The Darling project was developed by a subsidiary of the Oelsner Group, a small private company, which also owns and operates the four turbines. The Cape Town municipality signed a 20-year power purchase agreement (PPA) at ZAR 0.37/kWh (EUR 0.03/kWh), roughly a third of which is offset for transmission. The purchase price is about ZAR 0.25/kWh (EUR 0.02/kWh) greater than the "normal" the price paid for electricity.
The economics of the project hang together thanks to support from both the Danish state and the World Bank. Total investment amounts to some ZAR 70 million (EUR 5.6 million), jointly provided by DANIDA, the donor agency of the Danish Government, South Africa's Central Energy Fund, the Darling Independent Power Producing Company and a loan from the Development Bank of South Africa. The World Bank's Global Energy Fund is also providing a production subsidy of the power purchase price from a budget of ZAR 30 million (EUR 2.4 million) to help mitigate the extra cost compared to Eskom's cheaper, coal-powered generation.
A long haul
It has been a long haul for the Oelsner Group. Hermann Oelsner started developing the project back in 1996, when "nobody had any idea of what would be required to bring such a project to fruition, nor were there any criteria for the placement or erection of wind farms," says the company's Nicolas Rolland. In 2000 the project was declared a "national demonstration project" as part of a strategy to develop wind energy in South Africa and a year later was cited by President Thabo Mbeki in his state of the nation address at the opening of parliament. Despite all the apparent government backing, it took almost seven years of battling with the bureaucracy and a court case before environmental approval was granted in 2005, four years to ratify the PPA and five years to secure the promised government loan. Financial close was finally reached in October 2006.
But Oelsner's troubles were not over. By now the original turbine supplier, Bonus, had been taken over by Siemens and Oelsner had to look for an alternative supplier. Fuhrländer stepped in to fill the gap and in March Darling Wind Farm started feeding electricity into the grid. Oelsner plans to add a further six machines to the plant and also has couple of other sites in view, but needs the government to introduce a long promised purchase price specifically for wind power.
Call for 100 MW
Meantime, Eskom has been developing a 100 MW project at Koeknaap, also in Western Cape province. The utility recently signed a framework agreement with Agence Française de Développement, the French development agency, for a EUR 100 million loan over 20 years to part finance the project. In February, it launched a call for delivery and installation of 50 turbines of rated at 2 MW or 2.5 MW for commissioning in 2010. The closing date for bids is May 15 and a decision is expected by September.
Koeknaap is part of Eskom's renewable energy strategy to double its renewables generation to at least 2% of its production by 2025, requiring about 1600 MW. The government target, set out in a 2003 renewables policy paper, is to produce 10 TWh a year from renewables by 2013, twice the output achieved in 2005.