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The socio-economic power of wind energy in remote areas
Wind projects with a socio-economic slant need not be charity cases. More examples of wind power projects in emerging markets and remote areas are showing the wider economic benefits of this natural resource from Africa to Chile. We learn which companies…
By Katherine Steiner-Dicks
In November of last year, delegates at a South African Wind Energy Association talk heard that wind energy is now set to make a contribution of more than ZAR 7bn to communities and socio-economic development over the next 20 years in South Africa. With five wind farms in full operation, 22 large-scale wind farms currently under construction and another 700 MW expected to be awarded imminently, the total capacity amounts to 2684MW set to be installed. Each of these developments has committed significant financial investment to nearby communities, according to the Association.
“Utility scale wind energy is already boosting economic development in South Africa. Industry and government are committed to ensuring that these benefits are realised by small business and local communities across the country,” explains Dipolelo Elford, Chairperson of the South African Wind Energy Association (SAWEA).
Local benefits factored in
As per the design of the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP), each utility-scale wind farm invests a percentage of its revenue towards socio-economic development; and in some cases enterprise development in the areas surrounding the farm. Additionally, shares in the wind farm project company are allocated to an entity representing local residents within a 50km radius.
“The revenue percentage and dividends from the shares in the farm will benefit the local economies and residents over the full lifetime of the wind farms: 20 years. The amounts invested will be substantial – more than ZAR 7bn based just on current allocations, with more large scale development expected through to 2030. This figure compares favourably to that of direct investments made into communities in more mature wind energy markets in Europe and the United States,” said the SAWEA.
Direct, indirect and induced employment opportunities are created during all stages of the development, implementation and operations and maintenance of the wind farms, yet only a fraction of direct jobs are accounted for in the REIPPPP.
With the current awarded installed capacity and future IRP2010 allocation, a conservative figure of 77,700 cumulative jobs (person-years) may be created by 2030, 54,400 in the 20 year O&M period. This results in a minimum of 3,600 direct long-term and sustainable jobs, predominantly for semi-skilled and skilled individuals in local communities.
All about connections
Today, more than 1.3 billion people across the globe lack access to affordable and reliable electricity – with dramatic consequences for human health, education, and economic well-being. But more than 50 million of those live in areas with abundant wind resources.
A pioneering project called, Wind for Prosperity, started in 2011, when Vestas’ CMO, Morten Albæk, had the idea to connect two data sets; wind data and areas with the highest level of child mortality.
Two companies that are harnessing their know-how for “wind empowerment” are ABB and Vestas. According to the partnership, many such communities rely on diesel generators to supply what power they have, which is an expensive, polluting and potentially uncertain power source.
The Wind for Prosperity initiative is based on a hybrid wind-diesel electricity generating system made up of ABB microgrid power stabilization solutions and factory-refurbished Vestas wind turbines with advanced diesel power generation capability.
The system combines ABB’s grid modelling, integration engineering and electrical system specification process with Vestas’ leading hybrid wind-diesel turbine technology to create a stable, reliable power source and electrical infrastructure for remote, energy-poor areas not linked to a power grid.
Powering remote places and “new opportunities”
Wind for Prosperity will aim to create a world of “new opportunities” by accelerating access to clean water, healthcare, irrigation, education, communications infrastructure, and other social and economic benefits. It is different to most other corporate initiatives to alleviate poverty. The concept is commercially-based and is more scalable and sustainable than efforts purely reliant on philanthropy and donations.
Designed to increase capacity and reduce the cost and environmental impact of electrical generation in remote places, the initiative is an opportunity for business, government, and financial institutions to join forces and improve lives while generating risk-adjusted returns for private investors, say the partnering companies.
“A typical microgrid power system is made up of many parts, which must be integrated to work together,” says Massimo Danieli, Head of ABB’s Power Generation business, a part of the company’s Power Systems division.
ABB says interest in decentralised or off-grid electricity generation is growing as developing countries grapple with the challenges of delivering electricity to rural and remote locations. However, extending the existing grid is often challenging in terms of transmission extension costs, power quality and limited demand in isolated areas and sparsely populated zones. This has been experienced even in burgeoning wind power markets, such as South Africa.
Fuel-powered microgrids play a key role in bringing electricity to these areas, but are also vulnerable to fuel price increases and the logistical challenge of delivering fuel to remote places. This has given rise to the development of renewable energies as an additional or main source of generation in fuel-powered microgrids.
The Wind for Prosperity initiative is focusing on rural Kenya to start, where 13 communities – home to more than 200,000 people – have been identified as potential project areas, in coordination with Kenyan government agencies. The scheme is expected to supply electricity at significant lower cost than diesel-only power production.
In addition to Africa, Wind for Prosperity partners are also exploring potential projects in other geographical areas with similar needs. The initiative plans to install hybrid power generation systems reaching at least one million people in the coming years.
