Sinan BCM Solar Plant
Project Background
Sinan Energy has entered into an agreement to build a 10MW solar plant in the Northern Cape that will supply power to the Buffalo City Municipality via an energy aggregator.
The power will be delivered through a wheeling contract that allows Sinan Energy the right to export power into the Eskom and Municipal Transmission and Distribution Network for use by the Municipality.
Plant Location
The proposed plant location some 40km south of the Namibian border in the Northern Cape exploits a world class solar resource to provide power at a lower tariff than Eskom to the municipality through a licensed third-party energy aggregator.
The solar resource at the proposed plant in the Northern Cape is amongst the highest in the world.
The high level of available solar radiation results in higher power output than in other locations for the same plant size and cost. This allows Sinan Energy to supply power at a lower tariff than Eskom to MV and HV clients countrywide through a wheeling arrangement with Eskom and a commercial contract with an energy aggregator.
Unique Opportunity for Individual Investors
The Sinan BCM solar plant presents a unique opportunity for individual investors to participate in a utility scale infrastructure project with stable long-term cash flows and attractive returns.
These type of infrastructure projects have previously only been accessible to institutional investors and large project developers. Recent changes in the electricity regulatory framework have opened the door for independent power utilities to own and operate power plants that sell power directly to end users. The plants can either be built on site or at a remote location from where power can be wheeled through the national grid.
Sinan has exploited these changes in the electricity regulatory framework to build independent power plants either on site or at remote locations while simultaneously allowing individual investors to share in this high growth industry.
Environmental, Social and Economic Benefits of the Sinan BCM Solar Plant
Over and above the obvious environmental benefits of a pure renewable energy source of power generation, the Sinan BCM Solar Plant delivers additional social and economic benefits as well.
The plant increases the foothold of independent power utilities in the electricity supply industry thereby reducing the dominance of Eskom and allowing users greater choice. Over time Sinan’s vision is to allow end users total freedom in their choice of power provider.
The first plant is part of a larger 100 MW capital build program that includes wind and solar plants specifically built for wheeling power. The building of these projects in remote sites will assist in the economic upliftment of the local communities by providing job opportunities as well as supply chain opportunities to local entrepreneurs.
Outside of its wheeling projects, Sinan builds on-site power plants for private sector clients. It is anticipated that these will also be opened to individual investors in the short term thereby further strengthening the market share of Independent Power Utilities.
Licensing and Regulatory Framework
Since November 2017, the regulatory framework has undergone significant changes that has allowed independent power producers to supply power to clients directly under certain circumstances. The liberalization of the industry has continued with recent changes making it easier to build larger capacity renewable energy generation plants.
Similarly, the National Regulator (NERSA) has streamlined the registration and licensing process for independently owned power plants. While the process is still far from perfect it has been shown to work, resulting in an unprecedented number of own generation capacity projects being undertaken in the private sector.
The electricity industry is in a similar position to what the telecommunications industry was at the introduction of cellular operators in the mid-nineties. The then dominant telecommunications utility was subsequently overshadowed by the new cellular operators and early investors made exceptional returns.
Wheeling Power – Can it be Done
Sinan Energy’s technical, legal and financial experts are experienced in the wheeling of energy from independently owned power plants and have previously successfully designed and executed plants with wheeling agreements.
Wheeling arrangements though not commonly understood have been in existence for several years and have been mostly exploited by large industrial companies who have built their own on-site power plants. The excess power from these plants have been wheeled using an energy aggregator.
The Sinan BCM Solar Plant is one of the first plants built specifically to wheel all of it’s production to end users and represents a paradigm shift in independent power generation and supply.