Renewable energy is one of the topical stories of our day. Whether at dinner parties, around the water dispenser at work, or in the media, the issue of energy and alternative fuels shows no sign of abating.

In light of the spate of power outages seen earlier in the year, investors in South Africa have joined the rest of the world in warming to the idea of renewable energy, not only as a viable source of power, but also as a means of cutting carbon emissions.

Terms such as climate change and carbon emissions have become mainstays in conversation, and have produced reams of research, however, there still remains scant agreement on what to do.

The Kyoto Protocol, which was first adopted in 1997, was only formally ratified three years ago and the US, until now the biggest emitter of CO2, has refused to ratify the protocol. Meanwhile China, which is set to take over this record, has ratified the treaty but is currently on a reprieve as it remains a developing country.

In Africa things have been a little more plain sailing. South Africa adopted the Kyoto Protocol in 2002, with the government publishing its White Paper on Renewable Energy just one year later.

The White Paper set out the government’s ten-year plan on energy with a target of producing 10,000GWh renewable energy contribution by 2013, equivalent to 4% of the country’s projected electricity demand.

At the end of 2008, the government is due to review its policy on renewable energy as part of a mid-term assessment, in order to consider any changes required in policies, targets or its implementation strategies.

The government is hoping that one of the benefits of its current policy will be to provide renewable energy to rural communities located far from the national grid, as well as fostering an environment to help the emergence of independent power producers using renewable energy sources.

In addition, the government has also stated that it wants to see a greater investment by the private sector in renewable energy power producers.

South Africa has already made its mark on the global solar energy sector, after University of Johannesburg professor Vivian Alberts devised a solar panel that is expected to be up to 50% cheaper than the products currently on the market.

Alberts’ product, which is currently being manufactured at a purpose-built plant in Germany and is expected to begin production in October, does not use silicon, which has managed to drastically reduce production costs.

While this product is not yet on the shelves, consumers are already being encouraged to make use of solar heating products, not only as a means of guaranteeing power in times of load shedding, but also through state-funded incentive schemes.

State-owned power supplier Eskom currently offers South African home owners rebates of 15% to 20% on the cost of installing solar water-heating systems through its Solar Rebate Programme.

Investment opportunities in renewable energy have been steadily increasing in South Africa, as the country looks to harness the benefits of a sunny climate and the potential for wind power on the West Coast.

The Western Cape has set out its Sustainable Energy Strategy (SES), which requires an investment of some R8.8bn, to target renewable energy developments, as well as energy efficiency and the reduction of carbon emissions.

The SES has agreed a target to generate 15% of the Western Cape’s electricity through renewable sources, a 15% improvement in overall energy efficiency and a 10% reduction in carbon emissions, by 2014.

While both the Western and Northern Cape provinces have been touted as perfect destinations for utilising wind energy, it is the Western Cape that has gained a head-start with a series of projects already underway including the launch of the country’s first commercial wind farm in Darling, in May 2008.

The Darling project has four turbines and can supply 5.2MW of electricity, which will be sold to the City of Cape Town as part of a long-term power purchase agreement. Following the launch of the wind farm, a number of similar projects are now being considered.

Two much larger projects currently in development, the Lutzville wind farm and the St Helena Bay wind farm, both located in the Western Cape, are expected to have a capacity of 200MW and 80MW respectively.

Private investment in wind energy also appears to be gaining ground with the West Coast District Municipality revealing that one private developer has identified potential wind farm development sites in both the Western and Northern Cape provinces with a potential capacity of around 1,000 MW.

The West Coast is keen to utilise its natural resources to further the government’s renewable energy target and can provide potential investors with more information on the region, and possible sites for investment in future wind farms.

To obtain further information investors can contact the West Coast District Municipality on +27 22 433 8530, or email Ms Melonice Blanckenberg at mblanckenberg@wcdm.co.za.

Wesgro, the investment promotion agency for the Western Cape, has also been involved with several local and international developers, and is leading the search to attract developers of renewable energy to the province.

Whilst also having taken a lead in the promotion of wind energy projects in the region, the promotion agency has put solar energy projects high on its agenda, and is currently looking to partner an international manufacturing company with a local investor interested in gaining a foothold in the solar energy sector.

The investment promotion agency also recently assisted in facilitating a R40m investment into SETSOLAR, a solar panel manufacturer in the Western Cape to help expand their manufacturing plant.

For more information on renewable energy investment opportunities in the Western Cape, contact Farouk Yesufu, Investment Promotion Manager: Renewable Energy at Wesgro, on +27 21 487 8652, or email him directly at farouk@wesgro.org.za.

Investec, the South African banking group, is also taking a lead in the renewable energy sector, providing corporate financing for renewable energy projects.

For more information, investors can contact Tommie Potgieter, at Investec’s Project & Infrastructure Finance division, on +27 11 286 7258, or email him directly at tommie.potgieter@investec.co.za.

For investors wanting to venture further afield into Africa, a host of investment opportunities have also begun to emerge across the continent.

In December last year Nigeria announced that it was committed to achieving 5% of the country’s projected electricity generation capacity, equivalent to 750 MW, through renewable sources by 2015.

Like South Africa, the West African country has set out a renewable energy policy guideline alongside a 10-year action plan, designed to improve access to electricity amongst the rural population and stimulate large-scale implementation of renewable energy-based power projects.

Namibia also took up the mantle of solar energy in July, as the government launched a proposal for the construction of an R1bn solar tower that would generate 400 MW of electricity and would stand 1.5km high.

Elsewhere in sub-Saharan Africa, Mozambique has been busy identifying a host of renewable energy projects. The government recently invited foreign investors to help explore, fund and build hydropower projects in the country, after identifying 100 possible locations.

Antonio Saide, director of New and Renewable Energy at Mozambique’s Ministry of Energy, said funding was needed for feasibility studies, but also noted that Mozambique is gearing up to become an energy alternative supplier in the southern African region.

For more information on renewable energy projects in South Africa contact:
Ms Melonice Blanckenberg, West Coast District Municipality: mblanckenberg@wcdm.co.za
Farouk Yesufu, Wesgro: farouk@wesgro.org.za
Tommie Potgieter, Investec: tommie.potgieter@investec.co.za.