South Africa seen as renewable growth area

CAPE TOWN, South Africa, Aug. 6 (UPI) -- The renewable energy market will see ten-fold growth in the next six years, an industry analyst predicted.

Sipha Ndawonde, an analyst with Frost and Sullivan Research, said both wind power and solar energy sectors are seen as strong growth areas in South Africa.

Frost and Sullivan's Southern African Renewable Energy Equipment Market analysis said the renewable industry in South Africa had revenues of $28.4 million in 2008 but is estimated to swell to $262.3 million by 2015.

"The growth of the wind power market and large-scale solar concentrating projects will be driven by an increasing number of joint ventures," Ndawonde said in a report on the Frost and Sullivan Web site. "Such ventures will be between project developers with local knowledge and private equity investment firms, backed by the support of international original equipment manufacturers."

He said the driver behind the rosy growth estimates is the system of feed-in tariffs the South African National Energy Regulator announced in March. The government has set a target of 10 terawatts of renewable electricity contributions by 2013.

A tariff of 13.8 cents per kilowatt hour was set for wind energy while a 23.6-cent-per-kilowatt-hour tariff was set for concentrated solar. The landfill gas tariff is 10 cents per kilowatt hour, and the tariff for small hydro is 10.4 cents per kilowatt hour.

The rates are considered among the best in the world.

That should draw additional investment attention to an area where more than $1 billion has been allocated to sustainable energy projects in southern Africa, Ndawonde said.

"This is an indication that investors view RE and energy efficiency projects in southern Africa as having favorable returns and representing a solid investment decision," Ndawonde said.

"An abundance of natural resources combined with a stable political environment, reasonable economic growth rates and growing interest from private equity firms means that large-scale RE projects are set to penetrate into the southern African countries of South Africa, Botswana and Namibia."

Even with the feed-in tariffs, South Africa is yet to see a lot of alternative energy investment, mainly because its current electricity, power that is mostly generated in coal-fired plants, rates are low. One of the largest alternative energy projects, a 100 megawatt wind farm in Western Cape province, is on hold because of the global economic recession.

There is some commitment to sustainable energy advancements, however. For instance, Sasol, a South African energy company, this week said it was putting up $390,000 to support thermal energy research at Stellenbosch University and another $513,000 to expand the university's Department of Mechanical and Mechatronic Engineering facilities studying thermal energy.