Bloomberg

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Johannesburg - Former homeland areas in the Eastern Cape’s Transkei and Ciskei regions are gearing up, through the House of Traditional Leaders, to take on private farming enterprises for a share in the lucrative renewable energy market.

The House of Traditional Leaders in the Eastern Cape has argued that the lack of investment in the former homelands is attributed to government’s failure to effect a coherent land reform tenure policy that is in line with the national strategy, which will allow investment to flourish in impoverished communities.

In an interview with Business Report this week, Abel Zingisa Bokwe, the chief executive of the Eastern Cape House of Traditional Leaders, expressed disappointment at the exclusion of the former homelands, despite various projects that made bids in the third bid window of the multibillion-rand Renewable Energy Independent Power Producer Procurement (REIPPP) programme last year to establish wind farms in areas such as Transkei and Ciskei.

Projects that would bring wind farms to the homelands region lost out on the tender because the Department of Energy deemed these as not being commercially viable.

Bokwe said the department highlighted cases where an area had 10 homesteads, which would complicate the erection of the wind turbines, as not all of the families scattered around the plains would see eye to eye.

The Department of Energy has selected 22 successful wind farms across South Africa under the first three rounds of the REIPPP programme.

The Eastern Cape secured 12 of the 22 wind farms.

Bokwe dismissed the department’s claims, arguing that some companies had made presentations on how to deal with the issues of homesteads.

Explaining the situation, he said there was very little privately held property in the former homelands, which was a direct result of the communal land tenure put in place by the apartheid government in 1969 for all the rural areas of the homelands.

“We are discouraged by the Department of Energy’s attitude that they would not support the development and empowerment of the communities in the former homelands,” Bokwe said.

The fourth bid submission window of the Department of Energy’s REIPPP programme is on August 18.

A key highlight raised by some industry insiders is based on the so-called “current persistent over-concentration of projects to a few select regions of the country”.

According to Bokwe, the socio-economic spin-offs from renewable energy projects only benefit a handful, leaving out the poor majority.

Information contained in a World Bank report on Renewable Energy in South Africa, highlights that the Department of Energy’s REIPPP programme was launched in August 2011, for the procurement of 6 725MW of energy from renewable sources.

These included onshore wind, concentrated solar power, solar photovoltaic, biomass, biogas, landfill gas and small hydro.

It claims that the department has made significant strides in procuring large-scale solar and wind projects to be constructed for connection to the national power grid all over the country.

Through its three previous competitive tender windows held in November 2011, March 2012 and August 2013, the Department of Energy has contracted several private renewable energy companies to supply electricity from renewable energy sources to Eskom over a 20-year period.

During each competitive tender window, independent power developers are invited to bid for renewable energy power projects, and the Department of Energy selects the best proposals based on two main selection criteria.

The first is the price of the electricity offered by the bidder, which carries an importance weighting of 70 percent in the department’s scoring of the developer’s proposal.

The second is the socio-economic development and empowerment contributions of the project, which carries an importance weighting of 30 percent of each developer’s overall score.

This process, which started in August 2011, has delivered a total of 64 individual renewable power projects that are currently under construction, or going to be constructed, across the entire country: 22 individual wind farm projects totalling 1 983MW of capacity, 38 solar farm projects totalling 1 899MW of capacity, as well as a few small-scale hydro and biogas projects.

According to the report, the estimated combined investment to build and operate these renewable power facilities (4 155MW or about the size of Eskom’s Medupi coal power station) amounts to an estimated total investment of R120 billion made by the private sector.

The facilities will provide much needed financial and service delivery relief to Eskom at multiple points across the national power grid.

Once a private developer establishes a location, they set up a trust for the community as part of the social responsibility required by the department. Through the trust the community get 2 percent of the annual turnover of the company.

Percy Ngidi, an independent environmental consultant at EcoCompliance, said wind farms and other renewable energy projects, such as solar farms, were a complicated subject.

“Imagine trying to build a solar farm in the North Pole? It is similar to wind farms, the whole thing is dependent on wind maps. If the property falls into areas with good wind, then the projects will usually get the go ahead. The same applies for solar farms,” he said.

In the Eastern Cape, the areas around Jeffery’s Bay and from the N2 towards Port Elizabeth consist of major wind turbines because the area is windy.

However, many homeland areas are behind mountainous terrain and there is usually limited wind.

For this reason developers tend to take property that is located against the wind map of South Africa because it makes more business sense, Ngidi said.

“If you are developing a wind project, one important aspect is accessibility to the site. The modes of transportation are usually massive and in most cases roads need to be altered,” he said.

Also, there are a number of intricacies involved, such as the establishment of wind monitoring data. Before a developer gets a permit the area needs to be monitored for at least 12 months. The developer needs to be in a situation where he can afford to collect data.

The problem with former homelands is that the land is owned by the chief on behalf of the people, and in most cases, communities are not informed about the workings of renewable energy projects.

The government needs to come on board and educate people in order to make these projects successful in their areas,” he said.

The upside of finding a way to develop wind farming projects in the former homelands is that people from those communities will get skills, become employable and work on other wind farming projects initiated by developers.

According to Ngidi, these individuals can also be hired by major companies, which creates an ongoing opportunity for the areas from which they come.

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