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Is Africa Becoming a Wind Energy Powerhouse?

Is Africa Becoming a Wind Energy Powerhouse?

Scaling up Africa’s energy supplies is considered an enormous priority for moving millions of people out of energy poverty, and wind power is emerging as the renewable energy of choice.

“The market is expanding quickly, though off to a very low base,” Gareth Blanckenberg, Industry Analyst for Energy & Power at Frost & Sullivan Africa told AFKInsider. “There is a massive shortfall in power generation capacity across Africa and renewable energy technologies, especially wind power, have the potential to make up a substantial portion of this capacity due to their very competitive generation costs, relative fast build times and scalability.”

More than 500 million people on the continent lack access to electricity, but at least eight African nations have the greatest wind energy potential among the world’s developing  countries, according to a May 2013 African Development Bank wind study. And while only a few projects are in the works, there are about 10.5 gigawatts of wind power currently in development across Africa with a huge additional boost expected in the next few years.

“I’m never sure about the ‘real future,’ but I’m quite certain there will be significant wind power development in both South Africa and Ethiopia,” Steve Sawyer, Global Wind Energy Council secretary general told AFKInsider.

South Africa, Kenya and Ethiopia have taken the lead in developing wind power in Africa. But other nations are catching on. Senegal announced in January its first utility-scale wind farm is moving forward with the signing of a power purchase agreement with state-owned utility Senelec. Developed by French company Sarreole, the 152MW Taïba Ndiaye project on the north coast will feature 46 Vestas turbines and should be fully operational by 2017.

U.S. President Barack Obama’s announcement last year of a $7 billion grant for the Power Africa project includes some wind power projects. Critics of the initiative say it could go further. But other foreign developers are also stepping in to develop wind projects, such as Denmark’s Vestas Wind Systems, as well as companies from Italy, China, France, Ireland, Germany and Spain.

“Wind energy can help fuel African economic growth for many years to come. Vestas will continue working with its customers and other stakeholders to help them realize this great potential,” Michael Zarin, head of external communications for Vestas Wind Systems, told AFKInsider.

South Africa’s Fast Track

South Africa has the world’s seventh-largest coal reserves and roughly 94 percent of the country’s electricity comes from coal-fired power plants. In fact, Africa’s richest country is the world’s sixth-largest coal exporter, seventh-largest coal producer, and 13th-largest emitter of carbon dioxide – twice the global average. Eskom, the state-owned electric utility, is developing the third- and fourth-largest coal-fired power plants in the world.

But South Africa also has renewable energy resources available and plans to add 3,725 megawatts of renewable energy by the end of 2016, with another 3,200 megawatts online by the end of the decade. The country is expected to add 13 gigawatts of renewable capacity by 2030, with wind making up 85 percent of these additions.

South Africa was the fastest-growing market in the G-20, with investment growing from less than $30 million in 2011 to $5.5 billion in 2012, according to an April 2013 report from Pew Charitable Trusts. The South African solar sector attracted $4.3 billion in 2012, or 80 percent of the total. Another $1.1 billion went to the nation’s wind sector. Rapid investment growth positioned South Africa as the ninth-leading destination for clean energy investment, behind Italy, the United Kingdom, and India, the report said. 

The wind industry in South Africa is on a fast track with the first large wind farms nearing completion while the first set of local wind technicians are being trained in Germany.

As stipulated in the 2010 Integrated Resource Plan, 3,725 megawatts must be generated from renewable energy sources in South Africa, with a total of 8,400 megawatts by 2030.

South Africa is on track to become one of the fastest-growing renewable energy markets in the world, according to an October 2013 analysis from the international consulting firm Frost  & Sullivan’s South Africa Renewable Energy Project Tracker.

“South Africa committed to renewables as a generation source back in 2010 when the Department of Energy released the Integrated Resource Plan and included 17,800 MW of wind, PV and CSP. These allocations have been somewhat reduced…but this document awaits public comment and may yet change,”  Frost & Sullivan’s Blanckenberg told AFKInsider.

South Africa is blessed with excellent wind resources, according to a Global Wind Energy Council’s Global Wind April 2013 ReportAfter taking a decade to install the first 10 megawatts of wind power, the industry in South Africa is currently developing between 3,000 megawatts and 5,000 megawatts of wind power, of which 636 megawatts is under construction and a further 562 megawatts approaching financial close. In addition, there is a long term energy blueprint giving wind a significant allocation, about 9,000 megawatts of new capacity in the period up to 2030.”

This success is attributed to the creation of the Renewable Energy Independent Power Producer Procurement Program in March 2011, a procurement program to encourage investments in large utility-scale renewable energy projects.

South African Minister of Energy Dikobe Ben Martins has since issued three biding rounds, with the first two rounds adding a total wind power capacity of 3,500MW toward a 1.2 GW goal.

