Danish Firms Blow into South Africa

South Africa and Denmark signed an Energy Cooperation Agreement on wind energy on January 23 at a wind seminar held in Pretoria. The agreement will provide wind energy solutions to the country. Minerals and Energy Minister Buywela Sonjica said that the sector was the world’s fastest-growing energy source and could be a means to combat energy problems in the country. The Danish government also announced at the seminar its capital infusion of R60 million would help South Africa’s renewable energy sector expand and meet its plan of achieving 10,000 GwH of renewable energy sources by 2013.

The South African wind sector is being eyed by several Danish companies although some investors await confirmation that a renewable energy policy and a feed-in tariff (FIT) are functional. The Danish government announced at a conference held in Pretoria on January 23 that it will provide R60 million to the metropolitan areas of South Africa for renewable energy projects.

FITs allow renewable energy generation technologies to compete financially with fuel-based sources. It offers an incentive to push renewable energy via government legislation. South Africa is the first country on the continent to propose FITs, therefore, its functionality remains uncertain, although FITs are currently in place for countries like Australia and Germany. The National Energy Regulator of South Africa said last year that it planned to release details of its proposed FIT by the end of February.

Dong Energy said that South Africa was among the places (China, Vietnam, and Chile) that the Danish gas producer would invest in order to secure carbon credits to reduce the group’s emissions by a mandatory 43% by 2012.

It is more economical for Dong to buy carbon credits than reduce internal emissions, said Cilla Clausen, the firm’s head of carbon funds and purchases. "It would be very good to get three to four [wind] projects running in South Africa over the next one to one and a half years."

Sonjica said South Africa had implemented a technical assistance project to stimulate wind power development beyond the sole facility in operation – a 5.2 MW plant in Darling. She said projects generating a further 45 MW of wind power were already being prepared for development.