The Role of Specialist Engineering in Bankability and ROI for Renewable Energy Projects

In South Africa, the shift towards renewable energy continues to gain momentum. REIPPP has played a positive role in incentivising projects, attracting co-funders, and raising interest and awareness about energy opportunities.?

As interest increases, issues to consider for projects and stakeholders include production type, partnership model, transmission/distribution and connection, funding/asset management and managing the scale of projects required to feed commercial and industrial requirements.?

Below we look at some considerations.??

For more details, join our panel of experts (including specialist energy engineers) in a free webinar where we unpack and discuss the details.??

The Changing Energy Market?

We are seeing ongoing changes, all contributing to significant shifts in market and commercial dynamics. Deregulation in the sector is opening opportunities, outside of public procurement, for the private market to design bilateral, hybrid, or direct agreements.??

Commercial and industrial (C&I) demand is increasing, creating opportunities for producers to sell their products in multiple scenarios (into grid; direct to corporate; to trading exchanges; to export).??

Engineering is key to designing the right production/transmission/distribution solutions while factoring changing dynamics into models that manage public and private stakeholder expectations.??

Where will the Giga Watts be coming from??

Investors (business and individual) have already signalled their appetite for sustainable energy projects with an eye on the future, resources, and the environment.???

New renewable energy technologies like green ammonia and hydrogen production ramp up the size and scale and mark a significant step towards sustainable energy solutions. Not only in terms of scale but also as promising technologies enabling storage and transportation.??

There is already a global surge in demand for green ammonia to meet agricultural, chemical, and mining requirements as well as the prospect for it to become the chosen fuel in the maritime industry.??

There are many considerations and permutations to consider in planning and forecasting projects that work for bankability and deliver optimal ROI. Engineering expertise is pivotal in refining these innovations for practical application in the energy landscape.?

The Scale and Challenges of Modern Projects?

As demand-side needs grow, the market is looking to larger-scale generation projects and alternative production and distribution models.??

Mega project opportunities from distributed demand (e.g. mines) present challenges in securing adequate funding and engineering expertise to ensure grid capacity or alternative T&D solutions are able to accommodate expanded initiatives.??

These opportunities are very real. In South Africa, we have already seen plans for the establishment of five large-scale Hydrogen and Ammonia plants powered by 15GW of renewable?energy.?

Cost, Risk and Reward??

The Hive Hydrogen SA Green Ammonia Plant was announced (in 2021) as a $4.6bn project. This is an example of the type of demand-side potential from clients in C&I . Large-scale projects require careful consideration, specialist engineering and modelling before investment.?

Project-dependent factors that should be considered include:?

• A regulatory framework that doesn’t immediately cater for some new project types?
• Eskom unbundling; connection/ transmission?
• Stakeholder management and managing risk for an Independent Power Producer (IPP) with/without Eskom?
• Private and Public cooperation?
• New grid access and capacity rules?
• Business model and tariff options?

Engineers play a critical role in ensuring the stability and reliability of the supply, T&D and/or the energy grid, while addressing stakeholders' concerns to ensure project acceptance and success.?

?Energy business models?

Consider various options and tariff structures for investigation, discussion and negotiation during planning phase?

• The feed-in tariff?requires the Renewable Energy Purchasing Agency (REPA), e.g the Single Buyer Office (SBO) of Eskom, to purchase renewable energy from qualifying generators at pre-determined prices?
• Wheeling charges (standard tariff charges raised to all parties that use the grid)?
• Unbundled tariff structures and rates?
• Tendering??

Funding renewable energy projects involves diverse strategies, seeking investors or utilising government programs. Engineers are tasked with identifying the most suitable and sustainable funding avenues to ensure the project's feasibility and success.?

Meet the specialists - Your Opportunity to chat with SA Energy Engineers and ask them to assist ??

Join us on 23 November as we unpack these and more in our webinar??

“Renewable Energy: The future and strategy for ROI and bankable projects”.??

Register here for your free seat: https://us06web.zoom.us/webinar/register/8816988339931/WN_0d0d4rqVROiCUlJXM-PiwQ?

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