A new wind farm opened in Caledon on Tuesday, and it’s hoped it’ll add to South Africa’s energy security.
The wind farm, the first in the Overberg region, is part of government’s renewable energy programme. It’s good business for independent power producers and investors, but tough on the pocket for Eskom as it is mandated by government to support the project.
These initiatives are highly profitable, and create local jobs.
“As independent power producers you are promoting the creation of new power generation facilities, but at the same time ensuring they’re competitive, they’re effective. We’re also contributing to the local economy in terms of the profits we’re generating from these projects,” said BioTherm CEO Jasendra Nyker.
For investors, it makes financial sense to put money into independent power projects, which are guaranteed to generate income.
“Renewable energy projects have a power purchasing agreement with Eskom. So the project company has a captive client for the next 20 years. So as long as the project generates energy for 20 years, us as lenders will be getting paid our interest on capital,” said Mergence Investment’s Mark van Wyk.
The downside of the project is that the cost to Eskom will be passed on to consumers.