Challenges facing project development in the region - experience of building projects from the earliest stage of conception through to securing planning consent. Leila Mahomed Weideman 28 February 2013

Mainstream Renewable Power SA

● Mainstream South Africa, a Joint Venture between Mainstream Renewable Power and

Genesis Eco Energy has been active since 2009 developing over 4,000MW of wind and

solar projects in the Eastern, Northern, Western Capes, Free State and KZN.

● In December 2011, a consortium led by Mainstream SA was awarded preferred bidder

status by the Department of Energy to deliver 138MW of wind energy and 100MW of solar

PV into commercial operation by 2014. These 3 RE projects started construction end of last

year.

● This partnership is unique and teams the local knowledge, development skills and

relationships of Genesis Eco-Energy with the core global strengths of Mainstream

Renewable Power in the areas of finance, engineering and procurement.

● Mainstream Renewable Power is a leading global renewable energy developer with a

portfolio of over 15,000MW of wind and solar projects across eight countries.

● Genesis Eco Energy has been actively developing projects since 2002 in SA

RE Project development is hard work!

● Need to secure approx 39 permits : everyone is new to renewable energy,

inconsistency in responses, they not clear who should be dealing with the permits, logjams, different rules across the local and provincial depts

● Various stakeholders to consider (local, provincial, national, para-statal, CSOs, local business) and manage

● Rapidly changing environment as authorities learn

● Many moving parts, rules in flux

Permits

People

Project

The Internal Development Process

• Resource • Land • Grid • Fatal flaw • Competitors • Assessment

Committee

Identify

• Engage LO & secure land and servitudes

• Environmental Studies

• Bird and Bat Monitoring

• Resource Assessment

• Grid Assessment • Start permitting • Investors • EPC tender • SED/ED

Develop

• Collate Bid • Finalise

Schedule 9 agreements

• Non-binding agreements

• Bid bonds Bid

• Complete permitting

• Due Diligence • Agree Financing

and equity terms

• Binding offers • PPA signed

FC

• Construct • Connect • Start

generation

Deliver

Key Activities in Development

1. Land

2. EIAs + Permitting

3. Grid access

4. Resource

Assessment

5. Stakeholder

Engagement

The early years (pre REFIT and up to Round 1)

Activities

Land Many options. New for Land owners, questions but willing. Did not focus on servitudes. Private LO focus.

EIA

BA for met masts required, adding on 6 – 8 mnts. Many unknowns and flexibility required (eg size that would be allowed). No bird and bat monitoring guidelines.

Permitting 9 permits identified to secure. Key was CAA, LUPO, DAFF, EIA. Building the understanding of the officials was important but took time.

Grid Eskom had no process. Key individuals open to talk but cautious. Lack of info.

Resource Assessment

Few skills in SA to do this (installation of masts that would be bankable and people to do EPEs)

Stakeholder engagement

High and intensive – aim to build awareness amongst, LO, I&APs, officials

Securing Land

● Early days was a bit of gold rush – didn’t know what rules would come

● Now good land is scarcer (good resource, grid capacity available and no fatal flaws)

● The more critical Landowner (pro’s and cons) as the process is a reality now

● Variety of LO types (community groups, state land etc)

● Contracts with Landowners more comprehensive now

● Securing servitudes are key and can be more difficult, competitors blocking

● Raising expectations ● Consideration for neighbours ● With REDZ, there is a potential for

skewing of land prices ● Not all project land secured will end up

being a delivered project

● Ongoing communication with the landowner to ensure they are consulted and up to speed on all aspects of the project is important.

