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South Africa

South Africa

Poor South African area to benefit in wind power project

AFRICA: A poverty-stricken area without electricity or schools stands to benefit from what could be South Africa's first community wind power project.

The 40MW Tsitsikamma community wind farm project, in Eastern Cape province, is the brainchild of local councillor Mcebisi Msizi, who spent several years in exile in Denmark before returning to set up Watt Energy, an energy company based in Port Elizabeth.

The project would be operational in 2013 at the earliest, when the community can begin to plough its share of the revenue into building schools, health facilities and other local infrastructure, as well as providing electricity.

Watt Energy is developing the project in partnership with South African mining company Exxaro, which is diversifying into wind power. Under the plans, the community will provide the land in return for at least 10% of the equity, to be held by the Tsitsikamma Development Trust on its behalf.

The trust will receive an equivalent share of the revenues from the sale of electricity.

This could amount to an annual figure of ZAR14 million (EUR1.38 million) if the government sticks to its proposed guaranteed purchase price of ZAR1.25/kWh (EUR0.12/kWh) for wind-generated electricity (Windpower Monthly, May 2009).

Watt Energy and Exxaro plan to hold around 36% of the equity between them. The remaining 54% will be split between the Danish Industrialisation Fund for Developing Countries, which will coordinate the financing of the project, together with the Danish independent power producer European Energy.

Between them, the equity partners will stump up 30% of the estimated ZAR1billion (EUR100 million) project cost, with the balance funded by debt credits from the Danish Export Credit Fund. Danish utility Dong Energy will buy the carbon credits and Vestas is said to be supplying the turbines, although the company declined to confirm this.

The equity partners have signed a memorandum of understanding, although the final structure is subject to the outcome of the energy resource assessment and financial modeling of the project, according to Ernst Venter, Exxaro's executive general manager of business growth.

The feasibility study, including an environmental impact assessment, should be finished in about 18 months. The Danish National Laboratory for Sustainable Development, known as Riso, is carrying out the wind measurements. Initial studies have indicated speeds averaging 6.5 m/s at the site.

As the project moves through the various stages of development, other communities will be watching with interest to see if the idea can be replicated elsewhere.

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