Quick Summary
We had the distinguished pleasure to catch up with one of the key players of the Wind Industry in Africa,
Kilian Hagermann, Managing Director of G7 Energies. Very exciting interview where we covered:
- His journey and story of G7 Energies
- The challenges faced in developing their pipeline.
- The Impacts of Wind projects in the community
- The role of Wind in the resolution of load shedding in South Africa
- The opportunities presented by AfCFTA
It was windy and it was very insightful. Do enjoy it!
Listen to the Live Interview? Click HERE
INTERVIEW
RiA (Q1): Hello Dr. Kilian Hagermann how are you doing today?
KH (A1): I’m fine. Thank you. How are you?
RiA (Q2): I’m very, very good I’m very good. So it’s very much a pleasure for me to be hosting you today. For our Renewables in Africa podcast, we have high level interviews with key industry people like yourself. So today, we’re going to be talking about the wind industry. This is an industry that’s particularly dear to my heart simply because two years ago in 2017 we published a book the “Wind Industry Outlook in Africa” talking about the landscape and the opportunities for the wind in the continent. And today we are talking to one key player and that’s very interesting and more importantly, a key player from Africa. So Dr. Hagermann without wasting any time, would you mind just so going through some questions with me, so I will have the first question for you and to give a justice to your career and your company, I would like you to introduce yourself please, and also the fantastic company that you’re running.
KH (A2): Sure, sure. So first, a little bit about myself. I’ve been in the wind industry for almost 20 years now. I started way back in 2001 getting excited It’s about the development of wind energy globally and in South Africa in particular, became a board member of a South African wind energy association back then and started exploring the potential and the possibilities in the country. I then completed many years of research at the University of Cape town graduating with my PhD in 2008 after publishing the wind Atlas of South Africa, basically documenting, you know, where the interesting areas on, in South Africa. And then together with my colleague Nicholas Rowland, we founded G7 Renewable Energies. G7 is a specialized wind farm developer right from the start we’ve been focusing on wind as a forte as you know, something we have key technical expertise and we’ve been developing many projects throughout the years participating in all rounds of the South Africa’s, Renewable Procurement Program, the REIPPP and yeah, our most advanced project, and our most biggest success to date has been 140 megawatt (MWs) Roggeveld wind farm for which we reach financial close in April, 2018 at the lowest tariff ever awarded in South Africa. And that was about 70 cents in Rand terms.
RiA (Q3): Okay. That’s, that’s actually quite interesting. Now talking about the project that you just mentioned, a landmark project that you’ve delivered. So how many projects do you currently have under development? I know this one you mentioned is ongoing, but in total, how many would you say you have under development?
KH (A3): So let me differentiate between the different stages. So is the Roggeveld is the only project that’s under construction at the moment. It should get to commercial operations and April 2021. There is also the five megawatt Klawer wind farm, which is should reach financial close this year and start construction soon thereafter. And we have another 780 megawatts of projects across six projects in the pipeline at an advanced stage developments. And when I say advanced, they should be able to start construction in the next two years. And then we have a further, well more than a thousand megawatts of various projects at a very early stage of development in South Africa.
RiA (Q4): Okay. So it looks like, you definitely have a lot on your plate and I can also suspect that, obviously there’s a lot of challenges that you encounter. Can you just touch on the main one that you’ve been seeing or all throughout the development of this project that you’ve been on?
KH (A4): Well, we’ve had a number of challenges encountered over the years. One of the biggest ones is actually government procurement that has been stallen since the end of 2015 there hasn’t really being a renewable energy auction in South Africa since then and that caused a lot of issues with the planning and development of further projects and so on. But even without that, you know, it’s challenging enough to develop wind farm projects it’s a very high capital outlay requirements over three years at least, just to get them to a stage where you can qualify to bid them in an auction and [proceed to financial close and construction. We had several whole environmental issues, oppositions from neighbouring landowners. And competition is always a challenge and staying ahead of the game.
RiA (Q5): Okay. So I’m quite familiar with some of those challenges that you mentioned, now talking about the communities. So usually we’re doing this project, this is to bring power to the people and also to businesses. Can you talk about the main benefits that you can see from the community? From the South African model that obviously you’ve been a part of a since the start of your career, but also maybe African general.
KH (A5): Okay. So I assume by communities you mean the communities in the vicinity of the wind farm. The benefits are quite substantial because one has to bear in mind that as a typically rural community with a little bit of agriculture going on, but hardly any commerce, hardly any industry, high rates of unemployment, very difficult to find jobs. Now we’re coming into those regions with financial inflows of, you know, in the billions of Rands which create enormous opportunities, direct opportunities during construction. And there’s a lot of low skilled labour that that’s needed in the process, but also to a certain extent during operational of the wind farm and all the secondary opportunities, all that construction stuff; they need to eat, I need to stay solid. There’re strong services, catering, all sorts of things that suddenly can come into play and bring enormous benefits to the communities on sites. It’s also as part of the South African program, at least there’s mandatory ownership by these local communities of at least 2.5% according to current model plus at least 1% of revenues. And then during operation it is pulled back into community upliftment programmes. And that’s anything ranging from education and skills training to supporting entrepreneurs.