For these projects, ABB is providing its PowerStoreTM technology, microgrid controller and other equipment on a site-to-site basis to keep the hybrid wind systems stable and provide grid-quality electrical power, in addition to related electrical infrastructure and localised service solutions.
ABB’s microgrid technology is designed to manage renewable energy generation in isolated grids and ensure utility-grade power quality and grid stability, as well as very high levels of wind and solar power penetration, helping to reduce both emissions and dependency on fossil fuel. ABB has more than 80 microgrid project references worldwide, including consulting, key products in microgrid systems, and relentless project execution.
Vestas is supplying factory refurbished Vestas wind turbines, wind simulation studies for site selection and site designs, and EPC services for wind turbines, including foundations, power cables and transformers, as well as localised wind turbine service solutions.
Reactivating the other America
Another region with vast potential for wind power and remote area grid access is Latin America, notably Chile. In 2014 the country proudly announced the completion of El Arrayan farm, located on a coastal hillside 400km (250 miles) north of the capital city of Santiago. The project, the largest of its kind in the region, was built at a cost of $300m (£180m), according to news reports, and includes 50 turbines with an installed capacity of 115MW.
Some 70% of the energy the farm generates will be used to power a large copper mine, Los Pelambres, in the Chilean Andes. The rest will be sold on the open market, said a BBC report.
But despite its size, it represents less than 1% of Chile’s total electricity generating capacity.
Jointly owned by US company Pattern Energy and Chilean mining giant Antofagasta Minerals, El Arrayan will provide Los Pelambres with 20% of its energy needs.
Chile President Michelle Bachelet said as she inaugurated the farm: “I hope this project acts as a powerful stimulus for other companies in the mining sector to start opting for this kind of energy.”
It was reported by FC Business Intelligence in April 2014 that Jorge Rosenblut, President of Endesa Chile, one of the largest utilities in the country, said that there is an urgent need for Chile to “reactivate” the electricity sector.
Rosenblut said in a speech at the Enersis annual convention (Enersis is part of the Endesa Group) that the new government must focus on the development of local sources of energy that are both sustainable and competitive.
Chile is historically known for lacking internal conventional energy resources. This situation has made the country import the fuels needed for electricity generation, and thus making them dependent on their partners’ economy fluctuations. And that is not a sustainable option for any country.
According to Rosenblut, the import of fuels represents between 4% and 5% of the overall imports that arrive in Chile. To overturn this situation he stated the need to invest in local energies that would reduce the energy dependence of the country.
Sign of things to come
Seasoned wind players are putting more of their executives on the ground in South America. Wind Energy Update recently reported that José Antonio Miranda has been appointed as Gamesa’s chief executive officer for the entire Latin American region. He has been chosen for this role after leading Gamesa China for four years.
Miranda, who joined Gamesa in 2007 as managing director of the Electric Components Division, was appointed in 2011 CEO of China, a region that has become a key global production and supply hub of Gamesa. The company is present in China in its capacity as OEM and wind farm developer where it won orders for the supply of 450 MW in 2014.
Other companies making tracks in the country include Acciona. President Michelle Bachelet attended this month’s opening ceremony for Punta Palmeras, a wind farm equipped with 3 MW Acciona Windpower turbines, the machines with the widest power range installed in Chile.
The farm is the first of its kind that Acciona has installed in the country. This will be followed by the construction of wind and photovoltaic plants in Chile up to an overall capacity of 255 MW, with an estimated investment of EUR400m.
In his speech, Acciona President José Manuel Entrecanales highlighted the attractiveness of Chile for international investors.
“You have a stable economy with infrastructure needs, talented businesspeople and human resources, political and social stability, enormous quantities of natural resources, and above all, a long and solid tradition of legal certainty and stability. This set of values is not easy to find, and I would even go as far as to say that your ability to attract international investment is practically unlimited.”
The Punta Palmeras wind farm, located in the municipality of Canela (Coquimbo region) has a capacity of 45MW. It consists of fifteen 3-megwatt AW 116/3000 turbines of Acciona Windpower technology, with the biggest power range of any turbine in service in Chile. The 116-meter-diameter rotors and the nacelles are mounted on 92-meter-high steel towers.
The electric power produced by the wind farm – around 124 GWh per year – will be sold to Colbún in the Central Interconnected System (SIC) of Chile under a 12-year contract. The contract has the potential to be extended if the customer wishes.
President Bachelet said, “It is already a fact, not a promise: Chile is taking firm steps towards diversifying its energy matrix” and pointed out that the investment made by Acciona confirms that “the energy sector is a very important source of dynamism for our economy, and we should take advantage of it”.
The President added that, through the Energy Agenda set up by her government, “we have emerged from the state of slumber from which investments in energy suffered, and we have been able to drive many changes that our economy and society urgently needed in the field of energy.”
This report is from the Wind Energy Update.