In November, the government announced a third round adding another 17 clean-energy projects worth $3.2 billion. Of the 17 preferred bidders from among the 93 bids received, wind received the bulk of the allocation with seven bidders contracted for 787 megawatt from onshore wind farms.

These projects have the ability to benefit and transform communities, according to the South African Wind Energy Association report.

A consortium led by Ireland-based Mainstream Renewable Power emerged the big winner in South Africa’s latest Renewable Energy Independent Power Producer Procurement Program round, being awarded contracts to build three wind farms located in the Northern Cape amounting to 360MW: the 140MW Khobab wind farm; the 140MW Loeriesfontein 2 project; and the 80MW Noupoort plant.

Mainstream will be partnered with the South African investment firm Thebe Investment Corporation, Old Mutual’s IDEAS Managed Fund, development investor Futuregrowth Asset Management, and South African renewable energy firm Genesis Eco-Energy.

Another Mainstream-led consortium was awarded 238MW of contracts in the first round of Renewable Energy Independent Power Producer Procurement Program in 2011, including the Eastern Cape’s 138MW Jeffreys Bay wind farm. Construction began in August on the first of its 80-meter turbines and it is expected to start generating power by mid-2014.

China’s Longyuan Power Group also won two wind-power projects under the third REIPPP round with a total capacity of 244MW. To be jointly developed by Longyuan, Mulilo Renewable Energy, and Black Community Company, the two projects are the 100MW De Aar Phase I and 144MW De Aar Phase II located in North Cape Province and will feature 67 and 96 wind turbines produced by Guodian United Power.

Italy-based Enel Green Power signed deals to build two wind farms – the 110MW Gibson Bay and 89MW Cookhouse wind farm – to be built in the Eastern Cape region. Cookhouse, about 150 kilometers northeast of Port Elizabeth, will be one of the largest on the continent and is being erected by Indian wind turbine manufacturer Suzlon Energy and South Africa’s African Clean Energy Developments.

Denmark-based Vestas Wind Systems has had a huge presence in South Africa for a decade and opened an office serving Southern and Eastern Africa in 2010.

“We have announced firm and unconditional orders totaling 292 MW in South Africa in 2013. The total number of wind turbines is 113,” Vestas Wind Systems’ Zarin told AFKInsider.

Vestas will provide wind turbines to three projects in South Africa to supply 105 megawatts to Electricite de France SA’s Innowind unit and financed by South Africa’s Industrial Development Corp. and ABSA Group Ltd., according to Vestas.

In May 2012, Vestas was selected to supply turbines to five wind energy projects selected as part of the second Renewable Energy Independent Power Producer Procurement Program round. The five projects, which have a combined capacity of 297MW, include the 24.6MW Grahamstown, 61.5MW Grassridge and 21.53MW Chaba wind projects. The Indian power company Tata Power had secured financing to develop the $292.4 million Tsitsikamma wind project through Tata’s South African joint venture company Cennergi formed with Exxaro.

Later in November 2012, Vestas announced a 67MW order for 37 wind turbines to be installed in Hopefield at the Western Cape. That wind farm is expected to be commissioned by February 2014 by Umoya Energy.

In May 2013, German engineering firm Siemens also secured a wind turbines agreement with Eskom for the 100MW Sere wind power plant in the west coast of South Africa. Under that contract, Siemens will supply 46 units and is expected to be operating by the first half of 2014.

Kenya’s Massive Expansion

As the former British colony celebrates 50 years of independence, Kenya is now considered one of Africa’s frontier economies, according to the International Monetary Fund. But Kenya’s major source of electricity from hydroelectric dams is often subjected to drought where only 16-to-18 percent of Kenyans have access to electricity. President Uhuru Kenyatta pledged to accelerate economic growth to make certain every Kenyan has access to electricity by 2020. Much of that will come from wind, as well as geothermal power.

Spain’s Iberdrola plans to construct the 61-megawatt Kinangop wind farm northwest of Nairobi. Spain’s biggest utility is also building the Ngong II wind farm outside Nairobi, where it’s working with Gamesa Corp Tecnologica SA. The $150-million Kinangop Wind Plant will supply electricity to about 150,000 homes when it goes online in mid-2015 and has already been registered under the United Nations’ Clean Development Mechanism.

U.S.-based General Electric — a member of Obama’s Power Africa initiative — will supply 38 wind turbines to the Kinangop project and provide maintenance for 10 years, as well as train local technicians.

Another wind project is the enormous 310MW Lake Turkana Wind Power project. Expected to be completed in 2016, it will overtake Kinangop as the biggest wind farm in Kenya. Construction of the Turkana is now expected to begin in early 2014 after a funding shortfall postponed the project, which originally was to be completed in June 2011, with Vestas Wind Systems providing the 365 wind turbines for the project.

Like South Africa, Denmark-based Vestas has a firm presence in Kenya – and it’s getting firmer.

In November 2013, Vestas and Frontier Investment Management, along with Masdar, an Abu Dhabi renewable energy company, rolled out “Wind for Prosperity,” a project to bring wind power to rural areas of the world beginning with communities in Kenya.

