Adlershof's know how for achieving South Africa's climate objectives

Renewable Energy Project in Durban with the involvement of WISTA-MANAGEMENT

1 Purpose

The report provides the Executive Committee with a summary of the Renewable Energy Development Hub (RED Hub-KZN) that is being proposed for development in eThekwini Municipal Area.

2 Synopsis

The REDHub-KZN Project is a private initiative by the German based company IKD-International and ARDOR SA Limited supported by WISTA-Adlershof, City of Science, Technology and Media, the most innovative Techno Hub in Europe, leading German Companies in the Renewable Energy Technology, Universities and Institutes from Berlin/Brandenburg, partnering with Durban University, Anglo American Platinum and South Korean Technology Partners and Investors. The initiative was created through partnership with the eThekwini Municipality and supported by the KwaZulu-Natal Government.

The expected economic impact is planned as follows:

• 2 billion Rand additional investment from local and international private companies
• Return ofthe project investment in 8 years/annual profit of 11 % of the net investment
• Direct international investment return with an annual profit of 7.2%
• 4000 + sustainable jobs up from 2016
• 2100 additional project related jobs during installation phase 1- 2012-2016
• 800 additional project related jobs during installation phase 2 - 2016-2020
• 10.5 billion Rand addition to GDPof RSAin 2020
• 2 billion Rand additional to GDPto SADCCcountries in 2020
• Additional Tax revenue forthe government of min. 1.5 billion Rand (constant at 2011 prices)
• Local content for supply and services of 40% from the total Investment

The project will provide support for the energy Industry in KwaZulu-Natal based on renewable Sources and will establish the platform for the Renewable Energy Industry in the Province with an impact in the Southern African Region.

3 Project Components

The Project will plan, build and run the following components:

3.1 Renewable Energy Business Development Hub

A Centre of Excellence for Renewable Energy with 3 clusters:

• Renewable Energy and Energy Efficiency;
• Integrated Energy- and Infrastructure Networks
• Sustainable Development and Biodiversity.

3.2 Academy for Renewable Energy "T.W.Kambule"

R&D in applied technology solutions, capacity building, skills transfer, scientific and technical cooperation with German and International Institutes.

3.3 260MWp Hybrid Renewable Energy Power Plant

Based on the local Renewable Energy Sources and Applied Solutions at the Hub:

3.4 Renewable Energy Generation

The Implementation of the CO₂ neutral Precinct Development with integrated REPower Generation will support the concept of KZNand the Municipalities to reduce the CO₂ emission by 27% until 2020 and will secure Clean Energy for the sustainable socioeconomic development.

4 Project Stakeholders

4.1 Major Partners

The major investor is ARDOR SA limited, South Africa. The project initiation and Program Management is done by IKD-International Know-how Transfer and Business Development GmbH, a German based Consulting Company with an extensive truck record in projects in Southern Africa. IKD-International Know-how Transfer and Business Development GmbH is based in Berlin at the WISTA-Adlershof, City of Science, Technology and Media and is a member of the "Afrika Verein der Deutschen Wirtschaft". The basic analysis for the Hub development was made in close partnership with Companies of the Association Berlin Solar Network, eThekwini and iLembe Municipality, the DUT-Durban University, Anglo American Platinum and the South African Partners "Green Dream Projects" from iLembe and "Sakaza Communications" from Cape Town.

4.2 Strategic Partners

The Strategic Partners in Technology and BusinessDevelopment are:

• WISTA - Berlin- Adlershof - City of Science-Technology and Media;
• ANGLO AMERICAN PLATINUM LIMITED
• Berlin Solar Network, Association of the institutes and companies in Solar Industry in the Federal Estates of Berlin and Brandenburg,
• Optec-BB, Association of the institutes and companies in Optical and Laser Industry in the Federal Estates of Berlin and Brandenburg,
• ZAB-Zukunftsagentur Brandenburg- Economic Development Corporation in the Federal Estate of Brandenburg

4.3 Tertiary Institute Partners

Partnering Universities and Institutes

• Durban University of Technology
• International Academy for innovative pedagogic, psychology and economics gGmbH (INA) at the Free University Berlin;
• Humboldt University Berlin
• b-tu Brandenburg University of Technology;
• HZB-Helmholtz Zentrum Berlin - (Bessy)
• Ferdinand Braun Institute for HF-Technics,
• Fraunhofer Heinrich Hertz Institute

German, South African and South Korean private Companies are involved in the planning, technology transfer and investment.

