10 March 2016

South Africa: Eastern Cape Finance On Renewable Energy Sector

press release

Black community and business participation in the Eastern Cape's flourishing renewable energy sector is set to grow as supplier support initiatives pay off says the Eastern Cape Department of Economic Development, Environmental Affairs and Tourism.

The department, which was hosting this quarter's Provincial Eastern Cape Sustainable Energy Sector Forum with Broad-Based Black Economic Empowerment (BBBEE)-producer Ikhusasa Green in Stutterheim, says that black South Africans already participate in a multi-billion rand share of the province's first 13 large-scale wind and solar projects.

This measured by the percentage black ownership of the sector's supply chain, percentage ownership by local communities, financial contribution made by energy companies into the development of local enterprises and benefits accrued through wind and solar farms' socio-economic development investments.

Economic Development, Environmental Affairs and Tourism MEC Sakhumzi Somyo says: "This billion-rand energy infrastructure programme must be used as a catalyst for inclusive economic development. It needs to translate into meaningful benefits for black business and communities.

We are not leaving this to chance and are taking concrete steps to leverage the spend of this national programme for our province's transformation and improved social and economic outcomes - which is why todays' sustainable energy forum meeting will be focussing on the DTI's Black Industrialist Programme".

The Department says together with agencies such as the Eastern Cape Development Corporation, Coega and East London Industrial Development Zone, it is involved in various programmes that will allow SMMEs to provide more services to wind and solar farms including value-adding production processes.

Through its programmes, the department also hopes to create opportunities where Small, Medium and Micro-sized Enterprises (SMMEs) can transition to black industrialists who can become involved in the local manufacture and supply of renewable energy requirements such as wind and solar components, supporting electrical infrastructure, and other civil works.

To date, the department explains, local SMMEs have had opportunities to be involved in providing services such as catering, transport, cleaning, fencing and bush clearing.

But the department is working closely with wind farms to optimise the way in which their enterprise development budgets are spent and so strengthen the opportunities for black, women, and youth-owned businesses to participate more meaningfully in renewable energy projects.

The biggest challenge facing wind farm owners is the capacity of the rural SMMEs to meet the stringent legal, financial and technical specifications required for these technologically advanced multi-billion rand power generation facilities.

For example, for every day that a wind farm misses its contractually binding commercial operation date, fines range from R800,000 and upwards. So in order to ensure that these farms do not miss this date, they, in turn, impose strict specifications on their suppliers.

Other provincial, national and local government departments and agencies have joined the Department to help build the capacity of the SMMEs in rural areas so that they can be market-ready for the energy sector long before construction begins.

Currently, the department, supported by GIZ SAGEN, the South African-German Energy Programme, is assisting small businesses in predominantly rural areas to prepare for and access opportunities related to the development of wind energy.

During its second and third phase, the Department of Economic Development, Environmental Affairs and Tourism's programme engaged with 330 prospective SMMEs and provided follow-up support to 16 selected SMMEs, most of them women-owned. These businesses secured over R17 million in contracts in and outside the energy sector which has helped them cement their credentials for larger projects.

The department is using the Eastern Cape Sustainable Energy Forum and Provincial Green Skills Forum, co-hosted with the Office of the Premier, to bring together industry, TVET colleges and universities, relevant SETAs, provincial and local government and the Department of Higher Education and Training to ensure that the province develops the skills required for the sector to grow.

The forum also helps to place graduates on wind farms in the Eastern Cape.

The forum meeting features presentations from the Department of Trade and Industry, Industrial Development Corporation, South African Photovoltaic Association and a number of local black industrialists.

The Dorper Wind Farm, between Molteno and Sterkstroom, is one of the Eastern Cape's 16 large-scale wind and solar projects.

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