juwi Renewable Energies South Africa is part of the international juwi group, one of the world’s leading companies in the renewable energy industry. The South African business is one of 15 subsidiaries in countries worldwide, after the original juwi group decided to expand out of its German roots into new international markets. Since adopting this strategy, the group has become adept at observing the ebb and flow of renewable energy sentiments in different jurisdictions and identifying the opportune moment to move into or out of a particular market. juwi registered in South Africa in 2010, when the stars were beginning to align in the then nascent renewable energy sector, with the announcement of the government’s inaugural renewable energy independent power purchase programme (REIPPP).
juwi’s arrival into the South African renewable energy market in 2010 allowed the subsidiary time to build its workforce over the course of 2011 ahead of its participation in the first round of solar projects under REIPPP in 2012 and 2013.
Managing director Greg Austin joined juwi South Africa at the end of 2012 after it had signed four engineering, procurement and construction (EPC) contracts for four solar projects comprising 35MW in Round 1 of REIPPP.
“When I joined we executed those projects, predominantly over the course of 2013,” he says. “Subsequent to that, a few things have happened; we have diversified our business models, grown our business and been successful in following rounds of the REIPPP.”
juwi’s initial strategy was to follow two core business models in South Africa, the first of which was to provide EPC services to utility-scale solar plants. Meanwhile, juwi would also act as a project developer for wind farms, where it would effectively own projects up until financial close, at which point a financial investor would step in.
More recently the company has added solar project development to its business. This has allowed juwi to develop project rights alongside being able to build and operate a solar project together with the right investment partner.
“In parallel with that we’ve grown from a handful of people in 2012 to over 50 staff and we have further diversified the business to include commercial and industrial solar power systems.
“More recently our Cape Town office forms the hub for linking with off takers particularly in the mining sector for our cutting edge hybrid power solutions. Both of these latter business models are B2B in nature as opposed to the public procurement programme represented by REIPP in South Africa.”
Reaping the benefits
The introduction of REIPPP was a genuine watershed moment in South Africa’s renewable energy industry. In the six years since the first round of the programme, over 6.1GW of renewable energy projects have been allocated over four rounds of bids, which has generated investment of around R194 billion (US$16 billion), none of which has come with any form of government subsidy.
juwi has played a key role in this investment boom, building five utility scale solar plants totalling 121MW to date, along with an extensive portfolio of both of wind and solar projects in South Africa that are fully developed and ready for bidding in the next REIPP procurement round.
After focusing most of its early efforts on securing projects in the first round of REIPPP, juwi secured an 86MW solar project in the third round, which was commissioned in mid-2016 and has been in operation for two years now.
“We have been successful in selling one of our early wind farm projects that we developed back in 2012,” says Austin. “It was awarded as a project in Round 4 of REIPPP which has been the round where we have had all the signing delays.”
After three successful rounds of procurement, the fourth programme was effectively put on hold back in 2015 despite significant capital investment and job creation within the South African renewables industry.
Therefore, the last three years have proven to be a frustrating period for juwi and many renewable energy industry stakeholders who have had to wait patiently for the final signatures on the Power Purchase Agreements (PPAs).
However, the wait finally ended in April when South Africa’s energy minister Jeff Radebe signed the agreements for 27 PPAs worth a total of R56 billion, in a fresh sign of the government’s commitment to the renewables industry.
As a result, juwi has been able to reach financial close on the wind farm project sale, and secure PPA signatures for three solar projects totalling 250 MW in Round 4. juwi’s strong position in the local market has been further underlined as a result.
Hybrid energy solutions
juwi has also developed its strategy around renewables in the wider sub-Saharan African region, providing ‘hybrid’ energy solutions to the mining industry under a B2B model as part of a global focus for the juwi group.
“Our global hybrid business initiative combines solar, wind, any thermal generator and storage, and we are focusing our efforts in this regard.”
Austin reveals that the company is currently working on a number of significant mining projects in Africa, building on its experiences on an award-winning reference project. In 2016, juwi commissioned a 10.6MW solar PV plus diesel plus battery storage hybrid system at the DeGrussa Mine, located around 900 km Northeast of Perth in Western Australia.
The US$40 million project remains two years later as the largest integrated off-grid solar and battery storage facility globally, and fully integrates with the existing 19MW diesel-fired power station at the site, providing an additional source of power and energy storage with related cost and carbon emissions reductions.
Having received extremely positive feedback from the mine’s operator Sandfire Resources throughout the two years since its installation, juwi believes that solar hybrid facilities are fast becoming the benchmark for reliable and sustainable energy supply to remotely located mines.
But why exactly are these hybrid plants so valuable in terms of providing reliable off-grid energy? For Austin, the key consideration is ultimately cost. “If you look at mines, they can either be grid-connected, entirely off-grid or they can be on a weak-grid.
“Typically, you would see that most mines, even if they are connected to the grid, have substantial thermal power plants on site which will typically be diesel or heavy fuel oil-based. The cost of that energy is really high compared to solar. From a price perspective solar is a no-brainer, assuming that a suitably long-term PPA can be agreed between the involved parties.
“When you put these things side-by-side there are price offerings under a PPA environment that a thermal power plant simply cannot complete with.”
In addition to low costs, the reliability and quality of the energy supplied are another key draw for mining companies considering hybrid systems for remote mines. This is something that juwi is attempting to promote via the success of the DeGrussa mine.
“The reliability and the quality of the hybrid system is as good, if not better than that from the standalone diesel system,” according to Peter Gordon the Electrical Superintendent at Sandfire Resources.
“Those are the first points we are trying to hit. Once you achieve that and reference it, that’s when it makes a mark in everybody’s minds,” says Austin.
“Whenever you talk to miners about power and its relative costs and reliability, everyone is looking at solar, so that’s quite an exciting place for us to be in right now.”
Hybrid facilities are particularly compelling for many mining operators across sub-Saharan Africa because of the increased number of off-grid large-scale mines. Typically, off-grid connections are much more expensive than grid-connected mines in Africa and are often a much poorer quality.
Not only that, but according to Austin: “We anticipate the introduction of our hybrid solutions as a key enabler of new investments into proven mining resources that otherwise would not be bankable with the costs of providing a pure thermal power solution in some locations.”
Therefore, the continent is presenting fertile ground for juwi’s low cost, high quality and reliable hybrid energy systems, as off-grid mine operators look for reductions in and alternatives to their current electricity tariffs.
South Africa’s resurgent renewables sector
Returning to the current state of play in South Africa’s renewable energy industry, Austin admits that the sector has weathered a storm in recent years because of the delays in the final project sign off in Round 4 of the REIPPP.
“The entire fabric of the market has had a massive setback because of the delays. Having said that there is still a robust industry which has had to really sharpen its pencils and find a way to deliver value for its customers.”
Now it seems that brighter days are on the horizon once again with the announcement of the fifth round of REIPPP, which will be launched this year for over 1.8GW of renewable energy projects.
This programme will provide a major investment boost to the renewable industry, which is already benefitting from rapidly falling costs across the board, particularly in the commercial and industrial solar sector.
In addition, business conditions in South Africa have also improved as a result of political changes earlier this year, which is further contributing to a better outlook for juwi and its fellow renewable energy developers.
Reflecting on juwi’s development in South Africa, Austin tells RGN that the company has grown from having the capacity to build 35MW in around a year and a half, to being able to build 250MW in that same timeframe.
“Looking back over the last five years juwi has realised or secured 500MW of solar and wind projects in South Africa. In terms of the sub-Saharan business, we are bullish about the hybrid prospects and are aiming to achieve deployment of around 100MW by 2021.”