Green Power Market in South Africa Starts with Steam

Private and public sector bodies in South Africa have a new economy in the renewable energy market. Black Economically Empowered (BEE) start-up company Amatola Green Power is set to become the first enterprise in the region to supply green electricity to end-user customers, including fossil fuel conversion technology company Sasol, and food processing and export company Fat Belly Products.

Both companies are already winning export contracts due to their intent to convert to green power, according to Amatola. Commercial trading of electricity generated from renewable sources began on April 19. Kobus Morgan, the managing director of Amatola Green Power, said, “Amatola Green Power has pioneered the creation of a market where green power products can be traded freely, giving customers a choice of electricity supply. In doing so, we have not only unlocked a huge potential of sustainable renewable energy, but also kick started an industry that was dormant thereby creating jobs, economic growth and development.” Partial funding to establish Amatola was provided by the Shell Foundation and the Empowerment Through Energy Fund (ETEF). South Africa-based financier GroFin manages the ETEF. The government of the region has set a goal to generate 120 Gigawatt hours of its 2005 power use through renewable energy sources. They plan to increase those goals to 10,000 Gigawatt hours by 2013. Energy for the green power market will be generated by South African sugar mills, which use the waste crop from sugar cane processing to operate steam run generators that produce electricity for use inside the plants. Excess electricity has been used exclusively for mill needs up until now, but sugar mills with Amatola contracts will now supply electricity to the national grid during nine months of their production year. ESKOM, which owns the national grid in South Africa, will measure the precise electrical load used by a company or individual who purchases green power through Amatola and bill the end-customer for the amount of power used. According to background information provided by the Shell Foundation, the electricity generated at sugar mills is at the top of the list for available renewable energy resources in South Africa. Because Amatola is offering a market for the power, mill owners will have a reason to expand plant operations so they can also become green energy suppliers. Opening a trading market for green power should generate demand for more renewable energy generation facilities, which should in-turn promote investment. Steam recovery for power generation isn’t the only technology Amatola is interested in. Landfill methane gas plants and hydroelectric plants are also in the company’s plans Amatola alone will account for one-third of the South Africa government’s target of 120 Gigawatt hours for generating power from renewable sources in 2005. The company estimates that customer demand will more than double between now and 2007, and that a successful market launch will persuade owners of sugar mills to invest in greater capacity. Chris West, deputy director of the Shell Foundation, said, “The launch of live trading of green energy is an example of our wider commitment to nurturing BBE entrepreneurs and their companies through innovative investment funds.”

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