Wind Energy

Presented By: Mohsin Seedat

15 July 2010

2011/01/21 2

Structure of Presentation

• Strategic benefits of Wind

• Project SERE Background

• Global Wind Market

• Wind Technology Progression

• Africa’s share of the global wind market

• Overall growth drivers

• Investment Attractiveness

• R&D in WTG designs

• OEMs - business system and supplier relationships

• Case Study: Germany

• Case Study :Germany (Incentives)

• What is required to nurture Wind in RSA

• Value adding Localisation Opportunities

• Q&A

Security of Supply

• Wind is a Renewable Energy resource

• No Dependency on Fossil Fuels

• No Exposure to Fuel Supply Risks

• No Exposure to Fuel Price Volatility

Environmental

• Non Polluting & Non Consuming Resource

• Zero C02, S0x, N0x and other atmospheric pollutants

• Zero Water Consumption

• No Waste products (i.e. ash, dust, waste water, spent fuel)

• No Waste Disposal Cost

Financial

• Zero Short Run Marginal Cost

• Very Low decommissioning and rehabilitation costs

• Low O & M costs

Transmission • Coastal Location, closer to load centre resulting in reduced line losses

Strategic Benefits of Wind

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Project SERE Background

• Eskom’s R&D research into cleaner technologies led

to the commissioning of demo wind farm (Klipheuwel)

in 2003,

• Govt released RE strategy with target of 10 000GWh

by 2013

• Favourable data and key learning's from the demo

plant coupled to independent studies by GTZ, CSIR

indicated considerable distributed potential of Wind in

South Africa,

• In 2006 Eskom Board approved 100MW Wind project

on the West coast

• As with many projects in the world, the project was

delayed due to funding constraints

• NERSA released REFIT as an incentive mechanism in

2009

• Funding approvals by the Clean Technology Fund and

other Multi Lateral Development Banks enable

resumption of the project

[Source: Tennessee Valley authority]

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Global Wind Market &Technology Progression

Growth in size of commercial

Wind Turbine Generators

Source: Garrard Hassan

Three-bladed, upwind,

variable-speed, pitch-regulated turbines currently

predominate onshore. 1.5MW de-facto standard in 2008/09

WT technology is different for offshore projects: there are

strong reasons why individual turbine size is significantly

larger, and turbines of 5 MW and more

are being aimed at this market

The principal design drivers are now grid compatibility, cost of

energy (which includes reliability), acoustic emissions, visual

appearance and suitability

for site conditions.

Global installed capacity has been increasing at an average of 35 per cent since 2005

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Africa‟ s Share of the Global Wind Market

SOURCE: GWEC

•US &

•Canada

•24

•0.8

•Latam

MEA

•0.6 •16

•China

•Pacific

•1.4

•7

•India

•RoAsia

•1.8

•48

•Europe

•50.0

•Share in global cumulative installed capacities

•Percent

Africa & Middle East: Detailed cumulative capacity by country (MW)

430

253

91

Egypt

Morocco

Iran

•:

•:

54

12

8

•Tunisia

•Cape Verde

•South Africa

•:

•:

8

5

4

Israel

Kenya

Other

•:

•:

Regional distribution of cumulative installed wind capacities globally – 2009 year end

•Total = 157900 MW

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Overall growth drivers

Key growth drivers Potential barriers to growth

•Europe • High CO2 price due to Kyoto protocol

• EU regulations and subsidy schemes

• Currently high oil and gas prices

• Ramp-down of nuclear power plants

• Public resistance against onshore turbines

• Political support for other renewable technologies

•US • Political desire for energy independence, e.g., the “fear factor” vis-à-vis Middle East

• Increasing energy demand

• Currently high oil prices

• Limited grid capacity to key wind areas

•China • Strong increase of power demand requires fast installation of new capacity

• Environmental problems/wish for “clean air”

• Will to foster strong domestic industry

• Overall weak transmission capacity

• Weak domestic industry

• Transportation issues for larger WTGs

•India • Strong increase in power demand

• Independence from highly unreliable grid

• Tax saving schemes

• Differing regulations across provinces

• Very weak grid in some areas

• Transportation issues for larger WTGs

Source: Mckinsey

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Investment Attractiveness

Wind Turbine Main Components

Source: Nordex

Wind Turbine Value Chain

Source: Mainstream

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Mainly Western OEMs - business system and supplier relationships

