Insights on Karoo wind energy and grid expansion

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SIMON BROWN:  I’m chatting with Mark Tanton, CEO of Red Cap Energy. Mark, I appreciate the time. I want to delve into some of your experiences around wind power in the broader Kouga region.

In a recent note you had out, a press release, you talk around the region being one of the country’s key wind corridors. I’ve driven through the area; it is windy, it is full of wind turbines  and really is a significant asset for our country and our economy.

MARK TANTON: Yes, that it is so, Simon. Obviously we all know that the Windy City [Port Elizabeth/Gqeberha] gets its name from something, and that’s the wind.

Anyone who’s been fortunate enough to holiday in St Francis in December knows that the wind is almost always blowing, so it is one of the best areas in South Africa in terms of a wind resource.

But unfortunately, as is often the case, the resource requires wires to export the resource, and it has finite wires.

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SIMON BROWN: That was the problem you ran into. You were looking to do a project in the area, and the problem was quite simple. You could build it. But then, as you say, no grid infrastructure, no transmission infrastructure. You couldn’t connect to the grid – that was the challenge you then had to solve.

MARK TANTON: Correct. So Simon, when we got into the area, Eskom was planning its nuclear expansions, the plan Thyspunt, which is now back in planning again.

So when we got in there which was in 2009, Eskom had planned a significant grid infrastructure to support exporting power from Thyspunt.

So we had planned that we could use the infrastructure that was there, and then we would expand as the Thyspunt  infrastructure came online.

That never happened for various reasons I won’t go into. [Chuckles] So we were always engaging with Eskom on what their plans were. We looked to work with them. Effectively you get 400KV lines and 132KV lines, so it’s a big line and a bigger line.

For a listener, you know the 400KV is generally what you’d associate with those rather large pylons and the 132KV  is not as big. We then realised Eskom was going to be unable to progress with its plans, so we had to come up with a Plan B.

Eskom had a 132KV line running from effectively the Tsitsikamma River area all the way to Port Elizabeth, and we then had to plan to develop a line parallel to the Eskom line – and that meant, even though we followed closely, we had to get all the land agreements in place, get the permits and ultimately get it built.

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SIMON BROWN: And that’s a key part of it. You make the point that yes, you might be running next to it, but you’ve got to get land permissions –  and I think the press release said it’s what, 116 kilometres, which isn’t a lot. But it is when you have to go to, I don’t know, to dozens and dozens of landowners and engage them, but also just what infrastructure is currently there.

It is a massive project. I’ve looked out at some of these 132KV lines before and it’s as if I don’t know how they got there.

MARK TANTON: Yes, to put it in perspective, Eskom has launched, with government support, something called the ITP [Independent Transmission Projects] programme. That’s a programme to get the private sector to build, finance, and operate transmission lines.

Eskom’s plan is to build out 14 000 kilometres of line – that’s what we have in our transmission development plan – and 1 000 of that they are putting out to the ITP, which it seems will be parcelled off into six discrete projects.

So if you look at the Impofu [transmission] line of 116km and the six discrete, that works out to the 1 000km – I won’t do the math now because I used to be an engineer but I’m no longer good with numbers – the 116km is huge and that was 87 parcels of land that we had to cross.

So that’s 87 agreements you have to enter into with quite a diverse range of owners.

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SIMON BROWN: Yes – owners and all of their the idiosyncrasies.

My understanding is it is now done, and you’ve now got the line, you’ve got the power project, and in fact it is wheeling energy to Sasol and Air Liquide, the Secunda operation. It has been a long decade, but completed.

MARK TANTON: Yes, correct. So Red Cap Energy developed the project, and we did it ultimately in partnership with the Italian utility Enel Green Power.

Once we had finalised the development, Enel took it over and they did that final very difficult stretch of getting across the finish line to finally build it and get it operational – which they did recently. And, as you say, they’re wheeling the power to Sasol and Air Liquide.

The reality is that Sasol and Air Liquide buy the power, but clearly the power has been generated starting in the Kouga region going to Port Elizabeth. Realistically that’s where the power is being consumed but the commercial arrangement is that Air Liquide and Sasol are obviously buying.

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SIMON BROWN: Yes, the whole wheeling in fact is a separate conversation. Wheeling in of itself is a fascinating conversation.

But we’ll leave it there. Mark Tanton, CEO of Red Cap Energy, appreciate the time.

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