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The Promise of South Africa as a New Solar Frontier

Solar panel makers and developers have pegged South Africa as a new frontier for a few years now, and solar energy development seems to be underway in earnest. Hanwha Solar One and Suntech Power both announced Monday supply deals for large solar farms that are set to materialize over the next two years.

Hanwha said it will sell 155 MW (dc) of solar panels for two projects under development by Cobra, Gasolier and Kansan. Hanwha expects to complete the shipment by June 2013.

Suntech, meanwhile, won a contract to provide about 100 MW (dc) of solar panels for two projects that belong to a consortium led by Mainstream Renewable Power. Although it recently vowed to get out of the solar equipment and engineering business, Siemens is under contract to design and build these two projects in Cape Town. Mainstream expects the two projects to start delivering electricity by the middle of 2014.

The four projects highlight the efforts by the South African government to boost its renewable energy production. The country relies heavily on coal to generate electricity, according to the International Energy Agency. About two-thirds of the country’s residents have access to electricity, the highest electrification rate in Sub-Saharan Africa, but that still means about 12.5 milion people aren’t on the grid. South Africa’s mining operations consume a lot of energy and contribute to its carbon emissions.

The projects are part of the first round of awards by the government under its South Africa Renewable Energy Program, which aims to install over 8 GW of photovoltaic power generation projects by 2030. Overall, the government picked 28 projects that include solar (photovoltaic and concentrating solar thermal) and wind in the first go around. One of the projects belongs to a consortium involving Sun Edison, Chant Solar, Public Investment Corporation and ABB, which recently announced their plan to build two projects totaling 58 MW (ac) in South Africa.

Solar companies have pointed to South Africa as a land of big solar opportunity in recent years as they look for new markets to make up for the declining demand from Europe. Manufacturers also are anxious to find new outlets for their products given that a glut of solar panels over the past two years has prompted many of them to idle production lines and lay off workers. Some have gone bankrupt. Other promising markets include the Middle East, Japan and China. Japan, in particular, implemented a feed-in tariff program in July this year in an effort to increase clean power generation and move away nuclear power. The country saw an 80 percent jump in the amount of solar cells and panels being shipped across Japan. 

Just last week, First Solar announced it had hired Johan Colliers as its business development director for Sub-Saharan Africa and the managing director for its South African subsidiary. Sub-Saharan Africa, incidentally, has a far lower electrification rate than its North Africa neighbor: 30.5 percent versus 99 percent.

Solar power projects are also materializing beyond South Africa. Blue Energy from the United Kingdom is working on a 155 MW, $400 million project in Ghana and plans to complete it by the end of 2015. 

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