The establishment of the RED Hub-KZN as a "Special Economic Zone (SEZ)" will provide the business platform for local and regional project development, international investment and social-economic upliftment in KZN and in eThekwini and iLembe. The challenge to prove the capability of combining business development and sustainability the communities and the environment will provide the opportunity for a pioneering project in Africa with a remarkable impact in the business development in the Southern African Region.

5 Direct Outcomes - Scenario 2020

The REDHub-KZN offers in cooperation with the international and local investors, suppliers, tenants and partnering companies a complex of systems and services with the potential of generating additional revenue streams in order to provide finance for refinancing the projects and for generating CAPEXforthe partnering municipalities and private companies and partners.

This opportunity is developed out of the installed capacity for Renewable Energy Power Generation, Broadband services, ICT and security infrastructure. It provides competitiveness and improves the living standards in the partnering Metropolitan and in the Municipalities.

6 Required Support from eThekwini Municipality

In order to achieve these outcomes, the eThekwini Municipality will need to provide support to the development of the RED Hub-KZN. This support will include:

1. The eThekwini Municipality will ensure access to key personnel (especially those who were responsible for defining the requirements and acceptance criteria).
2. The eThekwini Municipality will provide access to all technical staff involved in the implementation and operations and information.
3. A comprehensive "Project Investment Agreement" (PIA) will be drafted and signed in collaboration between the eThekwini Municipality and the RED Hub-KZN Joint Venture.
4. The eThekwini Municipality will facilitate the approval of the status as "Special Economic Zone" for the RED Hub-KZN Project
5. The Power "Purchase Agreement" (PPA) between the eThekwini Municipality and the RED Hub-KZN Joint Venture will be signed in accordance with the council resolution of 13 September 2011 regarding PPAs.
6. The eThekwini Municipality will work with REDHub-KZN Joint Venture to develop an Environmental Management Framework (EMF).

7 Budget implications

The budget implications for the eThekwini Municipality at this stage are not defined. There are however 2 potential areas of budget implication for the eThekwini Municipality. These are the provision of bulk services to the development and the purchase of renewable energy from the development.

The eThekwini municipality will need to ensure that bulk services are made available to the RED Hub-KZN. These services include, but are not limited to, the provision of access road, potable water, storm-water drainage, electrical grid connections and fiber-optic access. A thorough assessment will need to be conducted by relevant departments, who will be in a position to advise on what specific services are needed and budgetary implications, for the RED Hub.

For the purchase of renewable energy, a council resolution was passed on the 13 September 2011 for "Authority for Head Electricity to enter into a power purchase agreements with customers having embedded generation and co-generation facilities at no additional costs to eThekwini rate payers." The eThekwini Municipality also has an existing application process for embedded renewable energy generation. The necessary authority and administrative processes are therefore already in place to purchase renewable energy at "no additional costs to eThekwini rate payers". Because the purchase of electricity will be at the same rate as that currently paid to ESKOM, there will be no direct budget impact.

8 Recommendations

Given the significant economic potential of this development within the eThekwini Municipal Area it is recommended that:

1. The eThekwini Municipality continues supports of the Renewable Energy Development Hub (RED Hub-KZN) as outlined in this report.

Contact:

Konrad Hochhold
Program Director RED Hub-KZN

IKD - International Know-how Transfer and Business Development GmbH
Justus-von-Liebig-Str.7, D-12489 Berlin
Tel.: +49 (0)30 / 5655-0745; Fax: +49 (0)30 / 6798-9714
E-mail: konrad.hochhold(at)ikd-international.com
Web: www.ikd-international.com

Dr. Bernd Ludwig
Head of Center for Photovoltaics and Renewable Energies

WISTA-MANAGEMENT GMBH
Rudower Chaussee 17, D-12489 Berlin
Tel.: +49 (0) 30 / 6392-2252; Fax: +49 (0) 30 / 6392-2246
e-mail: b.ludwig(at)wista.de
www.adlershof.de/pv