Rotor blades Rotor blades Gearboxes Gearboxes GeneratorsGenerators TowersTowers Controllers Controllers

Vestas Bosch Rexroth,

Hansen, Winergy,

Moventas

Vestas(Cotas),

NEG (Dancontrol)

GE Wind LM, Tecsis Winergy, Hansen,

Bosch Rexroth,

Eickhoff GE

Loher, GE DMI, Omnical,

SIAG

GE

Enercon Enercon N/A Enercon KGW, SAM Enercon

Mitsubishi Mitsubishi, TPI Ishibashi Mitsubishi Mitsubishi Mitsubishi

Vestas Weier, Elin, ABB,

LeroySomer

Vestas, NEG,

DMI,

Gamesa Ingelectric

(Gamesa)

Cantarey

Ingelectric

(Gamesa)

GamesaGamesa, LM Echesa(Gamesa)

Winergy,

Hansen

Repower Mita Technic

ReGuard

LM Winergy, Renk N/A N/A

Outsourced

Mixed mode

Insourced

Nordex GmbH Nordex

Omnical

Nordex, Mita

Technik

Nordex Winergy, Eikhoff,

Maag

Loher

Suzlon Suzlon - LM Hansen, Winergy Suzlon, Siemens Suzlon Suzlon, Mita

Technic

Siemens Wind Siemens - LM Winergy ABB Roug, KGW Siemens, KK

Electronic

Siemens Wind Siemens - LM Winergy ABB Roug, KGW Siemens, KK

Electronic

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R&D in WTG designs

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Case Study: Germany

Germany has one of the largest installed bases in

Europe, but in 2009, it had to forego its second

ranking in the world to make way for China’s blazing

growth. The German wind energy market blossomed

early in the 21st century and later growth slackened

as other regions began promoting renewables more

aggressively.

Overview

The wind technologies market has proved to be a

lucrative export business for Germany. The

presence of major wind energy companies has

further added to the country’s strength. About 85

per cent of the components manufactured are

exported to other countries, generating more than

€7.2 billion as revenues. Backed by a solid

engineering base, Germany is a haven for wind

turbine/components manufacturing companies as

an export base.

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Case Study :Germany(Incentives)

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‘Speed up approvals

processes’

NERSA, EIA

‘ Bold line of sight

renewable targets

required to provide

guidance to

industry’

„Appropriate incentives required for

development of Renewables value chain in

RSA’

‘ Simplify some of the

complex

requirements’

‘ Appropriate Incentives

for development and

production of renewable

energy’

‘Govt needs to provide

regulatory certainty for

Renewables.’

Incentives

Regulatory Framework

What is required to nurture Wind in RSA

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Value adding Localisation Opportunities

“Transforming this sector is therefore urgently needed and Suzlon believes that wind power can play a big role in helping South Africa reduce its carbon emissions and creating sustainable long term career opportunities for South Africans”,

– Mo Siddiqui, Regional Manager of Suzlon Wind Energy Africa at the Africa Utility Week, in Durban, RSA, Feb 2010

"We come in to provide technical support to consortiums trying to develop renewable energy projects" (…) "Later we could come in again as equipment suppliers." (…) There is the technical skill and capability to manufacture components for both CSP and wind in South Africa," (…) "Just about everything could be manufactured locally but it all depends on economies of scale.

"– Dion Govender , Chief Executive of Siemens Energy Southern Africa in The Star, Mar 10, 2010

"Our approach fits in well with the black economic empowerment framework. We have the technology and the partner will bring local expertise (for South Africa). We are talking to some local entities (…) Partnership is key in our growth model (…) We are particularly excited about wind"

– Jay Wileman, newly appointed regional executive at GE, in Comtex All Africa, Aug 12, 2009

Media and press releasesWind Resource Measurements

Project Development of Windfarms

Components manufacturing and servicing (+R&D)

• Turbines (tubular or other)

• Blades (carbon fibre or glass fibre)

• Control Systems

• Transformers( pad or nacelle mounted)

• Special coatings

• Pitch & Yaw motors

• Cabling

• Others…

General PM & Construction of Windfarms

Operation and Maintenance of Windfarms

Wind Turbine Maintenance (3rd party licensing)

Electric Maintenance (3rd party licensing

Remote Operation and data analysis

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Q&A