Thembani Marhanele is the Chair of the Tariffs and Wheeling Workgroup of the South African Independent Power Producers Association (SAIPPA). In that capacity, and as founder and CEO of Jeka Energy, he deals daily with issues central to the future of South Africa’s energy landscape. Opportunity spoke with him via an electronic connection made possible by electricity.
What is your background and how did you get into energy as a career?
I was in logistics as a mining service provider and I was introduced to Renewable Energy Technologies at the Mining Indaba in 2013. I studied Renewable Energy Project Development through the Renewables Academy (RENAC) in Germany where I received an International Certification in Renewable-Energy-Project Development in 2016. When I came back, I started a company called Jeka Resources (Jeka means light in Shona).
Jeka Energy was established as a subsidiary and it has focussed on large-scale project development since 2017. We have self-funded the development of a utility-scale 90MW project that will connect to a municipality’s distribution lines in Limpopo that is almost at financial close. We also do some smaller Commercial and Industrial (C&I) projects in South Africa. Our portfolio stands at about 20MW combined: We design, build, own and operate Green Power Plants for our clients through power-purchase agreements (PPAs).
When you say a bit smaller are you talking about a supermarket roof?
Roof or ground-mounted solar installation from 50kWp to 2MW (megawatts). A small office installation could be 50kWp with battery storage. A commercial building or office block could be about 100kWp to 1MW. Also, the rooftop installations at shopping centres and malls ranges from 100kWp to 5MW. We are also developing utility-scale projects in Zambia, Zimbabwe and Botswana.
Is the business growing?
Yes, and we have also been growing in SADC.
How many utility-scale projects have you done or are you doing?
In South Africa, almost 350MW, with 100MW developed for municipalities (90MW in Polokwane and 10MW with Ekurhuleni). The other 250MW projects are developed for private off-takers, being your large power users like mining houses and industry to conclude through PPAs with wheeling arrangements. They sometimes have challenges regarding land or space where they operate, limiting their ability to install large solar plants.
We are also co-developing projects in Zimbabwe (100MW), Zambia (150MW) and Botswana (5MW). We are looking into private PPAs, wherein wheeling power to private large power users becomes an everyday conversation
And so you have direct experience of that which you are talking about as the chairman of the SAIPPA working group?
Yes, we are engaging with Eskom and other stakeholders in trying to design financial models that make business sense. The tariff must make business sense to the developer and benefit the client, including the cost implications of wheeling power through the Eskom grid. We already have success stories of signed wheeling agreements in South Africa which shows progress in the kind of engagements that shape those conversations.
The tariff must make business sense to the developer and benefit the client, including the cost implications of wheeling power through the Eskom grid.
How have you found the wheeling environment?
In the beginning it was very difficult, especially for clients that are behind the municipal meter instead of Eskom. The success (even though it took longer than expected) of the Bio2watt-BMW-Tshwane project serves as a success story. The wheeling environment for clients behind the Eskom meter was also very challenging as most of the large power users (as potential off-takers) currently have very low tariffs. The benefits that come with renewable energy as an energy source also rely on policy adoptions that include tax incentives.
Please expand on the business sense issue.
The client could be paying 60 cents per kilowatt to Eskom, for example. If I then want to sell that client green power through a wheeling agreement, the simulated cost savings (ideally below the current tariff that they are paying) and tax incentives should make financial sense and add value to our clients. We also look into socio-economic strategies like localisation and direct community involvement within the value chain of delivering those projects to foster social-cohesion.
Does SAIPPA have direct communication with Eskom?
SAIPPA has a multi-pronged approach. We interrogate the NERSA processes and we have working groups that interact with different stakeholders. As an industry body we serve as the platform where IPPs, government, private sector, professionals and communities at large can engage and contribute to a zero-carbon future. Our membership is so diverse that all stakeholders come into one conversation and try to find solutions.
Our platforms are also used in sharing the feedback from all our engagement with stakeholders to benefit those that were not part of those conversations.
Are more power producers wanting to use the wheeling model?
Definitely. A key aspect is space availability. Roofs that were designed long ago do not have the structural integrity to carry the weight of solar panels for power to be produced from their roof for self-consumption. For large power users, how can you access green power cheaper without having to sacrifice land that is earmarked for future operations? In those cases, the other option is to negotiate a wheeling agreement where the solar installation is on land available closer to grid connection points.
Are your interventions being heard at policy level?
Yes, definitely. The beauty about it is that there are a lot of stakeholders besides SAIPPA that are advancing technology-specific policies like SAPVIA (solar PV), SAWEA (wind), etc. SAIPPA is an overarching association and we are not technology based. We are looking at the industry as a whole and engaging with all industry stakeholders and players.
There has been a lot of improvement in terms of the industry coming together and the conversations on different platforms created to advance and support our country strategies. The alignment of industry players with some of the stakeholders like potential funders is energising.
Do you believe the renewable energy sector is on the up and up?
Definitely. A good thing is that most of the business cases in terms of renewable energy for C&I and utility projects were not based on loadshedding as they would have been for households.
Businesses need uninterrupted power solutions designed to make sure that they can continue on a daily basis without further interruptions to operations due to power failures. The daily costs of loadshedding on our economy was measured and published. Power interruptions costs a lot of money to business.
How important is it for the renewable energy sector that Eskom completes its split into three divisions?
The debundling of Eskom into the three divisions is another one of the positive contributions, as the new focus on strengthening grid access also advances the green-energy business case. It is critical. We need a division that’s focused on transmission, strongly focussed. All the assets that Eskom owns need to be used optimally.
Is there scope to grow the sector?
Government, industry, communities and all other stakeholders have created multiple platforms that are advancing conversations and strategies for us as a country to achieve our country sustainability goals. The sector is also growing with advancement of other technologies for power generation like hydrogen.
Government support in policies that include social-cohesion strategies and localisation are also contributing positively to the sector growing that should be inclusive.
When you talk to a smaller service provider who is just installing small solar-power PV rooftop to households, they have no idea about opportunities to sell power through a wheeling engagement. They are not building business cases that allow them to grow, but solving that one problem, “Loadshedding”. As an Association we have a duty to inform and foster conversations that will elevate such energy businesses to eventually become IPPs.