The first Wind for Prosperity projects focus on up to 13 Kenyan communities, or about 200,000 people. These projects – coordinated with the Kenyan Ministry of Energy and Kenya Power and Light Company – are expected to supply electricity at least 30 percent below the current cost of current off-grid power production based on diesel generators, according to Vestas.

“We’re not disclosing at this point the names of the Kenyan communities in the Wind for Prosperity context,” Vestas Wind Systems’ Zarin told AFKInsider.

Vestas plans to replicate the project elsewhere in Africa using refurbished wind turbines in tandem with diesel generators. Long term, Wind for Prosperity aims to install these hybrid systems in 100 communities reaching at least one million people in the next three years in Africa, as well as Asia and South America.

Ethiopia Has Africa’s Largest Wind Farm

Africa’s second most-populous country has been plagued by frequent blackouts. And, according to the International Energy Agency, 77 percent of Ethiopians don’t have access to electricity. That’s because most of its power is sold to neighboring countries. But the government is now trying to connect more people to the grid using cash from its new power plants.

The plan is to boost electric capacity from 2,000MW to 10,000MW within the next three to five years. While much of the increase will come from the 6,000MW Grand Renaissance Dam under construction on the Nile, the country is also pursuing wind power – more than 800MW within the next five years – as part of a plan to alleviate the power outages during the dry seasons that impact the country’s hydropower plants where Ethiopia – like Kenya – gets most of its power.

Ethiopia’s wind power potential is believed to be Africa’s third-largest behind Egypt and Morocco. Ethiopia alone has an estimated wind power potential of more than 1000 gigawatts – estimated to be the total installed electricity capacity from all sources in the United States.

That wind potential is now being tapped from the biggest wind farm in Africa — the 120MW Ashegoda Wind Farm, 765 kilometers outside of Addis Ababa. Delays after the 2009 groundbreaking had pushed back the original 2011 completion date, but the 84 turbines began sending electricity to the nation’s grid in October 2013. The $289.5 million facility built by France-based Vergnet, now represents about 5 percent of Ethiopia’s entire installed electricity generating capacity, according to the U.S. Energy Information Administration.

Ashegoda is the second wind project in Ethiopia after the 51MW Adama I wind farm, located about 95 kilometers southeast of the capital, which began production in 2011. The Ethiopian Electric Power Corporation also worked with Chinese GCOC Company and Hydro China Company constructing the 102 turbines at the Adama 2 wind farm – a 153MW extention of Adama I.

These projects are part of the government’s Growth and Transformation Plan to generate 890MW of wind energy by the 2014-2015 fiscal year, including the 300MW Ayesha wind farm, 100MW projects each at Debre Berhan and Assela, and the 51MW Messebo/Harena wind farm.

Building A Local Industry

“Ethiopia has an ambitious plan for up to 7,000 MW by 2030 – Kenya and Tanzania are less clear in terms of their ambition, but the real prize would be a strong interconnection between the East Africa and Southern Africa power pools. This would facilitate the development of thousands of MW of renewable energy, bringing much needed investment to the region, as well as the means to provide energy services to millions of Africans who currently go without,” Global Wind Energy Council’s Sawyer told AFKInsider.

South Africa’s strategic location means it potentially has an advantage over international wind power manufacturers for providing equipment for African wind projects if they were to build up a local industry that could compete with international suppliers. But the lack of a local supply chain has slowed such development of South Africa’s wind power manufacturing industry.

That means they have some catching up to do.

In September 2011, Amsterdam-based turbine blade manufacturer, LM Wind Power unveiled plans to construct a 100,000-square-meter plant in South Africa to manufacture blades, reduce costs and create local jobs. Then the company revealed in September 2013 it is looking for another site for expansion of its blade manufacturing facility on the coast between Cape Town and Port Elizabeth.

Meanwhile, German wind-turbine maker Nordex SE announced in November 2013 that it had raised its “order-intake outlook on sales” in South Africa.

But South Africa does already make small and medium-sized wind turbines — from companies like Kestrel and Adventure Power — which are easily transported over rough terrain to remote areas and can be easily erected where they’re needed the most.

The hope is the South African wind industry can build up a local export industry to offset any imports still needed to construct large commercial wind farms. And while both cement and steel towers are already being manufactured locally, there is hope that rotor blades — which typically make up approximately 15 percent of the price of a turbine — and even large wind turbines can be manufactured there.

The expansion of a local wind manufacturing base is bound to be a topic of discussion at WINDaba, the official wind industry conference hosted by the South African Wind Energy Association in partnership with the Global Wind Energy Council taking place in Cape Town Nov. 3-5, 2014.

“My expectation is that South Africa will attract major investment in manufacturing and become something of a wind power hub for sub-Saharan Africa,” Global Wind Energy Council’s Sawyer told AFKInsider.