Suzlon to Supply Wind Turbines for South African Flagship Project

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Immediately after receiving a positive record of decision from South Africa's Department of Environmental Affairs and Tourism, the developers of the Cookhouse Wind Energy Facility in the country's Eastern Cape province signed a contract for 76 Suzlon S88 wind turbines. Each turbine has 2 megawatts (MW) of generating capacity.

African Clean Energy Developments (ACED), a joint venture between African Infrastructure Investment Managers and AFPOC Limited, will proceed with the first 152-MW phase of the project once the result of the National Energy Regulator of South Africa's (NERSA) renewable grid feed-in tariff review (Refit) has been released. This is scheduled for mid-June and could result in a significant reduction in tariffs for all renewable projects.

There is concern among developers that any cuts in tariffs would render projects marginal or unbankable. These opinions are dismissed by the pro-cut lobby, which maintains that the original Refit issued in 2009 had tariffs that were higher than international norms.

The ACED project has an option to purchase a further 124 MW of Suzlon turbines for the Cookhouse project to bring the total capacity up to 400 MW. This has been cleared in the record of decision. Construction on the project could start in late 2011 or early 2012, once a power purchase agreement has been secured under the Refit procurement process and financial closure has been successfully completed. No contract has yet been signed for the additional 124 turbines. The Cookhouse site is not far from the Coega industrial development zone on the Indian Ocean coast.

The Cookhouse project is a flagship for the developers and suppliers, marking Suzlon's entry into the South African market. Tulsi R.Tanti, founder and chairman of the Suzlon Group (Pune, India), said, "South Africa is a rapidly growing economy and a very important market for us. The country has immense wind energy resources, and the government has demonstrated praiseworthy vision and leadership to exploit this abundant renewable resource to power the nation's growth with green jobs, energy generation and inclusive, sustainable growth."

Tanti said that delays in the project permitting had not been too frustrating, as they are common in the renewables sector, especially in emerging markets. With South Africa's 30,000 MW of wind power potential and the commitment shown in the country's Integrated Resource Plan, up to 10,000 MW of installed wind power could be delivered by 2020.

Silas Zimu, the CEO of Suzlon South Africa (and former CEO of Johannesburg Power City utility), is guiding plans for the company to manufacture wind power systems domestically. Plans for this project to be in place within three years, with the focus on vendor development and on staff and supplier training, says Tanti.

ACED is working closely with the state-controlled Industrial Development Corporation of South Africa and commercial banks to finalize the finance package, which will include a significant portion of Broad Based Black Economic Empowerment ownership.

Suzlon was ranked as the fifth-largest global wind turbine supplier in terms of installed capacity at the end of 2010, with 17,000 MW of wind power generating capacity worldwide. The group comprises Suzlon Energy Limited (BSE:532667) and its subsidiaries, including Germany's REpower Systems AG (ETR:RPW), in which it holds a 95% share.

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