electricity generation from solid waste) and Enercon India (large scale wind farm) being a 100% subsidiary of EIL South Africa Power Development (Pty) Ltd. In total, the successful bidders submitted proposals amounting to approximately R9 billion for these projects.

Financial feasibility studies are currently underway and the conclusions will be known shortly.

When asked to comment on the NMBM’s initiative and their involvement Lereko Energy’s Chief Executive Officer, Dr. Crispian Olver replied as follows: "The NMBM is to be congratulated on its bold approach to tackling their environmental and energy challenges. This initiative paves the way for the large-scale implementation of proven renewable energy technology throughout the country. We are excited to be leading this groundbreaking series of projects."

Mr. Barry Berbeyer of Thermo-Rec had the following to say: "The pioneering initiative of the NMBM serves as an example to demonstrate that problem situations can often be converted into opportunities when a need arises. The innovative approach of the Municipality will not only afford the tax payers respite in their time of need for power but can have far reaching effects for future generations in providing a safer environment. We are proud to be a part of this initiative."

Mr. Rajsekhar of EIL South Africa Power Development Pty Ltd said "We are greatly encouraged by NMBM’s proactive approach and initiative to facilitate private sector participation towards deployment of alternative (renewable) energy technologies for electricity generation. Grid connected wind electric generation is now globally well recognised to be one of the most cost-effective and commercially competitive renewable energy technologies-with Worldwide installations exceeding 50,000 MW and growing annually at 23%. We are currently working towards designing the wind power plant addressing and studying the involved issues relating to EIA and wind characteristics. We are quite hopeful that with the continued support from NMBM, we would be able to develop a grid connected wind power plant in 3 years."


South Africans have been party to phrases such as "Global Warming", "Greenhouse Gases", and the slow destruction of the ozone layer over the past decade. It is only since the signing of the Kyoto Protocol that the seriousness of these emissions has reached a level where National policies, principles and objectives have been put into place to address this worldwide crisis. South Africa is probably one of the ideal countries to target alternate energy resources due to its situation and climatic conditions, but on the other hand one of the most difficult due to the amount of low grade Coal Fields and the historical cost of Electrical Energy.

The historical cost of Electrical Energy has in all probability been the key element in suppressing renewable, alternative energy resources. Furthermore, the more than adequate Reserve margin of Electrical Energy over the past two decades has been another reason not to consider large scale investment in alternative Energy. It has become clear over the recent months that this reserve margin can no longer be seen with any comfort at all. Government together with Eskom have made it clear to the Public that the cost of Electrical Energy will escalate and that South African electricity tariffs will become more reflective of new generation investment. All the above factors are becoming more and more evident and are now emerging in National Budgets, The State Presidents State of the Nation Address and Television interviews and documentaries. South Africans will need to become far more energy conscious today.

The international Framework Convention on Climate Change (IFCCC) was created to address the problem of climate change, with an objective to stabilise greenhouse gas (GHG) concentrations at a level that would prevent dangerous interference with the climate system. Under the IFCCC, the Kyoto Protocol (KP) was adopted to enforce the commitments of the 189 parties. South Africa ratified the KP in 2002, and stands to benefit from mechanisms such as the Clean Development Mechanism (CDM), which allows for the transfer of clean technology to South Africa to assist in the lowering of GHG emissions, and to contribute to national sustainable development goals. When the Protocol came into force in 2004, South Africa was classified as an Annex B country, and was thereby exempt from emissions reductions commitments. However, considering South Africa’s high CO2 emissions levels, it may be given Annex A status in the next round of the Protocol in 2012, and may well be subject to great emission reduction commitments.

In November 2003, the Government released a white paper on Renewable Energy. The focus of this white paper is to establish the Governments’ principles, goals and objectives on renewable energy. It identifies many crosscutting energy issues, and sets targets for the future contribution of renewable energy to South Africa’s energy sector. According to this policy of Government at least 10 000 GWh of electricity need to be generated by renewable sources by 2013.

The NMBM is seen both nationally and internationally to be a Metro with innovation and a leader in furthering National and International goals and objectives. On the face, Renewable, Alternative Energy Sources have always been seen to be far more expensive that conventional energy however, with the availability of international and national funding initiatives as well as the CDM Fund along with international trading potential, such projects have proven viable throughout the world and should be viable in the Bay.

The Mayoral Executive took a decision in the Executive Meeting of 14 November 2005 that the Electricity and Energy Business Unit should pursue the possibility of implementing renewable energy projects within the NMBM. An RFP was advertised on 1 February 2006 requesting interested parties to offer a bid proposal in terms of renewable, clean and energy efficient projects. The tender closed on 2 March 2006.

The tender attracted huge interest both from national and international parties. After careful consideration and a detailed evaluation process the metro accepted three bids offering the following technologies.

The one technology that can be implemented with ease is the use of solar water heating systems for individual households, commercial complexes and for general application by industry. It has been proven internationally and locally and the cost of such systems can be recovered within a few years. If such a programme is implemented at a large scale it will also stimulate the increase of local production of these systems, with a very positive effect on the creation of jobs. If the Metro implements the renewable technology proposals as currently under consideration by the Electricity and Energy Business Unit, it will pave the way for not only savings with respect to electricity consumption, but also the stimulation of increased local manufacturing of Energy Efficiency and renewable energy systems.

The project will further include the potential use of wind energy by evaluating the possible installation of small and large wind turbines. With MNBM being labelled the windy city such potential projects should prove viable for implementation.

Another element of the initiative is the thermal decomposition of solid waste and sewage sludge, from waste disposal sites and the Fish Water Flats reclamation works. The electricity generated from this Fuel source will be added to the local grid. Such initiatives will have a positive impact on the environment, energy resources as well as job creation in domestic projects and business.

An integrated co-generation project combining various technologies is further proposed. The proposed installation is envisaged to be bigger than the old Swartkops Power Stations and would therefore make a significant contribution to the national grid and as such contribute to the increase in generation needed in the Republic of South Africa.

Energy efficient Initiatives such as Demand Side Management on Municipal buildings, Municipal infrastructure such as pump stations, streetlights, etc, will also form part of the project viability. Additional water purification and proposed desalinisation technologies have been included in the proposed co-generation proposal. These downstream benefits could also make a huge impact to the NMBM’s future capital investment infrastructure programmes.

Additional information:
News date: 03/08/2006

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