By Emma Clarke in London

The World Bank’s Eskom Investment Support Project (EISP), announced in April, will co-finance several technologies to help South Africa achieve a reliable electricity supply, including – controversially -- a coal-fired power plant in Lephalale, Limpopo, as well as US$260 million for piloting renewable energy projects via the Clean Technology Fund (CTF).

Out of this, US$200 million will go towards a 100MW concentrated solar power plant in Upington in the Northern Cape that has been eight years in the planning.

This CSP plant will offer availability of greater than 65 per cent, 12 hours energy storage, and is expected to use central receiver, or solar tower, technology. This will make it the largest grid-connected solar thermal power project in any developing country, the biggest-ever solar thermal project with storage, and the biggest-ever central receiver-type solar power project.

Cash-strapped?

More funding, however, is required for construction to begin. So far, Eskom has received confirmation of a US$150 million loan from the International Bank for Reconstruction and Development (IBRD). For the US$750 million balance, Barry MacColl, manager for technology strategy and planning at Eskom tells CSP Today that negotiations are on-going between Eskom’s Treasury department and potential financiers.

The utility expects to go to market for the technology before March 2011 with a performance-based spec, as opposed to a highly detailed technical one, says MacColl. “We will use the market response to influence our final technology decision,” he says, pointing out that parabolic trough and linear Fresnel technologies are not out of the question.

Meanwhile, the South African government and Clinton Climate Foundation are finalising a pre-feasibility study for a solar park in the Northern Cape. Independent power producers (IPPs) will be able to the use the park to set up projects and share licensing, environment impact studies, interconnections and support facilities in order to reduce the cost of the energy.

Once the pre-feasibility is complete, South African’s Department of Minerals and Energy (DME) will work on a feasibility study to identify sites for the solar park. Funders and power providers would then be approached.

Last October, eSolar partnered with Johannesburg-based Clean Energy Solutions (CES) to set up eSolarSA to expand sales operations for its modular, scalable solar power tower technology across Sub-Saharan Africa. In February eSolar announced a partnership with power plant developer, Ferrostaal AG to deploy turnkey solar power plants in countries including Spain, the United Arab Emirates, and South Africa. This allows eSolar to draw from Ferrostaal’s construction capacity and expertise to speed up the deployment of solar power projects. No deals or applications have yet been announced in South Africa.

Digging deep

Coal-mining company, Exxaro, is also planning a CSP plant that would produce twice as much electricity as Eskom’s proposed Upington project. The pre-feasibility study for this 200-250MW plant at Lephalale in Limpopo is expected for completion in October. Exxaro is also continuing with solar radiation measurements; it has initiated an Environmental Impact Assessment (EIA), and is at early stages of discussion for financing. If finance is approved, construction will begin in 2012.

Exxaro had been focussing specifically on parabolic trough technology since this was the most proven and therefore most bankable. But following the deal signed by eSolar with Ferrostaal AG, and AREVA’s acquisition of linear Fresnel supplier, Ausra in February, central power tower and linear Fresnel technologies have also become a possibility, says Leon Lourens, project manager at Exxaro. “These deals mean these technologies become bankable and for that reason we have included both of them in the pre-feasibility study,” he says. 

Raising financing, says Lourens, isn’t expected to be a major issue. Of more concern is the regulatory environment in South Africa, he says. As outlined in CSP Today last November IPPs were concerned about a lack of clarity around how the Renewable Energy Feed-In Tariff (REFIT) would work in practice and how Eskom – as the single buyer of energy in South Africa – would recover costs of renewable energy and be able to sign the first Power Purchase Agreements with IPPs for renewable energy.

These concerns continue. Lourens hopes the next REFIT, due to be published this summer, will solve some of the confusion by offering a flat rate for any CSP technology. But he is concerned that the pre-qualification process for PPAs has been postponed once again till July/August of this year.

“The regulatory environment is not yet what we want it to be,” says Lourens. “We wish Eskom and the government and NERSA, the regulator, could get their act together and provide certainty so we can move forward with our project.”

For its part, Eskom says it has recently signed two PPAs. Although these were not with renewable energy providers, it does indicate that if the conditions are right and a PPA is possible. “We will evaluate any serious renewable supply option from a technical, financial and sustainable viewpoint and if it meets all the requirements a PPA is most likely,” says MacColl.

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