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Eskom delays threaten local wind tower factory

By South African Renewable Energy Council (SAREC) on 9 February 2017
The manufacturing of wind turbine towers at DCD Wind Towers, Coega near Port Elizabeth

If Eskom does not sign off on the next round of state-commissioned wind farms within the next few weeks, one of South Africa’s two wind tower manufacturers will be forced to close its Port Elizabeth-based factory and lay off the remaining 143 staff. The facility is expected to close in April.

The R400 million facility was set up in 2013 on the basis of the Department of Energy’s (DoE) energy policy, which forecast a relatively steady and predictable investment in new wind generation capacity between now and 2030. The state also ruled that a percentage of materials and skills for its renewable energy rollout should be acquired in the domestic market. 

But after supplying steel towers to wind farms in the Eastern Cape since April 2014, the production line at the DCD Wind Towers facility has been standing idle for three months, since no new orders can be processed. 

These delays are owing to the failure by Eskom to finalise the power purchase agreements (PPAs) with private wind energy firms which the DoE has already approved as part of its utility-scale renewable energy programme. Since 2011, the DoE has begun commissioning 96 renewable energy plants, using mostly solar and wind technologies. Half of these are already operational and selling electricity to the grid. 

But construction has been delayed on the next 26 power plants, some of which are wind farms, because of Eskom’s failure to finalise the contracts that will determine how much the national utility will pay the private companies for the electricity sold to the grid. Since being given DoE approval, developers have been kept waiting by Eskom for nearly two years. 

DCD Wind Towers general manager Alta-Mari Grebe says the factory has been at a standstill since the last tower unit was shipped out in November 2016. Since then, the staff complement shrunk by 29 as contracts were not renewed, or as skilled and semi-skilled employees sought work elsewhere amidst uncertain about the future of the plant. 

‘The factory was built with an anticipated demand (for new capacity) until 2030, by which time we would have recouped our investment. But this factory is just over two years old. It doesn’t make sense to recapitalise now,’ she says. 

The plant produces the tower sections which, once assembled on site as a complete tower, are between 80m and 90m tall. The process involves turning sheet metal of different strengths into the curved walls of the towers, and requires skilled and semi-skilled artisans, such as welders, boiler makers, electricians, and ‘blasters’. The process of priming and painting is done by hand, and is labour intensive. 

‘Many of the artisans we hired, had to undergo additional training, because this requires industry-specific skills,’ Grebe says. 

The factory is located in the Coega Industrial Development Zone, in the Eastern Cape, where the unemployment rate is higher than the national average. 

‘We started out with 172 employees. Now we have 143 going onto short time.’

While Grebe declined to say how many wind towers the factory would produce as a result of the pending wind farms, she said that the anticipated demand from the new plants is sufficient to keep both of SA’s tower factories in work for the next three to four years. 

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