● Being open about the limited IRP 2010 cap/latest determination and uncertainty of future annual MWs to develop is also important

Environmental Assessments

● +500 IPP EIA applications, totaling >26 000 MW of potential green energy projects ● DEA doing best to deal with incredible workload, but

EIA outcomes re often taking >18 months; reviews are inconsistent and often exceed stipulated timeframes

● Too prescriptive and, in many cases, too onerous; unnecessary delays and frustrations

● Most EAs conditional on compliance with other legislation, e.g. Water Act, SALA ● Leaves IPP with minefield of additional processes

and requirements ● Not always consistent with DEA, e.g. cultivated vs

natural land, WCape ● DEA&DP Wind Farm Siting SEA, Western Cape (2006) ● SEA for REDZ in progress. REDZs might help or stifle

development depending on how it is conceptualized and implemented, there could have unintended consequences

Environmental Assessment

Area Changes

Technology Flexibility being reduced. More information required, despite unknowns

New Grid Include under one EIA; Include Eskom SOC; Substation expansion; structures to be used; Eskom review and buy-in.

Socio-Economic Inclusion of SED/ED component. Difficult to not raise expectations.

DMR Section 53 To use land surface contrary to the objects of the act. Poor access to information,

Water Use License

Water extraction and/ or proximity of infrastructure to water bodies. Could only engage after PB status – but process long, recently changed to engage earlier. Water scarcity

Bird and Bat 1 year monitoring required prior to submitting FEIR. Guidelines developed by BLA. Bird and Bat specialist are limited and expensive

DAFF Requires DAFF engagement and a agri study

SALT and SKA Requires DST engagement and a SKA assessment. AGA Act protects.

Cumulative Effect

More emphasis on assessing this. Complex as not all facilities will be built.

Environmental Assessment

● Stakeholder mis-education or un-education -The IA&Ps with a PHD in Googling ● Nimbysim on the increase ● Consultants and their specialists are stretched

Permitting

● No clear policy on RE in most Governmental departments - Some signs of hope in only a small number of departments/sub-departments - this leads to applications being dragged out unnecessary.

● Inconsistency in dealing with applications ● Lack of policy also results in personal opinion playing a major

role in some departments/provinces when assessing applications

● Lack of understanding of what a wind farm is (especially in the beginning - some departments/provinces now have a better understanding, but in "new" provinces like the Free State we are currently doing through that process again)

● Lack of integration, coordination and understanding of REIPPPP requirements hampers decision making

● Lack of clear procedure and timeframe for dealing with applications

● Large number of different approvals required and dealing with large number of different departments/provinces/etc. Example - 8 telecoms operators which have to be consulted in terms of the Act.

Grid

● Lack of information, conflicting information, inherent grid constraints ● Distribution and transmission seldom talk and across Eskom boundaries

information might cease or not be calculated (GAU might help resolve this over time)

● Very little 132kV capacity left ● 275kV and 400kV connection rules means it is expensive to break into and

the timelines for connection is prohibitive especially with the bid cap in place (140MW), the developer cannot self build

● CEL take time and there is a 65-85% certainty, N-1 contingency can be

restrictive

Resource Assessment

● Save 8 months as no longer require a BA for met masts,

● We have an in house group, SA limited skills right now, future is CFD

● Requirement to verify independently, costly

● Poor long term data in SA ● Good installers of met

masts limited ● Increase use of SODARs ● Vandalism of met masts

continues

Future

● Land: Natural hubs/ “Collection Zones” enabling larger projects ● EIAs: DEAs Strategic Environmental Assessment Framework for RE projects

could hamper or help the development process ● Grid: breaking the 400kV challenge ● Resource Assessment: More long term data, better use of SODAR ● Stakeholders: Will the bidding rules and programme change significantly?

My wish list

● Co-ordinated, transparent, efficient and consistent land and environmental permitting process

● Access to reliable grid information

● A statutory RE Council that promotes RE and provides the gravitas needed to unblock challenges

● A developers code of conduct

● A firm and clearly articulated long term RE target/determination for the country that brings the investment required and the concomitant benefits

● Success breeds success, the Round 1 & 2 projects are delivered on time and in budget and with the promised benefits

Thank you

Leila Mahomed-Weideman Director: Development and Operations

Tel: 021 657 4040 Cell: 0837892923

PO Box 45063, Claremont, 7735 leila.mahomed@mainstreamrp.com