Eskom seeks equity partner for solar plant

Eskom is seeking equity partners to help finance a 100 megawatt concentrating solar power (CSP) demonstration plant, whose R6-billion to R7-billion price tag has up to now put the brakes on its development by the cash-strapped utility.

Eskom was already in talks with more than one party, Barry MacColl, its technology, strategy and planning manager, said yesterday on the sidelines of an International Solar Energy Society congress in Johannesburg.

Bloomberg reports that the utility has budgeted R30bn over the next 10 years for solar and other demonstration projects.

Prospective shareholders included both local and international investors. "The board is very serious about the project," MacColl said, indicating that funding was the only constraint to Eskom proceeding immediately with construction of the plant near Upington in the Northern Cape.

"Our thinking is that Eskom would be a majority partner, but we would like to invite others to come forward with funding," he said.

The parastatal had already secured the land - about 16km178 is required to produce 100MW of CSP power - as well as environmental approvals for the facility. MacColl estimated it would take three and a half years to build.

MacColl said the country had the potential to generate 58 000MW of solar power.

Eskom has embarked on a R385bn capital spending programme to increase generating capacity, mostly via coal-fired power stations. It has applied to the regulator to hike electricity tariffs substantially to cover the costs.

Leaked reports put the preferred hikes at 45 percent a year over three years, including costs for independent power producers, although one scenario outlines a shock 146 percent hike in the first year.
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MacColl said Eskom's concern was not so much access to funding for the CSP project - it was already in talks with development finance institutions like the World Bank - but rather how it would pay back loans. "There's no shortage of money - it's the ability to absorb that debt onto the Eskom balance sheet," said MacColl. As a result, the utility was looking at a shared equity model.

Last week, Eskom managing director for corporate services Steve Lennon said the CSP project would be viable if Eskom secured grant-type funding of about $200 million (R1.5bn). He believed the project would need to be seen as "phase one of something bigger", anchoring a roll-out of other CSP projects.

Eskom's preferred CSP technology involves heliostat fields around a central receiver and energy storage in the form of molten salt.

Lennon said there was a lot of potential for localising CSP manufacturing, even on a 100MW demonstration plant - particularly for steel to build the heliostats and tracking technologies. The imported components would probably include heat recovery systems and parts of the molten salt loop.

On Friday, Energy Minister Dipuo Peters signed a memorandum of understanding with the Clinton Climate Initiative to explore the possibility of building a solar park in South Africa, adding 5 000MW of solar electricity to the energy mix.