South Africa

How to de-risk your renewable energy contracting business

Mkhululi Maxontana2
Client Business Executive:
3 mins

In September, Vodacom announced it would soon launch a pilot with Eskom to source all its electricity from renewable independent power producers (IPPs). The goal is for the success of this pilot to provide a blueprint that other South African corporates can replicate, alleviating pressure on the country’s power grid and helping to solve South Africa’s energy crisis.

Eskom also put out an appeal through the media for businesses in the private sector to start focusing on how they could each put 100 megawatts onto the grid, calling it “100 megawatts from 100 companies.” If 100 of South Africa’s large companies each put 100MW onto the grid, 10,000MW — or the equivalent of 10 stages of load-shedding — would be achieved.

Which means IPPs are facing an unprecedented growth opportunity. Renewable energy solutions are big business. The problem is that with great opportunities, there are often great risks.

Here are two of the biggest risks that IPPs are

facing – and how you can mitigate them.

  1. Scarce skills and expertise

We’ve seen a number of scenarios where companies have contracted with non-approved or uncredible operators. They’ve paid millions for systems and then three years down been unable to switch it on or derive the benefits they were expecting to receive. Why? Invariably the answer to this question lies with solution providers who were not equipped or experienced enough to provide a legally and regulatory compliant solution. 

This happens for a number of reasons. First, because the business is new and is only looking to take advantage of the renewable energy market’s growth. These businesses often believe that one solution is just like another, and so they import poor quality products. They also don’t have the regulatory and compliance knowledge required for large (or small) renewable energy projects.

The second comes down to available skills and experience. We work with a number of IPPs that have market experience and strong partnerships with best-of-breed technology providers, but who struggle to source the skills they need to deliver on large projects, particularly because of the regions where many of these projects are being built.

Mitigate the risk: If you are interested in moving into this market but do not have the experience, ensure you get experts on board who can consult on regulatory and compliance issues and who know which products have the best track record. 

Skills can also be sourced through a solutions provider like BLU. We work with experts who contract to businesses in the renewable energy sector and we are able to source across different job roles for projects that are in more remote locations.  

  1. Grid-tied projects must be compliant

There are specific legislative requirements that ensure the overall safety and efficacy of any renewable energy installation – particularly as it is tied to the national grid.

The first critical piece of legislation is the National Distribution Grid Code, which is a mandatory piece of legislation that specifies that an end-user or a customer must inform the network service provider of their intention to connect any form of generating plant to the grid. This is similar to a road-traffic network. You’ve got to know what the rules are to connect and you need to get hold of the supply authority to say ‘this is what I want to do and does it fit in with how that roadway network would be used?’ 

The reason for working with supply authorities is simple. The first issue is a safety concern and it typically applies to a tide inverter. This is a device that can run in parallel with the grid and it’s therefore critical that it is certified in terms of NRS 097, a piece of legislation that is not mandatory, but Eskom, as well as all municipalities, require adherence to it to protect the integrity of the grid. The specification requires that the inverter equipment is able to detect when the grid has gone dead and stop feeding energy back in to it. This does not mean that it cannot supply the business’s installation, simply that it does not impact the grid.

The second main concern for network service providers is preventing power quality issues from arising. Businesses in the same area are connected to the same network. If an installation is too big for the current system, it can introduce over-voltage conditions, which would start to impact neighbouring companies. 

Mitigate the risk: Previously, many renewable energy projects have not been tied to the grid. IPPs interested in pitching for large contracts must be able to show that they are well-versed in ensuring that all grid-tied projects will be compliant. 

All project leads will also need to confirm with the local authority that the point where they will connect to the network can support the type and size of equipment being proposed. 

Pulling it all together

The current shift towards renewable energy in South Africa represents a huge opportunity for IPPs, particularly more established businesses. With the right partners and skills onboard, the ability to pitch – and win – large contracts will allow this sector to grow, and more importantly, to support South African industries across the spectrum as we collectively solve South Africa’s power challenges.

You may be interested in:

Client Business Executive:

Related articles

Workforce insights delivered!
Sign up now for our weekly newsletter.