RiA (Q6): Okay. That’s great. So one of my pet topic, it’s about talking about…and that’s true for wind and solar is to talk about the intermittency issues, right? So everybody knows about it, it has been well documented. One of my arguments is to say that to grow the sector we clearly need to be looking at ways whereby we can include wind as a base load energy for base load power. So I was wondering from your side being an expert, how do you think we can develop the strategy also including wind as part of base load power?
KH (A6): Well interesting that you use the word base load because I actually think it’s a, it’s a remnant of the 20th century thinking. It’s, outdated. And if you look at modern electricity grids with a lot of renewables on the grid like California and you speak to that California independent system operator they’ll be able to tell you that base load is actually the enemy, not their friend. Those Nuclear plants, few base load plants that they have left on the grid are actually the ones that give them the biggest problems, not, the easiest to deal with because of the way that they, you know, they follow a varying demand. And this is the issue that most people don’t understand. Demands is not constant, demand goes up and down all the time. And so in South Africa, we get a demand peak in the mornings, and another one even stronger one in the evenings, and then at night there’s not that much usage. So even if you couple a wind farm say with battery storage to try and level-up it’s actually not what the grid needs.
So in order to get closer to what the grid needs and that is delivering power when it’s needed. The answer really is to couple wind farms with battery storage. So lithium-ion comes to mind, but there is also a couple of other technologies on markets that are really coming of age now. The costs are way lower than they were just years ago when a lot of these models and plans were put together so that a wind farm can actually generate the power when it’s needed by the consumers on the grid. And that is, in the evening. And that only lasts for a few hours. So it’s not that you need to store tons and tons of energy to, then just charge that and distributed to the grid when the wind isn’t blowing. It’s actually much smaller than the issue than most people think it is.
RiA (Q7): Okay. Another very important topic. I’m sure you know much more than me on that. This is currently a load shedding crisis that the country South Africa is going on. So obviously the government has been taking some measures or announcing some measures which is quite different, they’re looking at obviously fast tracking the procurement programme. So hopefully that will follow. And also looking more closely at the decentralization model, I wanted to know from your perspective, how do you think wind’s power can support and help in this particular moment, in time for the country in terms of getting rid of this load shedding?
KH (A7): Right. So when does is a certain big part of the solution to load shedding in the long run. To avoid load shedding in the next week or the next month or even the current year; I’m afraid it’s unrealistic to expect wind to plug that gap simply because of the long lead times. You do need to procure the energy you know, contracts need to be signed for the offtake of the electricity and finance needs to be raised to build these plants. And unfortunately, you know, with any projects worth more than a billion Rand, those things can’t be build overnight. But in the longer run, we talking on two, three, four years, they are gigawatts, literally gigawatts of wind power projects ready to go and ready to be procured tomorrow. And I mean construction once all the contracts are in place and all the permitting have been finalized, and that gets me back to my earlier point about red tape, which they unfortunately haven’t really simplified once all that is in place, you know, then wind farm can deliver power within 12 to 18 months. If the conditions are right and some of the delaying factors in the procurement conditions are all relaxed so together with storage and photovoltaic energy, I think renewables has what it takes to solve the load shedding process in the long run.
if the conditions are right and some of the delaying factors in the procurement are all relaxed so together with storage and photovoltaic energy, renewables has what it takes to solve the load shedding process in the long run
RiA (Q8): Excellent. So let me now move to my last question, but not the least. So it’s to talk about Africa as a whole and specifically you’re talking about the current AfCFTA’s. I’m sure a businessman like yourself, you would have heard of it, which is the construction of the big, huge African common market. Even more interesting. So we know that a South African man would be the first to head the secretariat that will be headed in Accra in Ghana. I know it’s still very early stage, will all honestly it’s quite promising. I was wondering how you as the leader, the head of G7 Energies is planning to take advantage of that and take obviously your solutions, your services beyond the South African market and to tackle the African market, any thought on that?
KH (A8): Yes, I believe this free trade agreement will simplify a lot of matters in our business expansion strategy going forward. I mean you need to be, reminded for now we’re still fully focused on the South African market, but once we are ready to enter other African markets, this free trade agreements will make it much easier for us to move staff across to other countries. And to move goods and services. For example, electrical equipment required and cabling and substations and why not, wind farms, a lot of that stuff is already manufactured in South Africa. And to move that into other African countries which may not have such manufacturing capabilities is a very exciting prospect. So I believe it’s good for us.
RiA (Q9): I think we’re all looking forward to this common market, coming into place and shape and also looking at the implementation, especially from the industry perspective. So, Dr. Kilian Hagermann, it was a real pleasure for me to be talking to you today. So you were talking to Renewables in Africa. We are African clean energy champion, so we really want to be looking more to people like yourself, doing fantastic work in wind energy for sure and renewable energy at large. And then all that’s left for me to say is thank you very much for your time and have a great rest of the day.
KH (A9): Thank you. I appreciate the opportunity.
Video link: https://youtu.be/NU2aTz2zJpw
