Milestone for South Africa’s newest hydropower project: Neusberg

Southern Africa’s newest hydropower plant met its final project milestone in January, achieving full commercial operation, and was officially launched this week.

The Neusberg project is a run-of-river small hydropower project on the Orange River near Kakamas in the Northern Cape of South Africa. It is the first run-of-river hydropower scheme developed under the Republic of South Africa’s Renewable Energy Independent Power Producer’s Programme (REIPPP) and will deliver 10 MW of baseload power in the South African energy market, enough electricity for about 5000 households.

The Neusberg project is owned by Kakamas Hydro Electric Power (RF) (Pty) Ltd (KHEP), a company registered in the Republic of South Africa in which there are four equity participants:, Hydro 1 SA, Hydro Tasmania South Africa, Old Mutual Life Assurance Company (South Africa) Limited, and a community trust funded by the Industrial Development Corporation (IDC).

The REIPPP has been designed by South Africa’s Departments of Energy and Treasury to help achieve a target of 3725 megawatts of renewable energy. It aims to support environmentally sustainable growth, and to stimulate the renewable energy industry in South Africa.

“Hydropower is one of the few renewable sources of baseload energy generation – that is, it constantly generates a predictable flow of electricity”, said Christoff le Grange, Hydro Tasmania’s Director Southern Africa.

“As long as there is sufficient flow in the river, the power plant can generate electricity, and since the Orange River is a managed system, this means that the generation capacity is almost constant.”

Construction at Neusberg began in June 2013 and the power station began commercial operation on 31 January 2015 on time and on budget.

Hydro Tasmania and its consulting business Entura have been involved in the whole lifecycle of the project from design through construction and ongoing support for operation and maintenance. One hundred years of experience developing and operating hydropower plant in Australia equips us with the expertise to deliver vital skills to this project,” said Mr le Grange.

The project will provide revenue to the project partners for 20 years under the power purchase agreement entered into with South Africa’s energy utility Eskom. It also provides benefits to local communities.

“In an area characterised by high levels of poverty and unemployment, developing the facility has created many work opportunities,” said Hydro SA’s Niel Theron

“At the project’s peak, at least 350 people worked on site, half of them from the local community and specific employment opportunities were created for young people and women.”

Local business also derived benefit from the project’s commitment to spending money on South African goods and services. During the construction period the project maintained a local content spend in excess of 70 per cent.

The project also brings an ongoing social and economic boost to the community. The broader Kakamas community has a 15 per cent shareholding in the project which is administered via the Kakamas Hydro Community Trust. The dividend income will be kept in trust and distributed via community projects that will focus on education, the elderly and children. The dividend spend is monitored by the Department of Energy’s IPP Monitoring Office.

“In addition, the Kakamas Hydro Electric Project (KHEP Project) will spend 2-3% of its revenue – which amounts to approximately R60 million over the life of the 20year power purchase agreement - on community projects,” said Hydro SA’s Economic Development Project Manager Mercia Grimbeeck.

“This will go a long way toward stimulating and facilitating economic growth and social change in a community where it is much needed.”

Now that the construction of the hydro power facility is complete, the existing site office will be donated to the Zwartbooisberg farming community to be used as its new school premises.

Hydro Tasmania will continue to perform an ongoing role in providing remote alarm monitoring and dispatch control services from its 24-hour Hobart operations centre. A local operation crew will be available, to attend to any maintenance issues that may arise.

Hydro Tasmania South Africa will also provide engineering services to the project throughout its life.

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